One of the untold stories of Ireland’s industrial, technological and economic prowess is the country’s impact on fintech. This also represents a powerful global branding opportunity, writes John Kennedy.
Some people think Ireland’s impact on financial services and global trade goes back to the brilliant policy manoeuvres that led to the creation of the Irish Financial Services Centre (IFSC) in the 1990s. It began much earlier.
In the 20th century, an astute Clare man called Brendan O’Regan saved Shannon Airport from early annihilation when he opened the world’s first duty-free shop in the world in 1947. Roughly three years later, an Irish-American in New York called Frank McNamara found he could not pay for his lunch because he left his wallet in another suit. His embarrassing predicament gave him an epiphany to create the world’s first credit card, Diners Club International.
‘Ireland is one of the main global hubs for fintech – we just need to get our branding and messaging out’
– NIALL TWOMEY
Many people believe that fintech is a new term or construct. It’s just a current term for financial technology, and one of our biggest and earliest players is an indigenous company from Killorglin in Kerry called Fexco. Founded by Brian McCarthy in 1981 to enable Bureau de Change and payment card services, Fexco employs more than 2,300 people worldwide and last year revealed plans to recruit 175 additional highly skilled staff to expand its research, development and information technology capabilities in a collaboration with University College Cork. It seems Kerry has a knack for this kind of thing as Killarney-based company Monex is said to have processed more than $50bn in ATM transactions across the world.
Meath also has a bit of a penchant for fintech as Prepaid Financial Services (PFS), a company founded by Navan native Noel Moran, recently obtained an e-money licence from the Central Bank of Ireland and plans an IPO.
If you do a search on TechIreland for ‘fintech’ companies, it will yield a return of approximately 168 companies engaged in the field. Crucially, when it comes to the latest trends, Irish-led companies are in fact leading the charge in vital areas such as Strong Customer Authentication (SCA), the core development that will make the Payment Services Directive (PSD2) more real than anything.
The one to watch in SCA is Stripe, a company founded by two brothers from Limerick, Patrick and John Collison, in San Francisco. Siliconrepublic.com recently reported that the company is growing its existing engineering hub in Dublin tenfold after winning a vital e-banking licence from Ireland’s Central Bank that will enable it to process pan-European payments following a hard or soft Brexit. The company also recently acquired Touchtech Payments, a Dublin-based payments start-up, for an undisclosed sum as it prepares for the onset of SCA.
We are the world makers
Perhaps it is a worldliness born of constant emigration or an innate sensitivity to trade winds born of living on a rock out in the Atlantic, but we seem to have a big-picture understanding of what’s happening in finance. I recently listened spellbound to Anna Scally, head of technology and fintech at KPMG, and a founding member of the Fintech & Payments Association of Ireland, describe how Patrick Collison told her of his idea for Stripe.
The occasion was a panel discussion I was chairing at a fintech conference organised by the Trinity Student Managed Fund. “I got a call from Patrick nine years ago and he said he wanted to make it easy for merchants to do business on the internet,” Scally recalled. “He said there were still too many inefficiencies in payments and he wanted to democratise payments over the internet. Stripe went from that lofty objective to an unbelievable international business that remains very Irish at heart. It is valued at more than $22bn and is also building here in Dublin.”
At the Trinity event, Paul Byrne, CEO of peer-to-peer currency exchange CurrencyFair, said that fintech is more than just the consumer brands such as Revolut, and in fact it is here to stay. “It’s not a buzzword. It is ever-evolving. Think of it as another branch of technology and ultimately another use for improving people’s experience. Today that revolution is in financial services, but tomorrow it will definitely be in healthcare as another environment that needs to be improved.”
An example of how fast fintech companies grow can be seen through regtech player Fenergo. At the same evening event, CTO Niall Twomey recalled how the company started in 2009 with just three people. “We’ve grown to 700 people and it is an Irish-based company with a global footprint. We started after the financial crash because of the need for regulation to stop that happening again. The banks can’t single-handedly solve this regulation challenge so that’s what we do. We can make sure the banks ‘know your customer’ (KYC), that they have anti-money laundering (AML) controls in place and we make sure they stay compliant.”
Peter Oakes, founder and former regulator at Fintech Ireland, and non-executive director of Kilkenny-headquartered TransferMate and Susquehanna International Group (SIG), said it is worth remembering that 80pc of eight-year-olds in the world today have a smart device connected to the internet. This presents a challenge for banks and an opportunity to engage with nimble start-ups. “These eight-year-olds have no patience for apps that don’t work and services that are not delivered. They are the future consumers.”
Oakes said that with the sheer cluster of fintech companies active in Ireland, especially the large number of homegrown ones, Ireland has an opportunity to establish its global fintech brand.
Fenergo’s Twomey agrees. “Ireland is one of the main global hubs for fintech – we just need to get our branding and messaging out. We’re a small environment but how do we really build our brand and make Ireland a great fintech hub?”
That indeed is a trillion-dollar question.
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