Fintech has been around for a while but its use has exploded since the pandemic. As everything went online almost overnight, fintech expert and independent non-executive director Peter Oakes explains, the online payment systems required to make this a reality propelled fintech into the mainstream.
Yet Oakes, founder of Fintech Ireland, believes the loss of faith in traditional banking systems that followed the financial crash of 2008 was the original driver of fintech.
“We saw a number of smart people deciding that actually there’s a better way to bank, there’s a better way to do insurance, there’s a better way to do payments, there’s a better way to do savings, and we don’t necessarily need a bank to do all those things,” he says.
In other words, fintech unbundles banking into discrete components of financial services.
RM Block
Oakes says fintech has been driving innovation in banking, helping people think outside the box of the traditional banking model. A key example is Revolut, the global digital banking platform that says it has upwards of two million customers in Ireland. Revolut, Oakes points out, is primarily regulated by the Bank of Lithuania.
“It benefits from this European idea of the financial passport,” he explains. “So, they’ve probably changed the mindset of a lot of people in terms of banking with a local institution.”
Yet he notes that online native banks are still struggling with winning over the confidence of the masses when it comes to having their salaries directly deposited into those accounts. “Now they are thinking of new and innovative ways to attract retail customers to deposit their salary into their accounts because that naturally leads to other offerings such as mortgages, which are quite lucrative for banks.”
Innovation is also on the cusp of transforming how we pay our everyday bills. Oakes says the passing of the EU Markets in Crypto-Assets Regulation (MiCA) has ultimately “legitimised” buying and selling cryptocurrencies through regulated financial providers and exchanges.
“Ireland is home to 12 of these crypto firms. These firms allow someone like me to buy and sell bitcoin and trade other crypto too,” says Oakes. He says many of these firms are entering the area of stablecoins, which allow people to use a private digital currency to settle invoices or bills, something he describes as is particularly cost effective – and efficient – when exchanging currencies.
“I can immediately send my money to that company and they will receive funds instantaneously rather than wait anywhere between four and 10 days for the money to arrive overseas via the traditional banking system.”
When it comes to disruptive technologies, their blistering pace of development typically leaves regulators on the back foot. Ireland was vulnerable in this regard until relatively recently, Oakes says, noting that the Central Bank’s decision to establish an innovation hub whereby it could meaningfully engage with innovative fintech companies has ensured that regulation and supervision have kept pace.
“This has led to Ireland issuing over 80 fintech-regulated licences here in the last 10 years. But more in particular, in the last five or six years there’s been a big ramp-up in the number of regulated fintechs setting up in Ireland,” he says.
Giving “credit to the Central Bank”, he says it now has “probably got one of the largest pipelines of firms seeking authorisation in Ireland” than for many years previously.
“Overseas firms see Ireland as a highly credible jurisdiction – if they get their licence in Ireland, then they can sell their products and services across the EU without having to establish in another member state from a gold standard country. So that’s quite a good coup for Ireland.”
Innovative fintech firms are also being financially supported by the Irish Government as they scale under the Ireland for Finance Strategy, as well as via Enterprise Ireland. Oakes offers the example of Fineos, an Irish fintech that is listed on the Australian stock market.
“They have a strong client base in Australia and Asia and elsewhere,” he says. “So the profits are coming back to Ireland, while being generated outside of Ireland.”
TransferMate, a money remittance business, has an Irish license, but it also has access rights in every EU member state because of the pan-European financial passport.
“It’s also regulated in basically every state in America and has licenses across Asia and in Australia,” Oakes notes. “It’s almost like a bank without being a bank when it comes to the fast remittance of money between customers and their suppliers.”
As the fintech sector continues its exponential growth, Oakes says AI will continue to have a greater influence − for example, by allowing for very small payments to be made in a very cheap fashion.
Irishwoman Susan O’Neill has raised $2 million in pre-seed funding for her San Francisco-based company Paygentic, which provides billings and payments capabilities to AI-native and agentic-driven products. Oakes says this type of technology will be truly transformative.
“What that will do is really open up value transfer and it will drive a whole lot more people working in the gig economy as well.”
