It doesn’t take an expert to see that the financial world is experiencing major change. According to PWC’s Global Fintech Report 2017, 80% of senior financial service experts surveyed are concerned that they are losing revenue to innovators. Despite this concern, 82% of financial service incumbents expect to increase fintech partnerships in the next three to five years – a welcome figure for those fintech laboring to bring new ideas to the existing market leaders.
While the US still leads globally in terms of fintech investment (which is heavily skewed toward the US East and West coasts), there are very interesting things happening globally. With funding in Europe growing over 120% year-over-year, and markets like Africa, India, and parts of Asia displaying unique and innovative new ways of solving challenges – major global change is indeed happening.
Although it’s impressive seeing 35 rounds of $100 million (and over) being invested into established fintech companies in the US, cutting-edge innovation does not always require this type of investment. Sometimes alternative solutions driven by necessity (rather than VC demanded ROI) and fundamental situational challenges can yield the most significant step changes in progress.
Shifting centers of finance
There are great stories coming from other hubs within the US – cities like Kansas, Minneapolis, Indianapolis, Columbus, Des Moines and Grand Rapids are posting growth figures which cannot be ignored. As these locations thrive, traditional magnets for talent and growth like New York City, San Francisco, Boston, Los Angles have displayed lower growth figures (less than 1%). These “flyover states” that Steve Case refers to as “The Rise of the Rest” are offering new opportunity and demonstrating the growth to back it up.
A group of companies who are also taking advantage of the upside these markets provide are Irish companies. Support in part by Enterprise Ireland, the national export agency, companies like Id-Pal and WeSavvy have been quick to leverage the opportunity presented by the Midwest and focus on the opportunities that exist in these markets.
Ireland’s unique ecosystem has led to the development of a world-class fintech sector. Home to one of the most important financial services centers in the EU and one of the world’s largest concentrations of technology companies – Ireland combines the technical and financial expertise that global fintech buyers seek.
Over 40% of global hedge fund assets are serviced in Ireland. This resulting regulatory expertise is leveraged by Irish regtech companies to help leading funds, banks and insurance companies deal efficiently with compliance, while also making better, data-driven management decisions.
An established sector of payments technology companies has a strong track record of helping major banks and marketplaces to respond to rapid digitization and changing consumer demand. Ireland’s committed Eurozone membership, extensive talent pool, and dynamic innovation ecosystem reinforce its position as one of the world’s emerging fintech hubs.
In Illinois alone, there are currently 31 Enterprise Ireland supported companies employing over 5,000 people. An example is Id-Pal who in late 2017, successfully completed the Fintech71 accelerator in Ohio and are reaping the benefits of this growth. Having taken investment, Id-Pal CEO James O’Toole cemented partnerships with the likes of Corporate One, who saw great value in their digital identity product, with plenty more positive announcement expected in the coming months.
Another Enterprise Ireland company, AID:Tech is using their blockchain-based technology to solve challenges in areas as diverse as flood-ravaged US states to refugees in Lebanon. This application of cutting-edge technology, enabling commerce in the most challenging of circumstances and locations, demonstrates how fintechs are leading and driving change globally and how companies from anywhere, of any size, can be the vanguard.
Advancing the fintech model
What makes a small country like Ireland, with a population of just 4.5 million, such a fertile seedbed for fintech? It can be attributed to a unique set of fruitful circumstances. Firstly, Ireland’s fintech sector benefits from an exceptionally collaborative culture. Unusually for any entrepreneurial ecosystem, this collaborative approach includes significant government and state agency support, with fintech treated as a national priority.
Ireland also benefits from an exceptional selection of international players. It is home to the operations of nine of the world’s top 10 technology companies, including Facebook, Google, and Amazon. That’s the ‘tech’ side. Ireland is also home to some of the biggest names in global financial services, from Bank of America Merill Lynch, to Barclays and Sumitomo Mitsui. Ireland is the fourth-largest exporter of financial services in the world. That’s the ‘fin’ side.
While Ireland hosts all of these international tech and financial services companies, none of them competes with each other for customers in Ireland, allowing for extraordinary levels of collaboration. It also allows Irish fintechs an unrivaled ability to secure expertise. Many of Ireland’s fintech and regtech founders know first-hand the pinch points of the sector, having held senior positions.
There are many more ways that the global fintech market is shifting, but that’s the importance of it. The time is now to see changes through and look towards innovation to cement the opportunities in the space. Each sector within the market is doing something unique and fascinating and will only lead the world of fintech further in benefiting many.