The Central Bank is right not to rush to authorise fintechs such as Revolut to provide products and services in the Republic, Minister of State for Financial Services Seán Fleming has said.
Mr Fleming’s comments come just two days after Revolut announced it had dropped plans to use the e-money licence it had been offered by the Central Bank of Ireland to offer banking services such as personal loans to Irish customers. The neobank is instead using its Lithuanian banking licence to passport new products locally.
While Revolut did not criticise the Irish regulator when making its announcement, it is known that many fintechs have become frustrated at the amount of time it takes to secure approval from the Central Bank to operate in Ireland.
Mr Fleming said it was “disappointing” that Revolut had decided against accepting the e-money licence from the regulator. However, he added it is not the role of the Central Bank to encourage companies to base operations here or to rush through authorisation.
He also said there are no plans to change the financial regulator’s mandate to allow it to promote Ireland as a base for international finance activity as happens with counterparts in other jurisdictions.
The Central Bank previously also had this dual role although it was removed in post-recession reforms as it was viewed as a contributing factor to regulatory mishap in the lead-up to the financial crash.
“The Central Bank has a great reputation internationally. It really has the gold badge in terms of regulation,” Mr Fleming said.
“To get an application through the Central Bank is not an easy process and nor should it be . . . financial services companies are more attuned to dealing with central banks than fintechs and I have heard that some of the latter struggle with the application process.”
Sandbox
The Minister also said there is a greater role for State agencies such as IDA Ireland and Enterprise Ireland to play in promoting the Republic as a financial services centre, including potentially running a "sandbox" programme to allow companies to test new products in a safe environment ahead of them being made available publicly.
Mr Fleming was speaking ahead of the launch of the Government’s new “Ireland for Finance Action Plan” which is aimed at promoting further growth in the international financial services sector.
According to figures compiled to coincide with the plan, there are now more than 52,800 people working in international financial services, a record high.
Mr Fleming said he envisages greater job creation in the coming years, through a focus on establishing Ireland as a hub for sustainable finance. Fintech and digital finance is another key priority, with the Minister saying the State is “well placed to benefit from having strong bases in both the financial and technology sectors”.
