Fintech Ireland is part of an international fintech network and promotion group which includes Fintech UK and Fintech Oz. The primary activity is Fintech Ireland for the time being. Founded by former Central Bank of Ireland director Peter Oakes in response to difficulties technology firms were experiencing with the previous Central Bank’s licensing process, Fintech Ireland provides guidance and advice to fintech start-ups and established financial institutions which want to enhance their offerings to increasingly tech-savvy customers.


“We run seminars and meet-ups to help cultivate the digital innovation happening in Ireland,” Oakes adds. “Having worked as a central banker and board director of Bank of America’s European payments business, I am very much aware of the impact, challenges and benefits from the cumulative impact of technology, the internet, big data, and future regulation in areas such as cyber security, banking, payments, and MiFID on business and consumers. Importantly, through our network of international angel investors, venture capitalists, private equity funds, innovation hubs and technology accelerators we can help match start-up tech firms with investors.”


"Simply selling a mortgage online or enabling a customer to see their account balance on their smartphone is not fintech. Fintech is about disrupting, through innovation, existing banking, payments, investment, and insurance services. Equally it is about identifying new services"

Looking at future trends in the sector he says that fintech is a broad church and there are many components to it. “It is more than just the marriage of finance and technology,” he says. “Simply selling a mortgage online or enabling a customer to see their account balance on their smartphone is not fintech. Fintech is about disrupting, through innovation, existing banking, payments, investment, and insurance services. Equally it is about identifying new services.”

Looking beyond the standard payments area, which tends to command most attention, he notes some other critical infrastructure changes. “In banking there is the instantaneous opening of retail and business bank accounts delivered by challenger banks, such as the UK’s Monese, Mondo, Atom, and Starling Bank. Further innovation is being driven by new banking platforms such as Cogni in Ireland and Holvi in Sweden which take advantage of recent EU open bank initiatives to bank data and customer geographic locations in order to offer each customer tailored and unique business and personal banking experiences. We are seeing the traditional bank model coming to an end as they morph into utility companies. Although the traditional banking model may come to an end, it is just the start of a new banking service paradigm.”  He also points to the investments and pensions area where companies like Roboadvisers, Nutmeg in the UK, Robin Hood
in the US, and Rubicoin in Ireland are providing a range of services online and through apps. In the loans and
peer-to-peer or crowd-funded personal and business lending space fintech companies think of Funding Circle in the UK, OnDeck in the US, and Grid Finance in Ireland are bringing innovative new services.

The emerging area of insuretech is bringing about some potentially hugely disruptive concepts such as peer-to-peer car, personal or business insurance. “Similar to peer-to-peer lending, peer-to-peer insurance sees a number of policyholders pool together,” Oakes explains. “When the insurable risk happens, the policyholders support each other financially. If there is no claim, the insurance premiums are reduced. Effectively we are seeing all the benefits of the co-operative insurance, or lending, model being accelerated by the efficiencies and speed of the internet and technology. Examples of this include FriendSurance in Germany and Guevara in the UK. There are also a number of innovative insurance people in Ireland looking at entering the market.”

"Technology is critical. Without technology there is no way a central bank or a bank can be confident that they have the sufficient capital required to insulate them from the economic risks they undertake on a daily basis"

He believes regtech, or regulatory technology, will be an area of significant growth. “As more and more regulation and law comes into effect, the organisations subject to those laws such as banks, insurers, investment houses and other financial providers and those that administer the laws and regulations including central banks and regulators will need to adopt technology to analyse the huge amounts of data about the stability of systemically important institutions and important compliance obligations,” he contends. “These processes cannot be performed manually. Technology is critical. Without technology there is no way a central bank or a bank can be confident that they have the sufficient capital required to insulate them from the economic risks they undertake on a daily basis. Technology is being deployed in the fight against financial
crime and financing terrorism. Without technology it would simply be impossible to analyse trading and payments patterns to identify fraud, criminal behaviour, and stifle the flow of money which terrorists use to attack society.

On Monday 25th April 2016 I gave a presentation to the attendees of the Cyber Security Exchange FS.

Click here for the slides. 

Any comments or feedback to [email protected]

We are speaking at many events in Ireland and overseas. And we are contributing to numerous articles on the topics of fintech, regtech, banking, payments, insurance, investment management innovation, marketplaces, e-commerce and regulation.  If you would like to discuss us contributing, please contact us at [email protected].

Peter Oakes of Fintech Ireland. a leading fintech and regtech expert, looks at the recent work of Irish regtech startup Corlytics

A few weeks ago The Financial Times reported that failures in customer reporting have cost the world’s top investment banks $43bn in fines over the past seven years.  This was the single most expensive compliance issue, according to research undertaken by Irish regtech start-up Corlytics.  Corlytics research also found that the main types of failure and wrongdoing resulted in fines totalling $150bn for 10 US and European banks between 2009 and 2015.  Corlytics is, as the name suggests, an analytics firm. 

