Yesterday we published Peter Oakes' presentation on fintech at the Financial Services Ireland event in Dublin.  Mr Oakes' presentation is here.

Earlier today (29 May 2015) the Central Bank published the speech given yesterday by Bernard Sheridan, Director of Consumer Protection at the Central Bank of Ireland.  Click here for the speech.

A couple of points to note, Mr Oakes and Mr Sheridan were on a four person panel together with Colm Lyons (PaywithFire), and hosted by Marc Coleman, Director of Financial Services Ireland.  As the event was a private event we will not disclose the content of discussions but rather point to information in the public domain.  

A few points to note:

• Mr Oakes and Mr Sheridan are former colleagues at the Central Bank of Ireland where Mr Oakes was the Director of Enforcement and Financial Crime and Mr Sheridan is Director of Consumer Protection.  Mr Oakes was a member of the Senior Management (Leadership) Committee and also sat on the Policy and Supervisory Risk Committees of the Central Bank together with being members of other Central Bank fora.  
  
• In an article appearing in the Sunday Business Post on 12 April 2015, Mr Oakes was quoted as saying 

1. 'The perception is that the Central Bank is not a great regulator to deal with from the startup scene, or if you’re moving into the financially regulated space,” said Peter Oakes, who is driving the Fintech Ireland project'.
   
2. 'People feel there’s no clarity around timelines to get regulated. That hurts us in two ways. One, people will drop out and choose another jurisdiction, and two, rumours and stories are going around international financial markets that it’s best to avoid Ireland.'
   
3. 'Every jurisdiction in fintech is going to have its own angle, but unless Ireland is out there telling its story, nobody’s going to know about it, and we’re not going to get the business. That’s the real issue.'
   

• See our previous post here and click here for a copy of the article in the Sunday Business Post (twitter @jackhojo)

• The above points were addressed by the Central Bank in its speech.  Our feedback together with that of others has been heard by the Central Bank and yesterday's statements are very reassuring. If you are interested in the Central Bank's authorisation process and how it relates to Fintech, note the following from the Central Bank:

• "Our authorisation process is subject to on-going review and we have been considering how we can move to a more effective and facilitative approach to progressing applications which meet the authorisation standards.  Feedback received from a number of sources has been useful in helping us review and refine our approach.  We have identified a number of key principles to underpin our authorisation approach and specific areas which we believe will assist us in moving to a speedier, more streamlined and effective authorisation model including:

1. Accessibility – we will be offering potential applicants the option of an initial meeting with us to discuss the application process and key areas that need to be addressed in any formal application. This is designed to enable firms to focus on making their formal application rather than engaging with us on specific details in a pre-application process. We will also continue to deal with questions/queries from applicants during the authorisation process should they arise.
2. Transparency - we will be further streamlining the authorisation process to ensure that all applicants have a better sight and understanding regarding the authorisation process and, importantly, the stage that their application is at and the next steps in progressing the application.
3. Timelines – following the receipt of an application, we will be clearer with applicants on the expected timelines involved in reviewing their application.

• We will continue to review the effectiveness of this approach in order to ensure it is working to achieve all of our objectives."  HTML version of speech here
  

Slides from Peter Oakes' presentation (founder of Fintech Ireland*) at Financial Services Ireland  on 28 May 2015 are available here.  Peter covered topics of:

• What is FinTech
• How big is Fintech
• Recent regulatory developments in Australia, UK and Ireland
• A look at the impact of the Payment Services Directive and the number of e-money and Payment Institutions authorised in Europe 
• The way the Central Bank of Ireland looks at risk through PRISM
• Recent comments by former European Commissioner for Internal Market and Services (Charlie McCreevey) on what the Commission intended when it passed the PSD 

Thanks to the Financial Services Ireland for arranging this great event.   

*Fintech Ireland (CRO 523657) is registered with the Companies Registration Office

www.fintechireland.com

UK's Payment Systems Regulator published its Policy Statement on 25 March 2015 setting out its policy decisions and a package of measures to  enable it to start addressing its objectives. These measures are aimed at ensuring:

• an improved strategy setting process;
• improving governance of payment systems; and  
• access to payment systems is provided without unnecessary barriers or burdens.

