“Since 24th June 2016, we’ve seen a marked increase in the level of activity and footfall into Ireland where companies are carrying out due diligence…”
The financial press is currently littered with stories about how international banks are preparing to move thousands of London-based staff to other European cities in preparation for a hard Brexit. We recently sat down with Denis Curran, the IDA’s Head of Financial Services Division to talk about the competition for these jobs and also the second European Financial Forum which takes place today at Dublin castle.
Q: For those unfamiliar with the IDA, can you briefly tell us about the organisation and your role within it?
IDA Ireland is the agency with the sole remit and responsibility for promoting Ireland as a jurisdiction for international foreign direct investment. Our remit is to target new companies to come and locate in the jurisdiction and to work with existing companies to transform and upscale their existing operations in Ireland with a view to sustaining high-quality employment across the island. We are almost 70 years old and have about 300 people working in approximately 20 offices. We are also broken down in various target sectors like life sciences, pharmaceutical, technology etc. I head up the department that looks after all things financial services.
Q: The IDA’s brief is obviously across almost every conceivable industry, but what are you doing in the FinTech space and do you have a specific FinTech strategy?
FinTech is really really important to us. The IDA has its own strategy and it’s called Winning 2019. In that strategy, we have high level targets in terms of the number of investments and jobs, where financial technology is a key target area in terms of multi national companies. Then there is also the wider government strategy to do with IFS2020 which encompasses indigenous startups. IFS2020 has a target to create 10,000 new jobs over its lifetime. That strategy is currently being driven by Minister Eoghan Murphy, and under that leadership there are a number of different working groups, both public sector and private sector, that come together on a frequent basis to address all the building blocks that make up a FinTech ecosystem in terms of education, fiscal policy, research, collaboration etc.
So under the umbrella of IFS2020, we have all the key stakeholders and principals that make up this FinTech ecosystem, collaborating and communicating on a regular basis to try and take action to make Ireland a competitive location for FinTech.
Q: What opportunities do you feel now exists, if any, for the Irish FinTech scene in the wake of Brexit?
I’ll address Brexit in a minute, but well before Brexit, we had already been targeting FinTech as a potential growth opportunity. And why is that?
For starters, we have a very strong technology sector here. And over the last 40 or 50 years, at each technology paradigm shift and right the way through to born-on-the-web companies, we have managed to capture the world leaders like Microsoft, HP, Oracle, Google, Facebook, Twitter, PayPal etc. All of whom have large operations here.
Secondly, sitting beside all these technology companies, we have world leaders in insurance, payments, investment banking, funds administration etc. Again, all with large operations here.
Lastly, you also have this very vibrant startup community. So from out of all of that, what we are seeing now is that the lines of demarcation between what’s a technology company and what’s a financial services company is increasingly blurred.
You have these large incumbent financial services companies that are no longer treating technology as an expense but instead are treating technology as a growth mode investment and a better way to engage customers as well as help them with things like regulation and data security. It’s giving momentum to this whole thing called FinTech. So we see lots of opportunity in this space and we see Ireland as well positioned for that.
In terms of Brexit, we see two potential growth opportunities. One is that if there are FinTech companies which are regulated in the UK and using that to sell into the rest of Europe. If a hard Brexit results in those companies having to seek regulation in a different single market jurisdiction, then Ireland becomes a potential location for that type of business.
The second thing is that FinTech is very much skills driven and the population makeup of these FinTech companies can be very international. So depending on how the non-UK citizens are treated in a post-Brexit environment, Ireland could end up being a much more friendly location for that talent to come to and work in FinTech but also to start up new companies.
Q: Has the IDA’s strategy towards FinTech and financial services changed since the Brexit decision?
Well, we’ve been doing this for a very long time, and obviously, we continually change our strategy depending on the context of global economic policy, technology changes, paradigm shifts in industry sectors etc. In terms of Brexit, we do believe that Ireland is a great alternative to the UK in terms of us being the only English speaking EU member state, we’re a common law jurisdiction and all the other advantages that we’ve spoken about before in terms of skills and costs and everything else.
I think how we have pivoted since Brexit is just in terms of us getting the positive message out in the marketplace about all the brilliant things that are happening here from a FinTech and FinServ perspective. During Q4 of 2016 and Q1 and Q2 of this year, you will see the IDA marketing strategy taking out full page ads in the likes of the Financial Times, CityAM, The Economist, NY Times, Harvard Biz Review and the Wall St Journal. We have also published our own video on Brexit and we are doing a similar mass market campaign around Brexit. You will see our CEO Martin Shanahan appearing on lots of different news channels as he visits the various countries.
We are also running Brexit specific events in the leading financial capitals around the world where we are prospecting new and existing customers. We are also doing very targeted bilateral engagements on a confidential basis with our target client base around potential solutions that they are looking for in a post-Brexit environment.
Q: It has been reported that many London-based financial firms are looking at Dublin and some have already held “pre-application discussions” with the Central Bank. Has the IDA seen an uptick in enquiries from UK based companies?
