Forty years ago the Irish economy was in a difficult place. Unemployment was high, as was the national debt. The public finances were imbalanced, and the Economic and Social Research Institute was warning that difficult cuts would have to be made.
Financial services was one of the largest sectors in the economy and it, too, was facing into a period of uncertainty. Ireland’s economic challenges were a major part of that, as was concern about increasing competition from other countries in what was then called the EEC. With the liberalisation of European trade, Irish firms would now be competing with more overseas rivals seeking to win business in Ireland.
These challenges brought together a group of financial services companies, with significantly different interests and in some cases deeply competitive with each other, to form the Financial Services Industry Association, known today as Financial Services Ireland. Its objective was to collaborate: helping the industry to navigate a period of dramatic change, while also seeking to ensure that financial services in Ireland could remain strong and continue to grow in service of customers.
A key part of the equation was to ensure that Ireland would be a competitive location on the international stage. While trade liberalisation in Europe would mean more competition, it would also mean that Irish-based firms had the opportunity to bring their services to a market more than a hundred times larger than Ireland.
The development of the International Financial Services Centre in Dublin, one of the signature achievements of Irish economic policy, helped to realise this opportunity. Today, about half of the 103,500 people who work in Ireland’s financial services sector are in companies that provide services to customers all over the world. And international financial services is no longer just a Dublin story: those services are now provided from all over the country.
Today, Ireland’s financial services sector markets itself globally, providing support to customers across Europe and the rest of the world, and supporting investment and employment. This country has been successful in establishing itself as a hub for financial services but we can never take this success for granted. Meaningful and sustained commitment from industry and government is required to maintain and build on what has been achieved, particularly to adapt to new demands from customers.
The hub would be a tangible symbol of Ireland’s commitment to excellence in financial services innovation, but it is just one piece of the puzzle
This change is being driven by two key factors.
· First, technology has revolutionised how financial services is delivered to customers. This creates challenges as existing services are transformed, but it also creates fantastic opportunities to win new business and grow. Ireland has the capacity to be a world leader in fintech.
· Second, climate action and sustainability has become central to financial services, as it has in other industries. The sector has a significant role to play in financing the green transition – helping society to build renewable energy sources and the associated infrastructure, to retrofit homes and to fund important new technologies. Ireland has the potential to lead the charge in sustainable finance.
To fully grasp the leadership opportunities that exist, and the economic and jobs potential that go with them, Ireland must unlock the untapped potential that remains. Initiatives that boost competitiveness and innovation will be key to this, and the first thing the new government can do is continue the outgoing government’s support for a national fintech hub.
This hub would be a physical location which would serve as a natural first landing point for multinationals considering entry to the Irish market. But much more than that, it would also serve as a home and place of learning for early-stage fintech firms, as well as research and innovation teams from longer-established firms. This would provide firms of all ages and sizes with a fantastic community of peers, knowledge-sharing, educational events and more.
To drive this process forward, we believe the new government should launch a competitive process to identify an operator for the hub. These operators would bring their expertise, resources, and innovative ideas to the table, helping to achieve the kind of success that has been seen in similar facilities such as Level 39 in London, Station F in France and the National Fintech Hub in Slovakia.
The hub would be a tangible symbol of Ireland’s commitment to excellence in financial services innovation, but it is just one piece of the puzzle. Investment in R&D will play a huge part – and we believe enhancement of the R&D tax credits would encourage firms to boost investment in innovative products and technologies. This includes extending credits to cover more R&D activities and simplifying the application process.
These measures would help to build on the fantastic innovative work that is already being done in financial services companies across Ireland. People are at the centre of that, and Ireland should be proud of the tremendously skilled workforce that has developed here. The talent pipeline at third level is hugely exciting and encouraging, and there is scope to grow this even further through the plans for deploying the National Training Fund surplus.
The financial services sector is performing well in Ireland. It is delivering jobs and growth for the country. But we must strive for more, and always remain ambitious.
David Howard is deputy director of Financial Services Ireland
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