Meet the 3rd largest exporter of Financial Services in the EU - Ireland

The Paypers interviewed Michael Concannon, Head of Strategy and Brand Ambassador, at Fintech and Payments Association of Ireland, to learn more about the importance of nurturing startups for economic growth

Did you know that there are almost 250 fintech firms in Ireland and despite COVID-19, levels of investment in the sector have held up? Today we continue our Fintech Series, ‘From helping European local communities to building supper apps’, with a story from Ireland to learn more cool stuff about their fintech ecosystem.

Michael, what is the Fintech and Payments Association of Ireland for those who do not know it yet, and how does your professional background tie into the Association’s goals?

The Fintech and Payments Association of Ireland (FPAI) is a not-for-profit trade association which aims to further the interests of stakeholders in the Irish fintech ecosystem. Formed in 2015, it formally became an affiliate of Banking & Payments Federation Ireland (BPFI) in 2018. BPFI membership is really varied, and includes domestic and international banks, legal and advisory firms, technology firms and of course fintechs at all stages of development. We have also developed an extensive network of partner organisations that we work with such as Enterprise Ireland, the IDA, Academia, and other, like-minded trade associations in Ireland and abroad.

My background is banking, and in particular the sphere of Cash Management (where payments, collections, reconciliations, automation, and IT security all come together). I also represented the ‘voice of the customer’ in several large IT programs such as replacing payment engines and upgrading customer-facing interfaces. In my latter, post-PSD2 years in banking I encountered fintechs and was fascinated by their enthusiasm and can-do attitude.

All the above has given me a deep appreciation and understanding of how technology is transforming financial services. This has played nicely into the primary role of the FPAI which seeks to encourage and nurture the interface between banking and Fintech.

You have recently been part of a podcast that discussed the importance of nurturing startups for economic growth. How can you build and foster an ecosystem that helps startups grow?

Creating a true ecosystem, which serves the needs of all stakeholders, including startups and scaleups, requires support from a variety of entities. In the case of Ireland, startups get excellent assistance from Enterprise Ireland, a semi-state body that provides financial backing and mentoring. At a macro-level, the Irish government is also very supportive of Fintech and has laid out a strategy called ‘IFS2025’ which aims to grow and nurture the entire Financial Services sector, and in particular, fintech.

From the FPAI’s perspective, we run a broad set of activities aimed at helping startups and scaling fintechs. This includes regular showcase events where we get fintechs in front of banks and big technology firms to describe their products and services, using real-life case studies. We also facilitate roundtables, at which banks and fintechs discuss technical and regulatory aspects of topical subjects like Open Banking. It has been fascinating to observe the dynamic between banks and fintechs at these events. Fintechs walk away impressed by the depth of technical and regulatory knowledge that banks have. Banks meanwhile are amazed by how quickly fintechs can get stuff done!

Another important role we play within the ecosystem is representing our members in discussions with regulators and policy makers. In this regard we regularly meet with the Central Bank of Ireland (CBI) (the primary regulator of Financial Services in Ireland) to exchange views and share feedback at industry level. A practical example of the benefit of this relationship saw the publication of a ‘Helpful Hints Guide’ for firms about to or seeking authorisation from the CBI. The guide was based on the CBIs experiences with previous applicant firms and highlighted common errors and mistakes which had caused delays.

FPAI gets super support from Legal and Advisory firms who are members of BPFI. They bring great knowledge and expertise to the ecosystem and have helped run events on subjects such as crypto, outsourcing, AML and ESG, all of keen interest to fintechs.

Narrowing down the discussion to Ireland, what role does fintech play for your country’s economy? Is fintech included in your government’s agenda?

It is estimated that there are almost 250 fintech firms in Ireland and despite COVID-19, levels of investment in the sector have held up. In general terms, fintech is seen as a very positive development in Financial Services in Ireland, providing employment, competition for existing providers, and accelerating the use of new technologies to deliver customer benefits. It is also the case that Irish consumers are well-disposed towards the new players and new technologies, evidenced by the popularity of challenger banks and the move towards contactless payments.

