Ireland has produced a crop of world class fintech companies over the past decades, a number of which have already achieved unicorn status – defined as privately-owned companies that have achieved a valuation of more than $1 billion. Today there are well over 100 Irish and international firms at various stages of growth and development which can be broadly categorised as operating in the fintech space – the use of technology to deliver or support the delivery of financial services.
That Ireland should prove fertile ground for the development of this new wave of highly innovative companies should come as no real surprise. With eight of the top 10 global software companies having their European headquarters here and more than 250 of the world’s leading financial services firms also based in this country, the conditions for the fusion of finance and technology could hardly be better.
According to assistant professor Richard McGee, academic director of the MSc in financial data science in the UCD School of Business, the nature of the financial services sector here has lent itself to the sector’s development.
“A lot of back-office stuff is done here in the admin and compliance areas,” he says. “That’s where the regtech (regulatory technology) companies come in. There are at least 50 different Irish regtech companies now. There is a lot of institutional knowledge here. A lot of back-office work can be automated and we have people here who understand the work and the technology and how to automate it.”
He points to other reasons for Ireland’s success, including the low rate of corporation tax rate, the R&D tax credit regime, and the intellectual property profits tax incentive scheme. “The incentives for non-domiciled people to relocate here are also important,” he adds.
Richard Morrisey, head of corporate sales with Moneycorp Ireland, agrees. “At the end of the day it’s probably for the same reasons as the multinational companies choose to come here. We also have an abundance of talent. We have lots of people who have come out of banks with experience of financial services. Colm Lyon came from a banking background to found Realex and Fire, for example.”
The support environment for fintechs is also important. “Enterprise Ireland and innovation hubs like NovaUCD provide very good support, and Science Foundation Ireland is funding research in the fintech space,” says McGee. “Success stories like Stripe also motivate a lot of people – they give them the belief that they can succeed.”
The not so small matter of Brexit has also proved to be a boon for the sector here. “If you look at the impact of Brexit on UK payment services companies, for example,” says McGee. “They need to be regulated in Europe or partner with someone who is if they are to passport their services into the EU. Ireland is a strong candidate for that business.”
Moneycorp Ireland has already been a beneficiary of that impact. “We ran Moneycorp Ireland as a branch of Moneycorp UK from 2013 to 2020 when Brexit created a potentially awkward situation,” says Morrissey. “The company needed an entity regulated in EU because it was dealing with a client base across Europe. We got regulated for e-money and Mifid (Markets in Financial Instruments Directive) in 2020 by the Central Bank of Ireland.”
The company could have chosen another EU location but its strong foreign exchange payments business with the SME community here played in Ireland’s favour. “We are the third largest player behind Bank of Ireland and AIB in that space, and provide a range of foreign exchange payments and hedging services to clients. By getting the licence we became the headquarters for Moneycorp’s European business.”
Patrick Garry, co-founder or Loylap, a fast-growing fintech specialising in retailer solutions, puts that success in context. “Ireland is doing well in fintech, but it is not alone in that. The UK, Germany, Spain and Italy are all doing well too. Fintech generally is going through a period of strong growth, particularly in regtech with new regulations coming into force all the time and Covid having accelerated the journey towards cashless economies. Fintech is just where a lot of technology is going right now. Ireland is not necessarily punching above its weight, but it’s certainly above average.”