Following a post on Linkedin last week, we have been asked about other interviews conducted by USA Today with interviewees. 

Being respectful of USA Today's copyright, we have only included a limited selection of articles, interviews and links below. Click on the images below to read in a larger format. 

The publication was released on Wednesday 28th June 2023.

Full interview by USA Today with Brian Fahey of MyComplianceOffice (MCO) online.  MCO appears on both the Fintech Ireland Map and the RegTech Ireland Map.

• Interview with Aidan Finn, CEO of Binarii Labs, Ireland
• Interview with Eoin Hinchy, Co-Founder and CEO, Tines

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Evaluating Ireland as the overseas location for your Fintech business
Peter O'Halloran, Fintech Ireland Collaborator, @p_ohalloran 

Choosing a location of strategic importance, whether a headquarters or a regional office for your Fintech business is a fundamental decision and must be taken with the benefit of real insight.  There are a number of requirements which are of key importance to consider.  These include the availability of a skilled workforce, market access, a stable regulatory environment and a functioning ecosystem.

Ireland's ability to meet these requirements is underpinned by membership of the European Union, the Central Bank Reform Act of 2010 (which created a new single body called the Central Bank of Ireland responsible for both central banking and financial regulation) and by the scale of indigenous success which is evidenced in the Fintech 20 Ireland longlist (1).

It is therefore extremely encouraging for a Fintech business in start-up or expansion phase to find a country which has these fundamentals in place and in addition has a political administration with a stated objective to actively lead growth in that industry.  In March 2015, the Irish Government released a strategy for Ireland’s International Financial Services sector for 2015 to 2020, IFS2020.  The vision outlined in IFS2020 is for "Ireland to be the recognised global location of choice for specialist international financial services, building on our strengths in talent, technology, innovation and excellent client service, while focussing on capturing new opportunities in a changing marketplace and embracing the highest standards of governance" (2).  5 strategic priorities are set out in IFS2020 and one of these focuses on Fintech and is as follows: "Drive Research, Innovation & Entrepreneurship in the IFS sector, with a particular focus on financial technology & governance, risk & compliance".   Furthermore, there is real activity in this space in Ireland, with $631 million invested in Fintech in 2015 which represented 22% of the $2.897 billion investment in Fintech across Europe in 2015(3).  

How we can help
At Fintech Ireland our objective is to advance Ireland's unique ability and leverage its capacity, to become and remain a global centre for Fintech and we can help you make an informed decision by bringing the ecosystem to life.  We host seminars where we invite members of the Irish Fintech ecosystem to share their experiences and learnings with you at DogPatch Labs, Ireland's leading co-working space for scaling technology start-ups and the incubator for the Enterprise Ireland Fintech fund.  Through this collaborative interaction, with oversight from the Fintech Ireland team, companies gain a real understanding of how the ecosystem works and gather invaluable network contacts which can be drawn upon into the future.  Fintech Ireland can guide you (free of charge) in reaching your decision and help maximise your potential for long-term success.  How you decide execute is up to you - i.e. whether you do the leg work yourself or need a professional adviser.  If the latter, we know a lot of good people locally.

Multinational Fintech presence in Ireland
Some leading multinational corporations have established Fintech Innovation labs in Ireland in recent years such as Accenture, Citibank, Liberty, MasterCard and Zurich.  There are also numerous global Fintech companies who have established and strengthened their presence in Ireland over the past few years such as Elavon, First Data, Global Payments, PayPal, Stripe, Vesta and YapStone.  This is a clear indication that the ecosystem is functioning and that the talent pool and business environment are conducive to success.

Indigenous Fintech success in Ireland
There are numerous successful Fintech companies which were founded in Ireland and have remained indigenous.  A selection of these include Currency Fair, Ding, Fexco, Fineos, Orca Money and Sysnet Global Solutions.  These companies have all scaled globally whilst continuing to invest in research and development in Ireland.  

