2023 was a challenging year for the Irish FinTech market, with investments and transactions reaching $60.83 million across 11 deals; this was a significant decrease (94 percent) compared to last year, where investments and transactions totaled over $1 billion across 22 deals, according to the Pulse of FinTech H2’23—a bi-annual report published by KPMG highlighting global FinTech investment trends.
But Ireland was not an outlier. Global investment dropped “from US$196.6 billion across 7,515 deals in 2022 to a six-year low of US$113.7 billion across 4,547 deals in 2023.”
Looking at the two halves of 2023, FinTech investment in “the EMEA region grew considerably in H2’23, accounting for $16.3 billion in investment compared to $8.2 billion in H1’23. But the annual total was very disappointing, and the $24.5 billion of investment accounted for the lowest level of FinTech funding in seven years.”
Conflicts in Ukraine and the Middle East, the high-interest rate environment, and the barren exit environment “across regions saw FinTech investors holding onto their cash throughout the year.”
Ian Nelson, Head of Financial Services & Regulatory at KPMG in Ireland, said:
“Despite a challenging year, the Irish FinTech market is resilient and innovative and is anticipated to recover once market conditions stabilise. There are still plenty of opportunities for disruptors, especially within regtech, payments, insurtech and wealthtech. Other exciting FinTech innovations on the horizon include using Web 3.0, the continued development of AI into offerings, ESG and open banking. Investors are still willing to back innovative companies with market-leading technology and market opportunity, especially in key sectors, including AI, cleantech and life sciences.”
Nelson adds:
“As outlined in the Ireland for Finance Action Plan 2023, FinTech and digital finance have continued to grow in importance in Ireland and are becoming a strong driver of employment growth. But finding the balance between regulating FinTechs and supporting innovation will remain tricky.”
Anna Scally, Head of Technology and Media at KPMG in Ireland, said:
“Given the level of uncertainty in the market in 2023, it was no surprise to see FinTech investment fall substantially from the levels seen over the last two years. While H1’24 is likely to start in a very subdued fashion, any downward movement in interest rates could spur some renewal of deals activity. The exit environment will also be critical to watch as the extended lack of exits has made investors hesitant to deploy funds. Investors remain cautious and will be looking to invest in companies that can demonstrate a clear path to sustainable revenue and profitability.”
Focusing on H2’23, Ireland’s FinTech sector “recorded a mere $1.61 million in M&A, venture capital and private equity transactions across two deals.”
This reflects a significant drop from “the $742 million for the same period last year when H2’22 was admittedly skewed significantly by one significant transaction – the purchase of Cork-based Global Shares by J.P Morgan for $676 million. Q4’23 marked a unique and salutary milestone, recording no FinTech transactions – the first time since Q4’12.”
The largest FinTech deal in Ireland in 2023 “was $53 million raised by the Irish registered unified payments company NomuPay.”
The other deals over $2m in 2023 were those by Trustap, which provides “an end-to-end digital transaction platform; Outmin, an automated accounting and bookkeeping platform; and Dimply, which helps financial services companies drive customer engagement.”
Investors remain cautious and will be looking “to invest in companies that can demonstrate a clear path to sustainable revenue and profitability.”