Yes, we have. They are not all UK companies, but they are based in the UK. We’ve had enquiries from American, Asian and European companies that are currently passporting out of the UK. Since 24th June, we’ve seen a marked increase in the level of activity and footfall into Ireland where companies are carrying our due diligence and I’m sure they are doing that in one or two other countries also.
Can you tell us about what specific things FinTech companies can benefit from in Ireland outside of the obvious things like low corporation tax and English speaking… I’m talking about things like the Knowledge Development Box and other initiatives and supports that maybe not everyone knows about?
If you look at the whole enterprise policy here in terms of talent, tax, track record, collaboration with universities etc., I think we have a very compelling product offering. You mentioned the Knowledge Development Box and the associated 6.25% tax rate which is OECD and EU approved. We also have a 25% research and development tax credit for people who are investing funds to create next generation technology. There is a suite of incentives which are both cash and tax related to help offset some of their startup costs.
Secondly, if companies are looking to assemble these software teams they need to source these skills across Europe and all European passport holders can come here and work without a work permit or Visa.
There is also a lot of money being pumped into the Irish university research centres. There are opportunities for these companies to engage with these research centres. The IDA also has a number of different programs available for R&D funding and for feasibility funding that these companies can leverage as well. We can also help companies plug into the ecosystem be that universities or like-minded companies. We have a number of shared services groups and industry associations.
Do you believe there could be moves made by the Central Bank in terms of FinTech regulation that would make your job easier in terms of attracting FinTech and FinServ businesses to Ireland?
I think there has been enough public announcements by the various members of the senior executive of the Central Bank stating that they are very much willing to engage with all types of companies and all types of business models. They have said that they have adequate resources and will adjust their resourcing depending on the level of business that they may transact post-Brexit. They will carry out those mandates with respect to the highest international standards of regulation. So I think those public announcements will give people enough of a comfort level around the whole regulatory environment here.
One of the key initiatives of the Government’s IFS2020 strategy which the IDA are heavily involved in, was the inaugural European Financial Forum last year. This year’s event takes place this month. How successful was last year’s event and what does the IDA hope to achieve at this year’s event?
Last year was our first year doing the event and it definitely exceeded our expectations on a number of different fronts. The quality of the speakers was world class from the perspective of their seniority and the institutions that they led. It was also oversubscribed in terms of the number of attendees with over 600 people in attendance. The feedback from it was very positive. I also know that one or two investments did occur directly out of the forum. So all and all it was very much a success as an inaugural event.
This year’s European Financial Forum takes place in Dublin Castle on January 24th, and the agenda for the day will very much reflect the year that global financial companies and FinTechs are looking into in terms of 2017. The agenda will also play into the strengths of the financial sub-sectors that we have here and will also contain a panel discussion on FinTech and the future development of FinTech looking through the channel of disruptive technology.
The speaker line up is again world class we have Philip Hilderbrand the vice chairman of Blackrock, Noreen Doyle the vice chair of the board of directors of Credit Suisse, Ronan Ryan the president of IEX, Jim Cowles the CEO for Citi Bank EMEA, Patrick Manley the Zurich CEO for EMEA, President Jin Liqun of the Asian Infrastructure Investment Bank as well of course our own Taoiseach Enda Kenny.
While the Government and the Financial Regulator clearly shoulder a lot of the responsibility, what do you feel are the wider steps we need to take as individuals and as companies within the ecosystem in order to ensure Dublin and Ireland continue to grow as a FinTech hub?
One of the advantages of being a small country is that you can get a lot of cohesive working groups and strategies and I think IFS2020 is a good example of that. We are able to get the key industry leaders, the key startups, the key people within public policy and government together on a regular basis to make sure we are on the same page and heading in the same direction about the very positive intent we want to make for Ireland as a location for FinTech.
Competition is extremely strong worldwide for foreign direct investment, so going out into the marketplace and getting out the message beyond the two or three things that everyone recognises Ireland for.
It’s great to tell people about what First Data are going to be doing in Nenagh, what Fexco are doing in Kerry, what MetLife are going to be doing in Galway, what Pramerica are doing in Letterkenny with their 1500 people and 700 software engineers.
Marsh has just set up an innovation lab, Aon has built a center of excellence for data analytics. The list goes on and on. There is just so much brilliant and positive activity happening here with real tangible outputs that are making a difference to global technology roadmaps.
So what individuals and companies can do is to always try to get that message about Ireland out in the marketplace to make sure Ireland is a number one brand for FinTech worldwide.
As we continue the week long series on Ireland’s Fintech Future, we talk with Anna Scally about her role as Director and Treasurer of the FinTech and Payments Association of Ireland (FPAI) and what that organisation is doing to nurture Ireland’s FinTech ecosystem. Anna is also an International Tax Partner, Head of Technology and Media and FinTech Lead at KPMG Ireland.