Access to investment
The availability of investment for Fintech in Ireland is growing.  In Ireland, there are no Venture Capital firms that focus exclusively on Fintech but there are quite a number which invest in in the space and this is set to grow given the success of companies in the sector and the overall investment in Fintech in Ireland.  A selection of Venture Capital firms in Ireland which focus on Fintech Investment include ACT Venture Capital Limited, Atlantic Bridge, Enterprise Equity Venture Capital, Frontline Ventures, MML Growth Capital, NDRC and Pentech Ventures.  In May 2016, Enterprise Ireland announced a €500,000 fund for Fintech Start-ups. Successful applicants can be awarded up to €50,000 each in equity support and will also get membership to Dogpatch Labs in the International Financial Services Centre (IFSC) and access to the Ulster Bank Innovation Solutions team and industry  masterclasses.  The fund which was setup as a result of IFS2020 was launched by the Minister for Jobs, Enterprise and Innovation Mary Mitchell O’Connor who commented that “Ireland is recognised as a key hub for Fintech innovation and this new fund will make a real contribution to supporting more start-ups and ultimately more jobs in Ireland”.

Reference
Fintech Ireland has held a number of these events in the past and one of the participants, Credit Agricole, kindly provided a reference: "Back to France, after a great stay in Dublin, full of amazing meetings, I would like to thank you for the nice moment you gave to the Credit Agricole delegation.  The participants mentioned the interest in your speeches and the passion transmitted.  You contributed to the success and satisfaction of this learning expedition", Sylvain Potier, Chargé D’Affaires, Banking, Scoop. [NB: Neither Peter Oakes, Peter O'Halloran, Fintech Ireland nor any fintech company we showcased at the Credit Agricole event  received any fee or other consideration for our work on the day!] 

Find out more
To understand what Fintech Ireland can do for your business, please visit www.fintechireland.com  and get in touch.  Sign-up to the free Newsletter at http://www.fintechireland.com/get-involved.html 

(1). Irishtechnews.net - Fintech 20 Ireland
(2). IFS2020 - A strategy for Ireland's International Financial Services Sector 2015-2020.
(3). Accenture.com - Global Fintech Investment Growth Continues in 2016 Driven by Europe and Asia.

Get in contact with the author here Peter O'Halloran, Fintech Ireland Collaborator, @p_ohalloran  

Yesterday (13 September), the Central Bank issued through its Policy & Risk Directorate, a Cross Industry Guidance in respect of Information Technology and Cybersecurity Risks.  

The Directorate falls under the leadership of Gerry Cross.  A short video about the Central Bank’s thinking on the topic was released in conjunction with the Guidance – see You Tube channel. While its great to see the Central Bank embrace the use of social media, it seems to have a long way to go to have this recognised - at the end of the day on 14 September there had been only 131 views of the video.  That is quite remarkable given that the Central Bank regulates about 10,000 financial service providers and funds in Ireland and protects directly and indirectly a population of 4.8million. 

The Central Bank’s concerns are being driven by the potential impact of inadequate cybersecurity controls on the firms themselves, their customers and the risks for financial stability.

Given that Information technology is now at the heart of the supply of financial services and that the incidence of cyber-attacks and business interruptions is on the increase, the Central Bank is saying that firms should assume that they will be successfully targeted. Its view is that the security and resilience of IT systems, their governance and management must improve to reflect this reality.


Summary of Central Bank inspection findings:

• Alignment between firms’ IT strategy and the overall business strategy is weak. IT capabilities are not matched to the business ambitions.
  
• Firms are not taking a holistic view of IT risks across the business, which results in poor identification, monitoring and mitigation of IT risks.
  
• Shortcomings in IT risk assessment and identification with many firms not maintaining comprehensive IT risk registers and risk identification being backward rather than forward looking.
  
• Older technology supporting key business operations and requiring significant resources and/or investment to manage associated risks.
  
• Non-existent or inadequate data classification frameworks and policies.
  
• Staff not sufficiently trained on cybersecurity risks.
  
• Ineffective firewall management/inadequate intrusion detection processes with weak IT security monitoring.
  
