In 2023, funding for Irish fintechs experienced a dramatic 94% decline, as revealed by recent research. The KPMG biannual report, “Pulse of FinTech H2’23,” indicates that Irish fintechs secured only $60.83 million this year, a stark contrast to over $1 billion raised in 2022.
The number of investment deals also saw a significant drop, with only 11 transactions completed in 2023 compared to 22 the previous year. Alarmingly, nearly all of the funding this year was concentrated in one major deal—$53 million secured by payments company NomuPay.
This downturn mirrors a broader trend, as global investment in the fintech sector has reached a six-year low, plummeting from $196.6 billion across 7,515 deals in 2022 to $113.7 billion across 4,547 deals in 2023.
Additionally, a report from the banking lobby group ibec highlighted that almost three-quarters of Irish fintech startups identified a lack of state support as a significant hurdle to their growth and innovation just six months ago.
Despite these challenges, there is cautious optimism about the future of Ireland’s fintech sector. Industry leaders believe that once market conditions stabilize, opportunities will arise for companies focused on regtech, payments, insurtech, and wealthtech. Ian Nelson, head of financial services at KPMG in Ireland, stated, “There are still plenty of opportunities for disruptors.”
Looking ahead to 2024, the report predicts a resurgence in M&A activity in the payments sector, an emphasis on AI and enterprise solutions, and emerging prospects from tokenization, ESG, and evolving regulatory frameworks.
As outlined in the “Ireland for Finance Action Plan 2023,” fintech and digital finance are increasingly vital to Ireland’s economy and employment growth. However, striking a balance between regulation and fostering innovation remains a complex challenge.