The first three months of 2016 were a hectic start for FinTech. Here is a recap of the highlights and key events in Irish FinTech, with some key global trends and news.
The year began strongly with the European Financial Forum hosted in Dublin Castle, following this the programmes between established financial institutions and FinTech startups is discussed, through the FinTech Innovation Lab, the Ulster Bank hackathon, Bank of Ireland’s startlab and the community meetups.
The next section covers overall focus areas of FinTech, regulation, PSD2, blockchain, and cryptocurrency startups, as well as technology trends.
The post concludes with a discussion of analyst reports on global FinTech investment and the IVCA’s report on venture capital investment in Ireland.
Here's v0.4 of Ireland's Fintech map, nine new companies & updated layout. Who's missing? Let me know! pic.twitter.com/cDK7j2Cmn1
— Dave ☕️ Anderson (@supergingerdave) May 25, 2016
European Financial Forum
The European Financial Forum was held in Dublin Castle in January, organised by the FT in association with the IDA and Enterprise Ireland. A packed day of activities, with keynote speakers including An Taoiseach, The President of Morgan Stanley, Colm Kelleher, and Central Bank of Ireland Governor Philip Lane.
The panel discussions focused on the changing financial services landscape, the opportunity for startups and innovation, as well as the regulatory framework. Sessions were focusing on the funds and insurance industries and a dedicated panel session on FinTech and payments.
Videos of the speeches and main panel sessions are on the FT website.
- The Taoiseach’s Speech
- Launch of the 2016 Action Plan announced
- Comprehensive Blog Post of the Event
FinTech Startups and Existing Institutions
The Accenture Fintech Innovation Lab. This is an accelerator run by Accenture in conjunction with Enterprise Ireland. Six startups were selected to take part. Below is a brief description (note: my employer provided mentors to Coinprisim, Touchtech Payments and Cogni, so I have met their founders):
- Cogni (previously Bizbaze). Targeting small business and “micro enterprises”, Cogni provides them with access to a marketlace/platform of financial services. It uses a data analytics approach to match customers with potential providers. Bizbaze is a collaborative commerce platform with digital banking to help SMEs and micro-enterprises find new markets and customers with evidence-based insights through the use of collaborative commerce and Artificial Intelligence. Unlike other FinTech companies, Bizbaze helps micro-enterprises grow their business using Ai in a sharing and collaborative commerce space in addition to providing virtual banking services. A profile of Archie, a cofounder, is in this Dublin Globe article.
- Coinprism, a coloured coin wallet, founded by Flavien Charlon, who is behind the Open Assets Protocol. This allows multi-asset storage through coloured coins on the bitcoin block chain.
- courtsdesk, a unified platform for legal news. Addresses the problem of fragmentation of data published by the Irish legal system.
- Juggle, a consumer platform for managing finances, they are aiming at providing a financial well-being programme that employers can offer to their employees.
- Touchtech Payments, increasing security and offering better usability for online payments.
The demo day took place in March at the NDRC and a good summary is on YouTube. A summary of the demo day and programme is provided by one of the participants, Ostia which gives a good overview, as well as their impressions.
Ulsterbank Hack/Make the Bank Hackathon
In January, Ulster Bank ran it’s third hackathon, #hackmakethebank, in Dogpatch Labs. An article describing the event is at irishtechnews and the Irish Independent offer an overview of the event and winners. The twitter timeline of the event is worth a read, for a sense of what was happening as it unfolded.
Ulster Bank has been working with the OpenBank Project of Berlin to facilitate the technology and the event; they are currently running an Emirates FinTech Hackathon. An overview of their API is on GitHub.
Bank of Ireland – StartLab Galway Incubator
In a busy quarter one, Bank of Ireland announced startlab, their six-month incubator based in Galway. It’s a full programme of activity, helping startups to grow and scale. This article covers the February announcement. The full cohort list is on the startlab site.
Lots of meetups this quarter, a number of meetup groups are active:
Here is a list of the meetups for ease of access, descriptions are on the meetup page, where available:
- Fintech Ireland Ireland’s Fintech Scene, Impact & Opportunities in Europe & Beyond. Took place in February at the Marker hotel as a precursor to Money 20/20.
- FinDig: Pete Townsend of BNP Paribas Securities, and Derek Butler of GRID Finance, February.
- FPAI Fintech: Skuchain Using Blockchain For Supply Chain and Trade, January.
- FinDig: Shane Brett and Ronan Brennan, March.
- FPAI Fintech: At the Edge of Real-time Data Analytics, March.
— Ulster Bank (@UlsterBank) February 12, 2016
The big trends from 2015 continue into this year, we are seeing a lot of activity driven by the Payments Service Directive2 PSD2, regulation and blockchain. The ThoughtWorks Financial Services 2025: Eight Strategic Forces that are Transforming the Industry is an analysis of the forces behind the FinTech push and projects how the landscape may look in 2025. Gulp:-)
PSD2 requires a bank to give effective API access to bank accounts and allow payments through their networks, again via APIs. This is good as it opens up their facilities, and gives competition to card schemes. A simplified overview of PSD2 by Anne Boden of Starling Bank explains the main thinking behind it and some of the TLAs.
Security and identity is a big part of PSD2, and the W3c has some excellent comments on the EBA call for comments on strong customer authentication and secure communication.
To give you a bit of flavour of the difficulty and opportunity that exists, Paul Rohan’s post is worth a read.
Blockchain and Cryptocurrency
Blockchain is still a big area of activity with happening in new infrastructure and application to existing banking flows.
