Fintechs call for regulatory ‘streamlining’ in challenging environment

Irish financial technology (fintech) firms have called for regulatory processes to be streamlined to trim costs for firms and for the Government to explore ways to support staffing in the sector in a difficult market.

Financial Services Ireland (FSI), the Ibec lobbying group that represents the sector in Ireland, said in a report on Monday that the Coalition should also look to other countries such as France that have set up dedicated fintech hubs.

Conducted on behalf of FSI, an Amárach survey of fintech companies revealed that talent shortages, regulatory hurdles and funding are considered the three biggest obstacles to growth among firms.

More general issues such as the availability of housing and the cost of doing business were also “prominent among the challenges that were identified, as was the deterioration in the general fundraising environment caused by rising interest rate”, FSI said in its Ireland’s Fintech Future report.

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However, the report also indicates that the sector is primed for expansion over the next three years with 70 per cent of respondents indicating that they plan to increase their headcount. Some 86 per cent of start-ups and 72 per cent of the respondents at large said they also expect turnover to increase as technological solutions become increasingly integrated into mainstream financial services.

With private-sector funding for growth companies, particularly in fintech, drying up as a consequence of rising interest rates, FSI director Patricia Callan said there was scope for the Government to fill the gap.

The Republic’s regulatory environment is “very well regarded” internationally, Ms Callan said, but processes could be streamlined in order to reduce costs for businesses and avoid “without losing any credibility in the process”. Praising the Central Bank for “beefing up” its Innovation Hub – a platform for companies to put queries to the regulator about potentially disruptive technologies – she said the mostly costly outcome for companies in their engagement with regulators is “the slow no”.

In addition to the existing Central Bank forum, the report recommends the establishment of a dedicated hub for fintechs, which would provide office space for growth companies and allow for regular dialogue with regulators and policymakers.

The Coalition should also look to increase the supply of talent, allocating some of the €1.5 billion training fund towards the higher education system.

“The findings of the survey show that the sector is positive about the future,” said Ms Callan. “But it is clear that there are obstacles in place in Ireland, both for developing the next generation of financial services firms, and for longer-established firms who are digitalising their businesses.”

The fintech sector has been one of the fastest growing in Ireland in recent years, with more and more firms setting up offices in Ireland, including the likes of Revolut, at one time Europe’s most valuable start-up. Globally the sector, along with many others, has been hit over the past year as the tightening money supply crimps investment from venture capital firms and other investors. Irish firm Molten Venture slashed its internal Revolut valuation by 40 per cent in June, implying the company is worth about €18 billion, down from its last formal valuation of €30 billion. UK asset manager Schroder cut its own valuation of Revolut to €14 billion in April.