How Fire’s Colm Lyon ignited Europe’s fintech revolution

20 Apr 2018

Fire CEO and Realex founder Colm Lyon. Image: Fire

John Kennedy talks to one of Europe’s original fintech forerunners, Colm Lyon.

Before people talked about fintech in Europe, there was Colm Lyon and the company he founded, Realex Payments. And before people felt the urge to leave jobs for life for the more unsettling world of the entrepreneur, there was also Colm Lyon, CEO and founder of fintech player Fire.

Lyon had a cushy job as head of central IT at Ulster Bank but always felt the entrepreneurial pull.

‘Being free of what you wanted to be free of, setting your own destiny – that’s what being in business is all about’

He also heeded the advice of his next-door neighbour John Teeling, founder and owner of Cooley Distillery, not to attempt to start his own company until he was at least 38.

After 14 years with Ulster Bank, Lyon left to establish Realex to address what he saw as a major gap in the market between banks and internet merchants.

His timing was exemplary. He was literally on the money.

He steadily built the business, winning customers such as Virgin Atlantic, Aer Lingus, Superquinn and Vodafone along the way.

About a decade after starting the company, Realex had cemented its position as one of Europe’s largest and most successful online payments businesses. It was processing in excess of €28bn per annum for 12,500 online retailers.

In 2015, the company was acquired by Global payments in a deal worth €115m.

Lyon will be appearing as the guest of honour for a fireside chat at the next Bank of Ireland and Google for Entrepreneurs-backed Startup Grind in Dublin on Monday (23 April) at Huckletree on Pearse Street.

Burning ambition

Today, Lyon is CEO of Fire, a business-oriented fintech that is enabling bank transfers and other services in sterling and euro – perhaps a prescient move, with Brexit looming.

“Fire was part of Realex but I bought it out 100pc before we sold Realex, so it wasn’t part of the acquisition by Global Payments. It suited both parties, so everybody was happy,” explained Lyon.

I’ve interviewed Lyon many times in the years since he started Realex but this is the first time that we had spoken since the Global Payments acquisition.

Pardon the pun, but he is just as fired up about Fire and has the same characteristic zeal he had at the helm of Realex.

I put it to him that he was doing fintech before the term became a part of tech and start-up slang.

“Looking back, it was evident to me that businesses wanted to sell online and they needed a simple and easy way to do that,” he said.

“At the time, banks also wanted to be able to deal with merchants but not be dealing with the overheads of trying to integrate thousands of retailers.

“So, the idea of creating a gateway that sat between the retailers and the banks just made a lot of sense. I wanted to be that conduit.”

You could consider Fire a similar company, only more akin to actual online banking services, including Mastercard credit and debit cards and other clever services.

“Fire is similar to Realex in some respects, but it is in the clearing space, where providing accounts and debit cards is not quite the same. But it is also addressing a core issue for businesses who need access to business accounts as well as sterling accounts, and don’t want to be dealing with long wait times.

“The last time around, we had a proposition for retailers because they wanted to sell online, and banks who wanted the business – and we solved the problem for both parties.

“This time around, we are focusing directly on businesses who need access to payments services, and in particular work between sterling and euro.

“When we got our first customer at Realex, we had to figure out how they could pay us in sterling rather than euro.”

Lyon explained that the core of Fire is about removing frictions and making things possible for firms trading in euro and sterling. It is fully interoperable with European and UK banking networks.

“We were the first non-bank to join Mastercard directly. There is no bank between us and Mastercard.”

The lack of a legacy banking infrastructure has given Fire the ability to think outside the box, such as create dynamic and flexible debit cards for employees’ expenses, for example.

Underpinning the entire thing is a mobile app that gives business owners complete transparency on expenditure.

“Some use it for managing expenses, while others use it to bolster cross-border trade,” said Lyon.

“We do over €1bn a week in trade between Ireland and the UK and we are keen to foster those trade links.”

The spark

Fire is based in Dublin but it also maintains a sales and development team at the Barclays Rise facility in London.

As Lyon explained, the most pivotal part of any new start-up’s journey is customer validation.

“We have 2,000 businesses live, including a number of corporate customers. The key was to get the validation underway as quickly as possible. Like any start-up, we are facing into the usual scaling challenges, including what features to add, when and how to sell more.

“The big thing that is coming for us is PSD2 and open banking and open payments, and I believe that will change things a lot. The Fire platform is built, it is ready and we are in a position to take advantage of the changes that are imminent.

“Our belief is that platforms like Fire, rather than the big legacy banking systems, are going to be able to take advantage of the new legislation, environment and ecosystem. My core objective has been to engineer us into a position to be in the right place and at the right time to take advantage of these new legislative opportunities.

“Our distinction is that, while we do a lot of things that traditional banks do, we are doing them in a nicer, easier and more accessible, secure, and transparent way using cutting-edge APIs.”

While Lyon is the original of the species when it comes to fintech, he is conservative about the overall prospects of the fintech revolution. Expect carnage.

“There are dozens of challenger banks in the UK and we are seeing more and more people coming into the sector. But there is no way that the market is going to sustain that number of challenger banks. It won’t happen. The next few years will be interesting to watch in terms of who wants to be a lending institution because, traditionally, banks would make money from lending.

“I would be nervous about the companies that appear to be signing up lots of customers, and would have questions over some of their core business models.

“We are a payments institution and we will make our money from processing payments across the accounts we give to our customers – that’s our core focus.”

I asked him about the core lessons he learned along the way, from exiting a bank to successfully exiting the company he founded.

He offered some advice for budding entrepreneurs: “Always try to make sure that you are doing something that is consistent with what you want yourself. Avoid the hype at all costs.

“Those stories that you read about success? They are the exception and, most of the time, what really goes on is hard work – not pretty work, hard work. You will come to realise that it is not about the exit or the thrills; it is about your initial motivation to have the freedom and control over what you wanted to do.

“For me, it was about having the ability to make my own decisions about where I wanted to go and what I wanted to do with my career. Ultimately, getting to run my own business was very rewarding.

“If you are going into it just for the money, it might work, but it only goes that way for a small number of people. For me, as long as it was my own business, I was happy.

“And, across the board, having hundreds of thousands of small companies is not a bad thing. In fact, it could be a good thing and protects everybody in the long run.

“Being free of what you wanted to be free of, setting your own destiny – that’s what being in business is all about.

“The real thrill is when you get that validation; when you’ve actually made something and somebody is willing to pay for it. That’s the best feeling,” Lyon concluded.

“After that, it is all about scaling and putting in the structures and processes to make it cheaper so you can sell it faster and better. That’s the real joy of being in business.”

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years