Was Revolut’s e-money decision prompted by an unfriendly environment?

Is the Central Bank of Ireland being overly careful and, as a result, restricting innovation in the financial services sector? Or is it doing what it is supposed to do and protecting the financial system and, by extension, the State's reputation?

It depends who you talk to. Revolut may have held off criticising the Central Bank when announcing its decision not to use the e-money licence recently awarded by the regulator to serve Irish customers, but it is an open secret that it is not its biggest fan.

The fintech, and many others seeking authorisation to operate here, has become increasingly frustrated at the length of time the process takes. Applicants must have an initial meeting with the regulator before they can apply.

Authorisation

Currently the Central Bank is offering a meeting only in the third quarter. This means there is at least a minimum six-month, and potentially a nine-month period before the authorisation process even begins.

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Critics say the amount of time it takes for the authorisation process to be completed is damaging for Ireland Inc. The State has built a great reputation as a place where fintechs want to be, but with an unfriendly regulator as the heart of things, some are looking elsewhere instead, where authorisation is a more speedy affair.

Many of those representing fintechs say many companies are already quietly withdrawing applications and have chosen other jurisdictions to base themselves in. None will criticise the regulator here publicly, however, in case they wish to reconsider their plans at a future date.

The regulator, for its part, doesn’t comment publicly on individual firms. It did issue a longer-than-usual statement regarding Revolut in which it said it was the company’s decision not to proceed, rather than any reason of its own.

“Such strategic decisions are matters for the boards of firms, in line with their own business objectives,” it said.

The regulator went on to defend its decision-making strategy.

“The Central Bank operates a transparent and robust process for applicants seeking authorisation and has an active authorisation pipeline across all regulated sectors,” it said.

Remit

“Authorisation is an important part of the Central Bank’s work to protect consumers and investors, and to ensure the proper functioning of the financial system. The Central Bank deals with applications for authorisation from firms across all financial sectors in an open, engaged and constructive manner,” it added.

On hearing of Revolut's decision, Fianna Fáil Senator Malcolm Byrne called for an overhaul of the Central Bank and for it to be given a statutory remit for the development of competition in the financial services sector.

He also urged the regulator to create a “sandbox” environment for new fintechs that allows them to conduct tests in a controlled environment.

“The Central Bank of Ireland needs to shift its focus to giving greater priority to the interests of consumers and Ireland’s development as a financial centre rather than just shoring up the pillar banks,” he said.

“In the era of digital currencies – including the digital euro – and fast-changing technologies, developing a regulatory sandbox to allow new financial products to develop will be a positive move,” Mr Byrne added.