• Deficiencies in governance of IT related outsourcing including a lack of thorough due diligence on prospective service providers, poorly documented/constructed outsourcing agreements and inadequate monitoring of service delivery.
  
• Inadequate and untested disaster recovery and business continuity plans.
  

Expectations of the Regulator

The Central Bank expects that:

• Boards and Senior Management of regulated firms fully recognise their responsibilities for these issues and put them among their top priorities.
• Firms must robustly address key issues such as alignment of IT and business strategy, outsourcing risk, change management, cybersecurity, incident response, disaster recovery and business continuity. 
• Firms make sure that they understand these risks and that they are managed effectively. 
  

The Central Bank's supervisory engagement will reflect the new Guidance when it assess firms.

Director of Policy & Risk, Gerry Cross, said: “Developments in technology have fundamentally changed business processes and models in financial firms.  These advancements have resulted in benefits for firms and their customers.  However, they also bring significant risks as firms become increasingly interconnected and more reliant on complex IT systems, including outsourcing service providers.”  

“The Central Bank is demanding increased effectiveness in this area.  We are undertaking considerable work to require improved IT risk management and cyber resilience across regulated firms. This includes enhanced supervisory capabilities and increased focus on these risk areas."

So what’s in the Guidance? 

Here’s the table of contents:

• Executive Summary
  
• Purpose
  
• Background
  
• Supervisory Issues Identified To Date.
  
• Next Steps.
  

1. GOVERNANCE

• Board of Directors and Senior Management Oversight of IT and Cybersecurity Risks 
  
• IT Specific Governance.

2. RISK MANAGEMENT 

• IT Risk Management Framework 
  
• IT Disaster Recovery and Business Continuity Planning 
  
• IT Change Management
  

3. CYBERSECURITY

4. OUTSOURCING OF IT SYSTEMS AND SERVICES 

• Appendix 1: Glossary 
• Appendix 2: Key International Guidance for Firms
  

If you need to know more or wish to discuss, please contact Peter Oakes at hello@fintechireland.com / +353872731434.  Peter Oakes is a board director of regulated firms which too must implement this Guidance, he is a former Director of Enforcement at the Central Bank and works across cross-industry in financial services in London and Dublin. 

We are pleased to announce our upcoming event to take place at StartPlanet NI, 112-114 Donegall Street, Belfast BT1 2GX, Northern Ireland on Tuesday 27th September kicking off at 600pm (registration from 530pm) to 800pm.  We will be discussing Northern Ireland’s Fintech Scene and its Challenges and Opportunities Post Brexit and shinning a bright light on Northern Ireland’s burgeoning fintech industry and the innovators helping to drive Northern Ireland’s continuing success.

Spoiler alert, if you were hoping for an announcement of an Irish ‘sandbox’ to join the UK FCA and the Aussie ASIC sandboxes in yesterday's (05 May 2016) fintech speech by the Central Bank, you’ll be disappointed.  

The word ‘sandbox’ is like the word ‘sex’; if you put it in the heading of a fintech article, you're sure to get attention.

There is no indication that the Irish Central Bank is thinking of a sandbox or an innovation hub from today’s speech by Bernard Sheridan (Central Bank Director of Consumer Protection).  However nothing in the speech reads to me that the Central Bank will not go down that path.  The tone of the speech is very open and cautious, leaving the Central Bank room to manoeuvre (or pivot as we say in industry) as it responds to the challenges of fintech and, in the case of this speech, consumer protection risk.  We might expect a prudential driven fintech speech in the future as the areas of financial stability and market conduct area the  focal point of other Directors at the Central Bank.  

