'I’m on a mission to build a big global fintech out of Dublin'
Fenergo, founded amidst the financial crash, has gone on to become a serious player in the fintech sector
Fenergo chief executive Marc Murphy: “We have a real ambition to acquire over the next 12 months and have been building a team to focus on that.” Photograph: Alan Betson
In 2008, Marc Murphy set up Irish fintech Fenergo with the intention of targeting financial institutions as customers. Just weeks later Lehman Brothers collapsed, prompting a meltdown in global financial markets.
Murphy had just remortgaged his home, convinced his father to do the same, and talked his uncle and others into throwing some cash into his new enterprise.
More than a decade on, their faith in Murphy’s business idea is being repaid. “We’re in a good place right now,” says Murphy, speaking from his office in Clontarf via Zoom. “But it wasn’t always the case,” he adds, sitting back and laughing.
Fenergo is one of those companies that people tend to namecheck when asked about Irish-founded businesses that are making it big internationally. It might not be a household name but it has become a serious player in the financial sector.
For the uninitiated, the company has developed software that manages the mountains of regulations that came in the aftermath of the global financial crisis. Fenergo started out developing solutions for banks to help them with regulatory compliance and managing client data. In recent years, however, it has expanded past its core offerings into helping clients in areas such as asset and wealth management.
“We initially went after the niche that is large banks doing complex onboarding, but now what we do is right across the spectrum,” Murphy says.
Fenergo works with 300 of the largest banks and insurers in the world, including the likes of ABN Amro, Aviva, Bank of China, Danske Bank, Credit Suisse, UBS, Santander and State Street.
The company was last year valued at $800 million after an $80 million funding round, with many tipping it to shortly become the State’s third official $1 billion-plus so-called tech unicorn, after Intercom and Workhuman. The company is forecasting revenue of about €95 million for the year to the end of March 2021, although Murphy is busy looking at how quickly it can surpass the $500 million milestone.
Last year, despite the coronavirus pandemic, Fenergo still gained ground, taking on another 100 people. As if that weren’t enough, it ended 2020 being named Irish tech company of the year at the Technology Ireland awards.
Last week it announced another 100 roles for Dublin to bring the total headcount locally to 500 and to 950 across the group.
“We talk about the true potential of the business. Right now we are operating in the onboarding and origination space, which includes things like the origination of car loans, mortgages and so on. But the market tells us it wants Fenergo to manage transaction compliance too, so that is our next area of focus till the end of 2021 at least,” he says.
“Beyond that, we also have a vision for a data-sharing network, We see ourselves being able to create verified records for customers who multi-bank. Then those records could be provisioned to each of the institutions they bank with. If we can do this, then we turn what is a business currently turning over around $115 million to one that can get to $250 million in a short space of time and then on to $500 million soon after.”
It’s all an impressive feat for a fintech born at the beginning of a global financial crisis and founded by someone who didn’t necessarily see themselves as an entrepreneur.
“I’m on a mission to build a big global fintech out of Dublin that is publicly listed and which we can all be proud of, in the same way that we all love Glanbia or Kerry Foods,” Murphy says.
He is bullish in talking up Fenergo’s future prospects, but he’s not your average tech bro sprouting pie-in-the-sky figures or lofty aspirations. The 43-year-old sports fanatic is down to earth and friendly, with no attempt made to tone down the Finglas-forged accent.
“I’m a proud Dubliner and it is important to me that we’ve kept so many critical functions here, even though it annoys the hell out of some of our people in Sydney, Singapore, Toronto and California who’d prefer to see more of a geographic spread,” he adds.
Murphy never saw himself as an entrepreneur in spite of this clearly being part of his family’s DNA. His uncle is John Purdy, a former EY Entrepreneur of the Year category award winner, whose IT services company Ergo started out as a two-man firm selling toner cartridges for printers in 1993 but which now employs more than 400 people and is chasing annual revenues of €100 million. Another family member, his aunt Barbara Kearney, is managing director of Irish transport and logistic firm BCS Xpress.