Fintech is very much on the Irish Government’s agenda and indeed it is referenced extensively in IFS2025, the formal strategy to grow the Financial Services sector. The plan is somewhat unique in so far as many of the actions are taken on by industry. For example, one action owned by FPAI relates to Technology in Financial Services and keeping the Government up to date on latest developments. To achieve this, we will pull cross-industry working groups together to produce position papers and if possible, some proofs of concept to help illustrate business cases.

Government is also helping fund a major development in the centre of Dublin, which will see Academia, Technology firms, Financial Services providers and startups come together to create a world-class innovation district.

According to many, Ireland is the number 1 destination for US tech firms. What do you think these firms do better than fintechs? What can fintechs teach large financial corporations?

The big US tech firms have many advantages, not least their customer reach, depth of technical knowledge and extensive resources to enable research and development. Their expertise with data, and an ability to understand and commercialise its potential also provides huge advantage. The big US techs have also enjoyed success in infrastructure and lead the way in cloud services, data analytics and Artificial Intelligence.

Fintechs of course will always be about speed and nimbleness and can trump bigger firms when it comes to developing imaginative solutions to problems. It is these very differences that can provide potential for collaboration, when both parties recognise each other’s strengths. In fact, we recently conducted a survey of the retail banks in Irelandand were pleasantly surprised at the level of collaboration with fintechs. In many cases banks lauded the ability of fintechs to develop solutions far quicker than they could ever do. Fintechs similarly recognised the fact that banks have large customer bases, have deep knowledge of regulations and can be a worthwhile and lucrative partner.

What are the top 5 fintechs to watch in Ireland? What do they have in common?

A few Irish Fintechs that ‘hit the headlines’ recently include regtech firm Fernego, which became a ‘unicorn’ following acquisition earlier this year. Another long-established company is Fexco (which has been around for a lot longer than the term Fintech existed!). It opened a fantastic new Research, Development and Innovation Hub in Kerry which will help nurture startups and scale ups.

A very recent and interesting development saw CapitalFlow, a technology-led non-bank lender, being acquired by another fintech Bunq, which has a banking licence out of Holland.

A few smaller but no less interesting fintechs include Circit, an audit confirmation platform which had a recent successful fund raise which will accelerate its international expansion and create 20 new jobs.

Lastly, Think Evolve Solve, which operates in the sphere of data analysis, expanded its product range to help Financial Services companies meet their obligations under burgeoning Environment, Social and Governance regulations. This is an area we see becoming more and more important over the next few years.

All the firms mentioned are completely different in terms of what they do and where they operate in the financial services sector. However, having met each of them many times, I can say they all share the same passion, energy, and ambition to succeed in what they do!

How attractive is Ireland for fintechs? What makes your country a great financial hub for fintechs?

Ireland has several attractive benefits for fintechs. Not least the talent pool we have, which is young, highly educated, and flexible. Of course, already having significant Technology and Financial Services sectors is an ideal starting point (Ireland is home to 20 of the top 25 Financial Services in the world and has almost 40,000 people working in ICT).

Ireland is also well positioned as a ‘launchpad’ for export to Europe, being the only English-speaking, Euro-zone member of the EU. Our regulator, the CBI is seen as credible and very professional to deal with and of course firms regulated by it can freely passport services across the EU.

Add in a vibrant entrepreneurial culture, along with direct support available from the IDA, Enterprise Ireland, and others, it is perhaps no surprise that Ireland is the 3rd largest exporter of Financial Services in the EU.

Not to miss, are also contributions from fintech associations from Romania, Bulgaria, Spain, and soon to come the Netherlands, Germany, and the UK.

About Michael Concannon

Michael has worked in financial services for over 30 years. He holds a degree in Financial Services from UCD and is a Licentiate of the Institute of Bankers. Most recently he joined the Fintech and Payments Association of Ireland (FPAI) as Head of Strategy and Development. The FPAI aims to bring banking and Fintechs together for common good. Michael remains passionate about how Fintech is a positive force in financial services and can help bring tangible benefits to consumers and society at large.