Despite all the challenges 2020 and 2021 have brought with them, it has been a record-breaking year for fintechs.
Global fintech investment hit €85.5 billion in H1, while investment in the Irish fintech sector totalled €932 million – far surpassing the previous record set in 2011 of €596 million.
This investment was largely driven by three major deals. Undeniably, the standout was the $600 million buyout of Fenergo, a provider of Know Your Customer (KYC) and Client Lifecycle Management (CLM) software solutions for financial institutions, by private equity firms Astorg and Bridgepoint, who valued it into unicorn status. And the future looks bright for fintechs across the sector.
From Taxamo, Wayflyer, and Carne Group, through to StrikePay and Aikido, there is a raft of investment going into the sector that should be encouraging for those looking for it.
The secret to securing funding
While it’s clear that there are people willing to invest, some fintechs still struggle to attract investors and secure vital funding, particularly if their revenue is low. This challenge can arise even if the fintech ticks all the boxes with their proposition or fills a specific gap in the market.
Fortunately, it’s not all doom and gloom for those Irish fintechs and there is a way to overcome this problem. However, it is important for them to learn from things that don’t go well. We have seen the liquidation of Leveris in July, which appears to have simply been down to timing and funding. Fintechs need to find the right type of investor – namely a strategic investor who can recognise their value and is willing to invest early. This strategy will help them to secure funding and set them up for future success.
Top considerations for fintechs
Once they’ve secured funding, it’s time for fintechs to look at the bigger picture as while investment is obviously critical, there are a number of other factors that can impact their business.
Looking ahead, the three main issues we expect to impact fintechs both in Ireland and globally are:
- Volume of data growth
- Security/integrity of data
- Accessing data across silos in the cloud and on premise
Security, of course, should also be front of mind. As a country, Ireland has experienced the significant impact cyberattacks can have first-hand after the country’s health service was hit by a major ransomware attack in May that resulted in the shutdown of all of its IT systems nationwide. This had wide-reaching consequences on people across the country, with the data of 520 patients being leaked online, corporate documentation with no certainty on what was stolen in total, and others forced to miss vital medical appointments.
This was a clear sign that such attacks are ramping up, and while this was a high-profile attack, the majority in fact go undeclared by the affected organisations. Consequently, fintechs need to consider how to protect valuable customer and financial data, as well as the business’ IP, at every point. This is where implementing a data platform like InterSystems IRIS will prove immensely beneficial.
A word of advice
Despite these challenges, the outlook for the sector certainly looks positive and new opportunities are emerging all the time.
For startups there are three essential things to remember:
- It ALWAYS takes longer than you expect
- You should have multiple investor discussions going on at the same time, not to play them off against each other but to ensure you have one there to the end
- Even when you have secured the funding, keep the journey going for the next funding stage
Find out how our InterSystems IRIS can help to set you up for success by not only keeping your data safe, but also laying the foundations to allow you to innovate and create new innovative services using artificial intelligence and machine learning.