This statement also marks the start of an ambitious policy work programme for the PSR including two market reviews, into the ownership and competitiveness of infrastructure provision and into the supply of indirect access to payment systems, and a card payment systems programme of work.

This is further evidence that the UK is on a mission to become a global fintech hub.  We have published the news here because of the direct impact,  such high level UK policies and strategies when supported by all corners of industry, has on competing jurisdictions on Ireland.  See the post below on Ireland's IFS2020 Strategy.

The IFS2020 Strategy for Ireland which covers fintech and payments includes an interesting Action Point which might be easily overlooked.  Under the heading Operational Metrics for Central Bank there appears a less than certain action point stating The Central Bank and Department of Finance will, in accordance with their respective legal roles, review the authorisation service standards reported by the Central Bank in 2015.  See page 28 of the IFS2020 Strategy available here. 

The United Kingdom Financial Conduct Authority publishes metrics on the authorisation of all categories of firms.  With respect to fintech firms, these generally fall under the Payment Services Directive (PSD), the E-Money Directive (EMD) and crowdfunding.  Depending on the specific crowdfunding model, the firm might be regulated under the Markets in Financial Instruments Directive or UK only crowdingfunding regulations.

The idea of metrics for authorisation is a great idea, but it is an idea that should have found light of day a long time ago. However a bigger issue needs to be addressed.  If Ireland is such a pro-business jurisdiction, at the cutting edge of quality financial services, a hotbed of tech savvy human resources and apparently a well functioning bank / other funding community, why do we have such a poor level of firms regulated in the fintech space? A point made by a number of industry experts is (1) Why does Ireland not have any regulated E-Money firms? and (2) a mere 11 regulated Payment Services firms?  The question has to be asked, Why is Ireland so unattractive to these type of fintech firms?  When one looks at Payment Services firms, the picture looks less than favourable in terms of growing these firms indigenously and attracting them to our shores.  Of the 11 regulated firms, 64% (i.e. seven) provide 'money remittance' (which was ably regulated under the former Central Bank Act 1997 regime), leaving only four firms providing what some might say are 'real' payment services firms and one of these firms is the payments firm for Ireland's 380 credit unions.  Ireland's Central Bank is on the record as warning about crowdfunding firms, whereas a more meaningful response would have been to engage the public on what Ireland could do to grow this alternative finance market in the wake of the banking crisis and the widely held belief that Irish banks are not lending to Irish entrepreneurs and small-to-medium size businesses. Furthermore, four of the 11 firms became regulated the day (1 November 2009) the Payment Services Regulations came into effect because they were already in business.  Of the seven that became regulated post November 2009, only two are authorised to provide 'real' payments services (no disrespect intended to money remittance firms!).

However by far the most stark statistic is that the Central Bank last authorised a Payments Services Firm in December 2013. And that was for, you guessed it, money remittance.

No one wants the Central Bank to repeat the mistakes of its past of poor regulatory knowledge, supervision, culture and resources.  However it was not payments firms, e-money firms, crowdfunders or digital currency firms that help cause the almighty crash, it was banks - and in particular just two to three of them.

The Central Bank may no longer have a statutory role to promote Ireland's financial services, but neither does it have the right to overlook the important role it has to play in stimulating business, jobs and the economy. After all, are these not some of the elements that promote its financial stability mandate? 

UK Trade & Investment, in association with AIB, are delighted to invite you to learn more about current FinTech market opportunities in the UK.  Peter Oakes who helped set up Fintech Ireland is a speaker at the event.

To register for this event click here Tuesday March 31, 2015 from 7:30 AM to 10:00 AM BST @ The Gibson Hotel, Point Village, Dublin 1, Ireland

This morning seminar will focus on why the UK is the ideal marketplace for indigenous firms looking to expand their operations internationally.