Upstarts challenge Ireland’s traditional banking sector

A number of disruptive businesses are emerging in the banking sector aiming to reorganise how the traditional industry in Ireland performs.

The latest service to launch is Realex Fire which supplies users with a free online current account that will allow them to pay friends and businesses online in real time.

Already this year Linked Finance, a crowdsourced business lending enterprise launched and expects to have loaned €1m by the end of October.

Realex Fire founder and chief executive Colm Lyon said its product differs from what PayPal does in that its accounts are fully integrated into the banking system.

“PayPal is more of an online wallet, this (Realex Fire) is an actual account. This is a real bank account, that was our Eureka moment; we didn’t want to make a wallet, we wanted to make a real account,” he said.

The company was one of the first to apply for payment institution authorisation following a change of legislation in 2009.

Since then, it has spent the last four years building systems and integrating them with the banking environment.

“We want to fundamentally transform the payments landscape and make payments safer, more accessible, social, and less expensive to process. That is our mission,” Mr Lyon said.

“This is a significant milestone for us and marks a fundamental change in the payments landscape; as a regulated entity we have joined the banking networks so we can create the most complete and compelling payments products.”

Realex Fire’s parent company Realex Payments processes payments in excess of €20bn for 12,000 companies a year.

Mr Lyon said he doesn’t foresee the company becoming a traditional bank.

“The opportunity to build something from scratch is very exciting,” he said.

“I don’t think that we will become a lender but remain a payment service.”

Another online service, Linked Finance, has gone straight into the business of lending money to projects.

The Irish company believes that the future of lending to SMEs does not feature any banks.

Marc Rafferty, one of the owners of Linked Finance, said: “I don’t see any role for banks in lending to small and medium businesses going forward.”