Murphy initially settled for a career in software engineering, studying it at Dublin City University, before he ended up joining Ergo via a placement at IBM.
While at the company, he built up a financial services software business that would later become Fenergo. The name derives from “fenero”, an ancient Greek word meaning “trade”. Uncle John insisted on the ‘g’ to keep the link with Ergo and given he invested an eventual €4 million in the business, who was going to argue?
While focused on implementing a new account opening system for Lloyds across 13 countries, the bank’s chief information officer told Murphy he’d be mad not to buy the intellectual property associated with the technology. It was 2008 and while initially reluctant to go down the route of setting up his own business, Murphy realised that starting the company was the smartest thing to do.
“I was unsure if I wanted to be an entrepreneur but this was of course at a time when Ireland was booming and when Anglo would write you a cheque off the back of a phone call, so I quickly began to think I’d be stupid if I didn’t try it. I then managed to convince family members and others to put in some money, and me and my dad remortgaged our houses, and this was all just before the bubble burst. A few weeks after I had the business up and running, the only thing banks wanted to do was close accounts, not open them,” he says.
Murphy pressed on through what were a few initially grim years, which were made better through the signing up of all-important early clients that encouraged the company to carry on.
“We were grinding through until we signed Investec, which became our second client after Lloyds. They signed a big investment cheque for €1 million and that was a huge milestone for the business,” he says.
Murphy realised though that financial institutions weren’t going to be focused on account openings for some time. He figured as 2010 and 2011 beckoned that there was a need to pivot and bet that it was on compliance and regulation where money would be spent.
A cash injection from Uncle John and tech entrepreneur Paul Kerley, founder of Norkom Technologies and someone who remains a mentor to Murphy, then followed.
“In 2011 we signed Scotia, State Street and SunTrust. We built our revised product around them and everything cascaded from there, well at least up until four years later,” he says.
“It was 2015 and we had BNY Mellon, HSBC and UBS all ready to sign up to us when we were told we had to do something about our balance sheet. I was surprised because we had €4 million in cash, but were told that if we wanted to sign €40 million worth of contracts we needed more firepower behind us,” Murphy adds.
The solution was to bring in private-equity group Insight Partners, which has a 55 per cent stake in Fenergo following a $75 million investment six years ago.
“I didn’t realise I needed the money till I was persuaded to take it. I was such a dumbass really because everything changed after Insight came on board in that anyone who took a look at us saw we were backed by a $50 million asset, which meant we were serious players,” says Murphy.
The company closed an $80 million investment round last year with backers that include DXC Technology and Dutch lender ABN Amro.
The Dubliner has hinted at a possible stock market flotation for Fenergo but that doesn’t appear to be on the immediate horizon.
“Public markets are still in love with assets like Fenergo, and we continue to explore an IPO among other options,” he says. Bloomberg has previously reported that the company was looking to raise up to $2 billion from listing.
In the meantime, there is more business out there to secure. One key way that Fenergo aims to grow in the years ahead is through acquisitions.
“We have a real ambition to acquire over the next 12 months and have been building a team to focus on that. The market is pushing us to add some bolt-ons and there are four or five acquisitions over the next two to three years that we are targeting. I hope to have at least two of them done by the end of 2022,” Murphy says.
As it stands, even with significant outside investment, Murphy still has a 10 per cent stake in the business with his team holding a similar share. DXC has 10 per cent, as does Paul Kerley, with BNP and ABN on 5 per cent. Uncle John still retains a 1 per cent stake after previously selling most of the stock to Insight in a move that netted him €20 million, a tidy return on his earlier investment.
While Murphy obviously isn’t short of a penny or two, he says the dream of having built a multinational from Dublin is what motivates him above all.
“We’ve created a platform that is built on trust and reputation. Customers like the brand and keep telling us of areas they want us to expand into because they love dealing with us, so that is gold and everything will flow from it,” he says.