At a speech given at the Financial Services Innovation Centre in the Cork yesterday, the senior central banker commenced by saying he ‘was struck by the growing and significant level of interest there is in fintech developments across a wide variety of sources including international regulatory bodies’ and it being ‘a clear sign of things to come’ for regulated and non-regulated fintech firms.  Reference was made to a number of Mr Sheridan’s international peers, including;

• Mark Carney, Chair of the Financial Stability Board: global regulators are evaluating potential stability implications that emerging financial technology poses to the global financial system including “systemic implications of financial technology innovations and the systemic risks that may arise from operational disruptions”.
• European Commission: “the retail financial services sector is experiencing significant change as it is affected by digitalisation. New business models are emerging: online-only providers and technology companies are entering the market, offering services (within Member States and sometimes cross-border) including electronic money transfers, intermediation in online payments, financial data aggregation, peer-to-peer funding and price comparison”.
• Steven Maijoor, Head of EIOPA: “financial innovation is important and, at its best, contributes to economic growth. However, this can only be achieved and sustained where consumers have confidence in such innovations. Our role as European Supervisory Authorities is to monitor new financial activities and to take action where appropriate.”
  

Returning to Ireland, the regulator noted that its strategic plan has identified the increased risks arising from technological developments and the increased reliance on information technology by regulated firms, their customers and suppliers. He also reminded that cyber risk is a key emerging threat and that the regulator’s Consumer Protection Outlook Report highlighted financial innovations as a key consumer risk - “[t]he consumer benefits of accessibility and convenience must be matched by service reliability, safety and security, and transparency of cost of services”.

While I agree that the issue of financial stability risk arising through innovative financial services is important, this isn’t something new.  Rather it seems to me that regulators, even if they considered this to be an issue previously, may not have had the confidence to express their concerns until recently.  It feels like regulators have been driven out of their comfort zone and forced to confront the rapid (re)evolution in industries which they traditionally pondered about for years, if not decades, before setting out their prudential, consumer and conduct risk concerns.  While it is a fair observation to note that “Fintech is transcending traditional boundaries and borders, not just physical but also regulatory as it blurs the lines between regulated and unregulated activities”, this is nothing new.  The same can be said of banking and investment house conglomerates which run empires of regulated and unregulated firms, to which the same tests are applicable as to whether they are regulated or not.  A significant problem in the world of fintech are the inconsistent interpretations across the EU.  For example, peer-to-peer lending is considered to fall under the Payment Services Directive in Germany and Italy, but the same activity in Ireland is not.  This has nothing to do with the fact that the activity is provided through fintech or not.

The regulator goes on to note that “As new technologies change the everyday provision and delivery of financial services for consumers and firms, it becomes more challenging for regulators to monitor what is going on as the regulatory rulebooks and supervisory tools struggle to keep pace with developments.” Quite frankly, I don’t understand why it becomes more challenging for regulators unless they remain static and continue with outdated and backward looking supervisory systems instead of real-time and data analytic supervisory systems.  The information which they need to keep abreast of is rapidly moving to digital format.  They have a number of options here: (1) insist on being provided access to this data direct, which is what fintech firm Uphold Inc voluntarily does, by providing real time transaction data to the regulators; (2) ramp up their own resources, i.e. technology, understanding of data analytics, AI, staff and education; and (3) try to stop the advancement so that it remains at a level at which regulators are capable of supervising - but good luck with regulating the internet!

Consumer protection and the Central Bank
As we know, the Central Bank has a statutory objective of effective regulation of financial service providers and markets, while ensuring that the best interests of consumers are protected. And it is fair for the regulator to let us know its thinking that the disruptive impact of financial innovation is impacting on its risk priorities and the way it does its work. The regulator noted that “[f]intech certainly has the potential to bring many benefits for firms and consumers and the framework should protect the consumer’s best interest and enable the management of additional and new risks by firms while not stifling innovation or damaging consumers’ trust and confidence in financial services”.  This sounds impressive until one asks exactly what are the precise ‘risks’ which are of concern to the local and overseas regulators? Saying general that there are risks to financial stability and consumer protection simply because change is afoot does not help inform the debate.

In the eyes of the Irish regulator a few of the areas where fintech and innovation are impacting on its consumer protection work include: (1) monitoring of consumer risks; (2) authorisation process for new firms; (3) new product development; and (4) how we are changing our approach to assessing consumer risks in firms. Noting that point 4 mitigates point 1, there are really only 3 areas here.