The main news items for infrastructure for blockchain and cryptocurrency were:
- Microsoft Azure Blockchain as a Service, an announcement last year to add blockchain to the azure set of cloud services. It launched with Ethereum, using the ConsenSys Haskell implementation. This quarter saw an expansion of the number of services offered in update 7:
- Algorythmix Cetas: Decentralised KYC and Credit Rating services;
- Expanse: a decentralised information, smart contract and application platform;
- Influx : an algo coin;
- Monero: a crypto currency devoid of bitcoin;
- Radium: a proof of stake cryptocurrency;
- Tendermint: faster, better, more secure blockchains.
I enjoyed this video of an Ethereum based implementation of a swap.
- IBM hyperledger. IBM is fronting a linux foundation project called OpenChain, which is using the name hyperledger. The number of technology companies, consumer companies and financial institutions is too long to list, but it has broad cross-industry support. Hyperledger is a project whose aim is to be the one-stop solution for all decentralised, distributed ledger use cases. A good place to start is the specification document, a well thought out presentation on the use of distributed ledgers in different flows and use cases. This was announced late last year, but was worked on over the first quarter and publicly released.
- Bitcoin’s SegWit, Segregated Witness, proposal implemented to allow for efficient use of storage, bandwidth and reduce settlement time. This is quite involved, this talk by Pieter Wuille presents it well. More info in bip 141.
Trade flows had some interesting announcements late in 2015, from Barclay’s and this continued in 2016 with Standard Charter. Barclay’s spoke of applying Israeli startup’s Wave. More details in this coindesk article. Standard Chartered is working with Ripple to reduce cost and remove duplication in Trade Finance.
MIT Media Lab announced $900k Bitcoin Developer Fund, with the goal of the fund is to enable diversity of work and thought on Bitcoin by providing positions and financially supporting leading developers of the Bitcoin protocol at the MIT Media Lab.
There is a move to apply blockchain as a mechanism to provided direct access to buyers of securities with sellers. BNP Paribas is working with Smart Angels to launch a disintermediated buy and sell side of private bonds; they are calling it a crowdfunded securities platform backed by blockchain. They are waiting for regulatory approval.
Unicredit too are looking to apply blockchain, but this time, to post trade settlement.
Adjacent to these settlement and security issuances are the various syndicated loans market, and Symbiont is working on applying blockchain and apply it to the $3 Trillion Syndicated loans market. Symbiot has worked on “smart” securities for bond issuance in the past so they have a good experience.
Other articles of interest:
- The overstock launch of a cryptosecurity, which is part of the Medici blockchain exchange
- Unicef is looking to applications of blockchain to help reduce child poverty
The regulatory framework for FinTech varies throughout Europe, some regulators are more accommodating for early stage FinTech, and others are more cautious. Some of the more permissive aspects are drive by the PSD2 directive from the EBA and others from a desire to increase investment in FinTech. There is an interesting article from the Telegraph that startups wish to open accounts directly with them to allow access to the full financial network and not just the broker one offered by retail banks.
The UK Treasury publish its Open Banking Working Group Report, to push for an open banking standard. This is seen as an enhanced set of features over and above PSD2. And Germany’s BAFIN working group allows setting up of banking and FinTech companies in a safe regulatory environment.
The German approach has fostered a number of incubators, such as FinLeap, and challengers to banks: startup banks going after existing and established players but typically offering different service levels and being more technology driven.
A number of these banks have launched atom bank, and solaris bank. An overview of Atom, Starling, Tandem and Mondo Banks is provided. From a broader European perspective, Number 26 and Fidor need to be added to the UK list, and an overview of a recent Money2020 session, of an incumbent debating a challenger.
Quite separate from PSD and related concerns, UCL’s Sarah Meiklejohn and George Danezis, release details of their Cryptocurrency for central banks. This is driven by some work with the BoE and others to find a way to have a regulatory safe cryptocurrency.
Clearly, regulation is helping drive innovation and support for startups. We are seeing a friendlier environment for these FinTech companies, and more acceptance of Cryptocurrency and Blockchain.
It is interesting to see blockchain being applied to more and more institutional flows,and at the same time more interest in cryptocurrency by regulators, and we may even see acceptance of Bitcoin by European Regulators in the near future. What’ll be interesting is to see what happens first, Bitcoin acceptance or a FIAT cryptocurrency.
In the meantime, much more hype and crazy ideas will be following the blockchain investment money, so there could be some “interesting” ventures forming.
The challenger banks and PSD2 are generating great activity, and will hopefully bring a service culture to the tech in banks.
FinTech and Ireland
FinTech is an area of strong global activity; CB Insights reports around $13.8 billion was invested in FinTech in 2015, with around $460 million for blockchain. Citi’s FinTech report indicates a $19 billion investment in FinTech in 2015.
This maps well into startup activity in Ireland in 2015, a record year of investment. The Irish Venture Capital Association reports EUR520 billion was invested in startups in Ireland in 2015; this is up from EUR 310 billion in 2010. Thanks to Brian Caulfield for sharing the info graphic.
In Conclusion and Looking Forward
This post has turned out to be much longer than anticipated. A lot happened, and this is only covering those areas which interested me and I took the time to note.
This quarter, quarter two, is not to be left behind. We held the first bitcoin meetup of 2016, and it covered SegWit. The FinTech Nation event was on in the Marker Hotel on April 14th. And there is a talk of a FinTech fund launching for early stage startups.
This is a view of what I have seen and encountered, if there are any errors or points of comment or correction, please contact me. We have further meetups happening in the ecosystem, and FinTech in Ireland looks very strong in 2016.