Funding levels in Ireland’s fintech sector have decreased over the past year due to various economic and geopolitical challenges.
Data from KPMG reveals that nine fintech investment deals were completed in the first half of 2023, totaling $59.2 million. While the number of deals matched that of the same period in 2022, the value was markedly lower, with 2022 seeing investments amounting to $742 million. A significant factor affecting this decline was the large $676 million investment from JP Morgan in Cork-based fintech Global Shares in 2022.
The report highlights that rising interest rates, inflation, the ongoing war in Ukraine, and increasing geopolitical tensions have all contributed to this situation. Furthermore, venture capital (VC) funding in Ireland has also seen a downturn, with the value of deals from April to June falling by 17% compared to the same timeframe in 2022.
This trend in Ireland reflects broader global patterns. Global VC investment has decreased for six consecutive quarters, and fintech funding worldwide dropped to $52 billion in the first half of 2023, down from $63 billion in the same period of the previous year.
Despite these challenges, Ian Nelson, head of financial services at KPMG, maintains that Ireland’s fintech market remains strong, particularly in sectors such as regtech, insurtech, payments, and wealthtech, where solid business cases are present. He anticipates a rebound in funding when market conditions stabilize, though it may not reach the unprecedented levels seen in 2021.