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• Traditional forms of banking are all now trying to jump into fintech but they've still got problems in their outdated back-office systems.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 

Editor's Note:  Irish readers will recall that many years ago Irish taxpayers could avail of a Special Saving Incentive Account (SSIA).  It was a type of interest-bearing account in Ireland. These accounts were available to open between 1 May 2001 and 30 April 2002, and featured a state-provided top-up of 25% of the sum deposited.  Whereas Individual Savings Accounts are a class of retail investment arrangements available to residents of the United Kingdom. ISAs qualify for a favourable tax status. Payments into the account are made from after-tax income. The account is exempt from income tax and capital gains tax on the investment returns, and no tax is payable on money withdrawn from the scheme either. Cash and a broad range of investments can be held within the arrangement, and there is no restriction on when or how much money can be withdrawn.  Although it is not a pension product, it can be a useful tool for retirement planning.

In this article Jordan Stodart, Co-Founder/CMO, Orca Money bring us up to speed on the UK's Innovative Finance ISA which is dedicated to peer-to-peer lending. Perhaps Ireland, following the past success of the SSIA, could consider a similar regime to the UK ISA regime.

Peer-to-Peer Lending + ISA = match made in heaven? Peer-to-Peer Lending (P2P) is becoming an even more attractive investment option with the introduction of the new Innovative Finance ISA (IFISA). But how will its introduction in April affect the P2P space? Will the investor number spike? How are existing firms gearing up for the change? Why should early adopters take the opportunity to invest? All will be explored. 

"The Innovative Finance ISA dedicated to peer-to-peer lending, is a game changer for millions of Brits who have suffered from poor returns since the financial crash. It signals that P2P lending has become a mainstream way for people to invest for their futures.’" Giles Andrews, Zopa Founder and CEO.

Low interest rates drive alternative investment.  The peer-to-peer lending industry has seen exponential growth in its 10 years. Last year saw a 106% increase in lent funds from Q3 2014 to Q3 2015 (UK P2P market) and with an expected industry value of almost £5bn in 2016 it could be a great opportunity for you to start increasing the returns you make on your capital.

When consultation commenced around the Innovative Finance ISA – also known as ‘Innovative ISA and ‘Peer-to-Peer ISA’ – it was clear change was on the horizon. In Summer 2015 the UK Government announced the inclusion of P2P investments in a new, ISA-wrapper, the IFISA. Here are the key takeaways from this announcement:

• IFISA arrives 6th April 2016
  
• £15,240 yearly allowance
  
• Allowance can be spread between available ISAs
  
• Peer-to-peer lenders can act as ISA Plan Managers without legally owning or co-owning the loans
  
• ISA transfers and withdrawals adapted to fit illiquid nature of P2P investments
  
• Only peer-to-peer lenders can offer Innovative Finance ISAs presently
  

The IFISA is helping position peer-to-peer lending as a viable alternative investment. How can the Innovative Finance ISA stimulate the industry and how will it work for the investor?

With this new tax environment, ISAs could be great for an investor's tax-efficient portfolio. Firstly, from April 6th almost all UK adults will be able to earn £500 or £1,000 interest tax free (depending on their tax bracket) with their personal savings allowance. If this is added to the couple’s allowance of £30,480 which can be held in an ISA, plus a top-up of £10,000 at an average peer-to-peer lending rate of 5%, it looks possible that an investor could achieve returns of over £2,000 per annum through an Innovative Finance ISA.

It’s important to assess the risk involved in a peer-to-peer investment as P2P lending is not covered by the UK's financial compensation scheme and you could lose all your money notwithstanding that these products are regulated by the UK's Financial Conduct Authority. 
Risk of P2P default is the number one concern. Borrowers could default on their loan repayments, and an investor could lose their money. However, P2P platforms implement security measures to mitigate this risk. Some key mitigation procedures are:

• Diversification – capital is split between numerous borrowers, often around 100.
  
• Asset security – some P2P platforms hold borrower’ assets over the loan, which can be sold if the repayments stop, thus paying back the investor.
  
• Provision fund – many P2P platforms hold back funds in a fund which pays out, at the discretion of the Directors typically, when a borrower defaults.
  