In addition to the customer reporting compliance failures, other issue that caused significant financial and regulatory issues for large banks included rigging foreign exchange rates, money laundering to product mis-selling to name just a few.

"The seven years of fines have taken a heavy toll on the banks, wiping out the equivalent of a staggering 14 per cent of their equity capital."

The pool of banks covered by Corlytics’ work are Barclays, Bank of America, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley and UBS. The seven years of fines have taken a heavy toll on the banks, wiping out the equivalent of a staggering 14 per cent of their equity capital.  

John Byrne, chief executive of Corlytics, said client reporting failures were the source of substantial fines for banks in a wide variety of cases, including misleading customers about investments and not communicating clearly enough with borrowers. “It can involve any aspect of client disadvantage or loss due to inaccurate or misleading reports or communication,”.

Corlytics’ work shows poor disclosure to clients was a factor in the $25bn of fines paid by US banks in a 2012 settlement for abusive foreclosure practices. The second most expensive issue for the 10 banks was failures in how they sold residential mortgage securities, which resulted in a penalties total of $27.7bn.  The banks meanwhile paid $20.2bn in fines in relation to securitisation failures. “Rate setting” fines came to $14.6bn, partly stemming from banks’ manipulation of foreign exchange and interest rates.

Mr Byrne said that while many banks have “experienced serious issues with regulators, some have not”.
“The data seems to indicate that the less diversified a bank, the lower the regulatory risk,” he added. “This may be because with fewer business lines, [internal] controls can be better understood and implemented.”
The high point for penalties was 2014, when banks paid $56.2bn in fines for compliance issues ranging from foreign exchange and interest rate rigging to flaws in selling mortgage securities. Banks paid fines of $40.2bn in 2013, and $38.2bn in 2012.

Banks’ penalties came to just under $10bn in 2015. However, European banks are braced for substantial fines this year when they find out how much they will pay for mis-selling mortgage bonds.

The fines do not cover most of the £30bn that UK banks paid for mis-selling payment protection insurance. This is because Barclays and HSBC are the only two British companies that rank among the world’s top 10 investment banks, and therefore are included in Corlytics’ work.

Corlytics has assembled a database about banks’ penalties based on disclosures by authorities with powers to levy fines.

The Dublin-based company sells the database to banks looking to pinpoint areas of weakness, and regulators which want to know how their penalties compare to others.

In a wide ranging speech made today by my former co-director Gareth Murphy, Director of Markets at the Central Bank of Ireland, Mr Murphy addressed a number of important issues, especially in the areas of financial innovation, digital currencies, fintech and regtech as he laid out his thoughts on 1) Culture and personal accountability, 2) Technology, 3) IT & Cyber Risk, 4) Disclosure of Investment Fund Fees, 5) Stress Testing of Investment Funds, 5) Data and data-driven supervision and 6) the Current Workload of ESMA's Investment Management Standing Committee (which Mr Murphy Chairs)

Rather than taking up space in this section by repeating the post on LinkedIN, I have included a link to my post here.  Note that my post doesn't intend to look at all points addressed by the Central Bank. Rather, I read through the speech to look for and extract novel and unique remarks on areas dealing with culture, technology and technology led supervision.

https://www.linkedin.com/pulse/supervision-ever-evolving-craft-hard-data-technical-peter-oakes

Founder of Fintech Ireland, Peter Oakes, contributes to Simon Rowe's excellent article on Ireland's booming fintech sector in the Sunday Independent (3101/2016).  The global financial crisis has ushered in a new wave of innovation as banking giants have been forced to rethink business models while tech start-ups reinvent ways to loan cash and transfer money. If Ireland can overcome the damage to its reputation from last week's Oireachtas report, it is uniquely placed to become an international financial technology hub for fintech, writes Simon Rowe of the Sunday Independent.

"Peter Oakes, the founder of Fintech Ireland, an advocacy group for the sector, and a former director of the Central Bank, echoes Watson's blunt assessment.

• Traditional forms of banking are all now trying to jump into fintech but they've still got problems in their outdated back-office systems. They've still got problems in their payments systems. And perhaps they really should be spending their money on fixing these before jumping into new initiatives because those new initiatives are highly IT dependent.
  
• In Ireland, the banks weren't very good at IT. They also weren't very good at making credit risk decisions. There was insufficient expertise of IT at board level and banks' management information systems were inadequate to monitor their risks during the period leading up to the crisis. A big unanswered question is whether this has in fact changed."
  

Peter Oakes - Twitter @oakeslaw : LinkedIn https://ie.linkedin.com/in/peteroakes 
See full article at http://www.independent.ie/business/technology/news/irish-fintech-sector-is-banking-on-boom-34410257.html