Global investment funding in the FinTech sector reached a record $5.4bn (£3.86bn) during the first quarter of 2018, according to new research. This has been boosted by a dozen investment mega-rounds of at least $100 million, according to the latest figures from CB Insights.
The first quarter of 2018 seen a record of 323 deals, 157 of which came in North America, bringing in $2.17 billion, slightly down from Q4 in 2017. Even though European FinTech deals dipped to a five-quarter low, funding hit a five-quarter high bolstered by $100 million plus investments to later-stage digital banking startups N26 and Atom Bank. These deals were part of a wider global trend that saw 12 $100m+ deals across four continents during the quarter, including eToro, Oscar Health and C2FO.
Banks worldwide are continuing to make fresh FinTech investments, but top US players, such as Goldman Sachs, Citigroup and JP Morgan have slowed down their activity. This hasn’t been the case in Europe however, with Santander alone making three new portfolio investments in the first quarter.
FinTech in Ireland
There are currently around 5,000 people employed in the FinTech industry in Ireland, with the potential to double by 2020. As outlined by Deloitte, there are five key factors that will shape the success of the FinTech industry in the next 5-10 years.
1. Connectivity
The Government and industry partners must work to build connectivity and lessen the ‘awareness gap’ between indigenous FinTech firms and financial services companies operating in Ireland. This can be addressed locally via co-industry ‘get connected’ type events through to the establishment of cross-sector government policies.
2. Talent
The Deloitte Talent in Banking Survey 2014 identified the ‘Google Factor’ as the reason why software services are the most popular industry for business graduates in Ireland. The opportunities for IT professionals within the financial services arena needs to be communicated to graduates. To fill this demand for IT professionals, education policy at second and third level in Ireland will remain critical. For example, the UK has begun tackling this issue by making computer programming a mandatory subject for all students aged between 5 and 16.
3. Innovation
Ireland needs to emulate the success of the top FinTech global hubs such as London, New York and Berlin. There has been specific successes in the establishment of R&D hubs, primarily driven by EU and national initiatives. The fostering of an innovative mind-set at national level to create the right conditions for innovation, investment, and collaboration activities and hubs is imperative. A combination of Ireland’s R&D tax credit regime and the Knowledge Development Box regime that will be introduced later this year should help support increased innovation in Ireland.
4. Investment
On average, only €16 million out of €400 million in venture capital investment in high-tech companies has been invested in FinTech companies over the last three years. FinTech companies need to avail of this significant untapped VC potential in Ireland and focus on international VC firms that are looking for investment.
5. Cyber
Cybersecurity is a critical issue in financial services companies, as incidents continue to increase. This has led to a flood of investment in companies that provide cybersecurity software, solutions, and services including R&D investment. The large number of financial services and FinTech companies in Ireland provides a level of critical mass, with the potential to position Ireland as a Cyber Centre of Excellence, acting as the engine for policy formation, investment, skills development and operations throughout Europe.
There has never been a better time to join the FinTech industry in Ireland. We recruit for a number of jobs in the FinTech industry. If you would like to find out more information, give us a call on +353 1 571 3000.