The Financial Times's FTAdviser published statistics last year gathered by Consumer Intelligence relating to the introduction of the Innovative Finance ISA.  The findings included:

• 1 in 5 of 1,020 UK adults say they will save in an ISA henceforth.
• 89% say they will seek to take advantage of the changes in ISA regulation. 
• 405,000 new P2P investors expected with introduction IFISA.
  

It is important to research peer-to-peer lending before you commit to a given platform and product. You can  compare UK peer-to-peer platforms and their risk mitigation procedures here. Orca Money has also created a handy guide to P2P lending.  Find out more about the mechanics of the Innovative Finance ISA and how it works here.

Jordan is a FinTech enthusiast and co-founder of UK’s no.1 peer-to-peer lending comparison service, where the everyday person can research, compare and feel empowered to invest and earn more money on their money. [email protected]

31/12/2015: Great to be included at number 56 in the "Fintech 2015: Top 100 Influencers and Brands".  Really happy that we are helping put Ireland on the international fintech scene.

Onalytica, an independent body, were very interested in seeing which fintech professionals and brands were driving engagement within the fintech community.  It analysed over 482,000 tweets containing the word “fintech” and identified the top 100 most influential brands and individuals leading the discussion on Twitter.  Fintech Ireland was ranked number 56 in the Top 100 fintech brands.

A full copy of the report is available here.

"We analyzed Social Media conversations around Fintech together with qualitative research to uncover the most influential brands driving the conversation. Download to see the full analysis and discover who ranks among the top most influential individuals and brands" Onalytica.com

Great article in the Irish Independent (26 July) about Dogpatch Labs [@dogpatchlabs] partnering with Ulster Bank [@UlsterBank] in a project which will see the Ulster Bank Innovations team base itself in the technology start-up hub. The Bank’s Innovations team will form part of the 8,000 square feet expansion of Dogpatch Labs into the vaults of the historic CHQ building in Dublin, Ireland. The Bank’s staff will work side-by-side in open plan office space with ‘some of Ireland's most innovative and potentially lucrative technology start-ups in Dogpatch's open-plan offices’.

The deal will also allow Dogpatch Labs expand significantly, providing new office space, meeting rooms and a dedicated event space into the vaults of the CHQ building. Dogpatch Labs is home to the likes of Irish company Intercom, which raised $23 million in funding earlier this year, and IDA backed Udemy, which raised $65 million of funding in June.

Why is Ulster Bank getting involved?  Well according to Maeve McMahon, director of customer experience and innovation at Ulster Bank, the partnership is "a really exciting and interesting collaboration", and is as much about the bank learning from start-ups that are disrupting the traditional financial services market as it is cornering the potentially lucrative financial technology (FinTech) start-up market.

"There is also an obvious commerciality to this venture for us, and we have a very good high potential start-up package in Ulster Bank that we can make available to these companies. By being based here and working side by side with them we can understand better what they do and can potentially back them as companies with expansion capital", she said.

Patrick Walsh [@pwlsh], co-owner of Dogpatch Labs says that Ulster Bank was the right bank for the co-working space to partner with because it "understood the vision and is open to innovation", but also because the bank is part of the International Bank One Solution (IBOS) group.

"The whole point of FinTech start-ups is to scale outside of Ireland. The ability to plug into an international banking network through RBS in the UK, but also through their IBOS partners like Silicon Valley Bank in the US, is invaluable. We couldn't get with another bank in Ireland", he said.

Hugo Mahony, Business Development lead with Dogpatch, added that in the coming months Ulster Bank will launch "the 'FinTech Fireside Chat Series', featuring some of the leading names in Irish tech today".

Fintech Ireland [@fintechireland / @oakeslaw] meet both Patrick Walsh and Hugo Mahony a little while ago and we have to say how impressed we were with not only their enthusiasm and business acumen but in particular their genuine commitment to fintech and startups.  If you haven’t checked out Dogpatch Labs, do yourself a favour and follow them on twitter and visit the website at http://www.dogpatchlabs.com

http://www.independent.ie/business/technology/news/ulster-bank-and-dogpatch-labs-break-into-vaults-31404001.html

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