1. Monitoring of emerging risks
Under this heading the regulator noted that the findings from its consumer focus groups included people being “time poor”, people wanting more convenient and less time consuming complaints processes, including online channels for formal complaints. I get this point, but I am at a loss as to why this “presents a real challenge as to how innovation can be utilised better to marry the two consumer needs i.e. having a convenient and easy to use complaints process while at the same time enabling interaction with an experienced member of staff to resolve complaints in a fair, timely and transparent way”.  Surely the advent of online and ‘direct to supplier’ chat support forums on many of today’s websites is the starting point.  This is not an issue about the channels available to consumers, but rather the quality of the interaction and therefore the resolution of a complaint?  

I liked the next part of the speech.  I think it was meant to provide comfort, but will probably spook those who feel that we live in an Orwellian society – “The Central Bank also undertakes regular social media monitoring and gathers intelligence from platforms such as social media sites, public discussion fora and media sources in order to gain an insight into and keep abreast of current issues being raised by consumers”.  One suspects that monitoring might also focus on the behaviour of regulated firms in cyber space too.

We learn in the speech that the European Supervisory Authorities (“ESAs”) accept that increased automation of advice to consumers provides potential benefits, such as wider access, lower cost and more consistent consumer experience.  And we also learn that the ESAs are concerned about potential risks, e.g. consumers’ understanding of the nature of the service, limitations or errors in the tools and/or algorithms used. The ESAs are now considering what specific regulatory or supervisory actions should be taken to mitigate consumer risk in automated advice.

2. Authorisation Process
There is nothing new under this heading.  We covered this area when the changes were announced.  In fact, these changes we announced following our engagement with the regulator back in 2015.  See our April 2015 update here and our May update here. Suffice to say that the regulator repeated its adoption of the three key principles: accessibility; transparency; and timeliness.  The Central Bank reminded that its role is not to act as advisers to potential applicants but rather to provide clarity and certainty by responding to applicants in an open and facilitative way.

3. New Product Development
From 2017 new guidelines will be in place for banks and payment institutions, which will be followed by other sectors over time.  These guidelines will be a key part of the overall consumer protection framework. Product oversight and governance arrangements are to be an integral part of the firm’s governance, risk management and internal control framework requiring firms, amongst other things, to identify the target market, test products before launch, monitor how the product is performing and take remedial action where problems arise. Product testing will be required to enable the firm to “assess how the product would affect its consumers under a wide range of scenarios, including stressed scenarios”.  Product monitoring will be required on an on-going basis.

4. Assessing Consumer Protection Risks
Under the last heading the Central Bank announced that it is developing its Consumer Protection Risk Assessment supervisory model which will assess how firms are utilising technology to support their consumer risk management including:

• how systems are used to alert firms to emerging and existing consumer risks;
• how firms consider consumer risk management and reporting when developing new systems;
• the maturity of firms’ analytics techniques in terms of identifying and escalating emerging and crystallised consumer risks.

The regulator noted that technological innovation can enable firms to deliver an effective internal consumer protection risk model and management information and support the delivery of suitable products and services. Looks like regtech to me.

Future Challenges

In his concluding remarks Bernard Sheridan said that there was potential for:

(i) a greater level of engagement between innovators, innovation centres and regulators so that we can all be better informed and involved in helping avoid the crystalisation of consumer protection risks in new innovations;
(ii) at a firm level, there is an opportunity for fintech to play a bigger part in developing products and services that help support regulated firms in monitoring and managing consumer risks;
(iii) at the product level, fintech can bring forward innovative solutions for firms seeking to deliver suitable consumer-focused products and services and support firms meeting their regulatory requirements in product oversight and governance;
(iv) and finally, at the consumer level, fintech can help deal with the issue of product complexity and the increasing difficulties that consumers are having in understanding financial products and services.

His final words on fintech and consumer protection were, unsurprisingly, “We all can and must play our part in ensuring that innovation and consumer protection are closely aligned and, above all, that we are continuously focused on getting it right for the consumer”.