Ireland has witnessed remarkable growth in its FinTech sector in recent years, establishing itself as a hub for global technology and financial services. While the industry faces challenges posed by inflation and high-interest rates worldwide, there are still abundant opportunities for disruptors in this ever-changing market.
Ian Nelson, Head of Financial Services & Regulatory, Owen Lewis, Head of Management Consulting and Head of Banking and Capital Markets and Anna Scally, Head of Technology and Media in KPMG, shed light on the flourishing FinTech landscape in Ireland and its significance within the wider financial services sector.
The FinTech space in Ireland is currently flourishing with a huge array of FinTech new entrants and further developed existing companies, notes KPMG’s Head of Financial Services Ian Nelson.
The importance of FinTech to Ireland
“The quality and depth of the FinTechs produced and fostered in Ireland is extremely strong. One area for potential additional investment in Ireland would be migration of a better sandbox environment for the ability for cross-pollination of FinTechs in a safe space”, says Ian.
FinTech is of huge importance to the wider financial services sector both in Ireland and globally. Ireland has a significant FinTech opportunity, being both a centre for global tech and financial services.
The payments sector in particular, which currently dominates Irish FinTech, is having a significant impact on consumers in Ireland. “Global investors still show a high level of interest in this area despite economic uncertainty, demonstrating just how much attention, innovation and collaboration is occurring in the sector” says Anna.
"The expansion of existing franchises across FinTech from AI to the growth of the payments and digital assets sectors."
Head of Financial Services & Regulatory
Disrupting payments - rise of the neobanks
Neobanks are becoming an increasingly popular rival to traditional banks in Ireland, which is not only affecting consumer behaviour but also causing traditional financial institutions to up their game technology-wise.
KPMG’s Head of Banking & Capital Markets Owen Lewis agrees with this, noting “The neobanks are quickly becoming, or already have become, real competitors to the traditional financial markets. The customer and user experience, and in some cases the emergence of more attractive pricing and rates are predominantly the main attractions. They are particularly of interest to the younger demographics within the banking communities.”
However, he notes that the established banking players have been fighting back against their new competitors. “The established players are evolving very quickly to revise their digital strategies in order to mirror some of the customer and user experience that is so heavily welcomed by a number of the neobanks. In many cases, some of the established players are looking to co-market or co-produce financial products with the neobanks in the forms of Partnerships or otherwise and the use of smart technologies including AI and easy-to-use apps are becoming increasingly of interest” says Owen.
“Whilst neobanks have taken the mobile banking industry by storm, increasingly we are seeing traditional banks invest much more in customer experience and placing customer value and ESG at the core of their purpose. Those that can muster the true power of their organisations through agility, customer-obsessed strategy and technology partnerships can and will retain the trust of their customers. Neobank tie-ups with traditional banks and big tech firms offering full-scale banking capabilities are also likely to be a force to be reckoned with in the future”, he continues.
How RegTech will continue to grow
Aside from payments, another area that has continued to grow is RegTech. Owen Lewis observes that despite the global tech slowdown, RegTech is likely to continue to thrive as financial services businesses seek solutions to address the changing regulatory environment. Regulatory oversight is becoming increasingly data-driven and this means that regulated financial services entities are under more pressure with more detailed and more frequent data requests. Regtech is helping these institutions meet their regulatory expectations in a timely and cost-effective manner”.
“Ireland boasts a unique infrastructure and well-established financial and technology hub with, for example, over 40% of global hedge fund assets serviced in Ireland. It also has a talent pool for RegTech, sourced from excellent academic institutions, global tech giants and a vibrant financial services sector.
So what needs to be done at a national level to ensure its continued success? Owen notes “the continued growth of RegTech will be heavily dependent on the ability of the technology to plug directly into the regulatory entity systems and data basis and with an ongoing reduction in the manual or human overlay that is required to operationalise the technology. Also, continued complexity in regulatory obligations will be a help.”
"FinTech allows financial services to better deal with regulation, cybersecurity concerns, manage wealth and investments and much more"
Head of Media & Technology
How FinTechs are handling increased regulation
Ian Nelson notes that there is ‘clearly a desire’ from the broader investor and customer communities for more regulation of FinTechs to offer that further degree of security. However, he notes that this is a ‘delicate balance’ that must allow FinTech’s innovative spirit not to be diminished while at the same time protecting investors and customers.
“The regulation in the near term will likely be quite heavily focused on anti-money laundering (AML), and also crypto/digital assets, noting that there are emerging technologies in his context that are still relatively new and unknown to the regulatory environment as such will require further education and understanding”, Ian continues.
What can be done to continue to support Irish FinTech?
Anna Scally notes that “Ireland’s favourable corporate tax regime, educated workforce and strong and supportive business community all combine to create a favourable environment for FinTech to thrive. Policymakers, government bodies and regulators should continue to monitor Ireland’s competitiveness relative to other jurisdictions and continue to fine-tune and constantly improve.”
Anna acknowledges the recent FinTech-focused university programmes have been a “great addition to our existing infrastructure supporting FinTech. It’s important that we continue to have strong representation for the industry so it can continue to innovate and evolve”.
Get in touch
FinTech continues to disrupt financial services in a highly competitive arena.
If you have any queries on how we can help you develop your business or deal with the challenges please get in touch with Ian Nelson, Owen Lewis or Anna Scally.
Contact our team
Partner, Head of Financial Services & Regulatory
KPMG in Ireland
Head of Management Consulting and Head of Banking and Capital Markets
KPMG in Ireland
Partner, Head of Technology and Media
KPMG in Ireland