knowledge 13 March 2015 |

IFS 2020 - Ireland’s New Strategy for International Financial Services

McCann FitzGerald has been closely linked to the IFS sector for many years, in particular with the International Financial Services Centre (IFSC). Indeed, we were among the first businesses to locate in the IFSC when we established our headquarters there in 1991. Over the intervening 25 years, we have been involved with Government and others in developing the legal and regulatory structures that have enabled the IFSC to become the significant driver of IFS in Ireland. The initiatives in IFS2020 are to be welcomed as re-introducing the strategy, focus and partnership that were central to the success of the IFSC.

Existing Strengths

The IFS sector is one of the pillars of the Irish economy, which is widely recognised as one of the most open, competitive economies in the world. According to international rankings, Ireland is first in the world for availability of skilled labour and investment incentives, second in the Eurozone for ease of doing business, and 15th in the world in terms of global competitiveness. In 2014, it also had the fastest growing economy in the Eurozone.

The Irish IFS sector has grown rapidly since its origins in the late 1980s, a growth which is largely attributable to the availability of highly-skilled talent, an innovative culture, a competitive regulatory and tax environment and a strong client focus. It now spans a broad range of services including: Banking & Payments; Funds Management and Administration; Insurance and Reinsurance; Aircraft Leasing and Financing; and technology applications in financial services - FinTech. As outlined in IFS2020, Ireland:  

• has more than 200 foreign-owned multinational companies operating in the IFS sector, many of which are leading global players. There are also over 200 Irish owned IFS companies;
• is one of the leading countries in Europe for FinTech venture investment, and, together with the UK, has seen the volume of FinTech deals triple since 2011, with a five-year compound growth rate for FinTech financing that is twice the global average and twice that of Silicon Valley;
• is the global centre for aviation finance with 14 of the 15 top global aviation lessors located here: 50% of the world’s leased commercial aircraft are owned or managed from Ireland;
• has over €3.2 trillion of investment funds domiciled or administered in Ireland and is the top hedge fund location in the world;
• is the leading European jurisdiction for securitisations;
• is a significant location for Islamic funds with an estimated 20% of the Islamic funds market outside the Gulf located in Ireland; and
• offers an extensive tax treaty network, which includes most of the world’s largest economies, accounting in aggregate for more than 80% of world GDP.

Future Developments

IFS2020 seeks to build on the IFS sector’s existing strengths while simultaneously anticipating and preparing for rapid sectoral developments, including growing international competition for IFS investments and the rapid transformation of financial services business models and products. It revolves around five strategic priorities, namely: promoting Ireland as a location for IFS; improving the IFS sector’s operator environment and competitiveness; driving research, innovation and entrepreneurship in the IFS sector; developing job-creation opportunities; and establishing a new implementation framework. Each of these priorities is associated with a number of specific actions to be implemented in the short or medium term.

Promoting Ireland as a location for IFS and world class innovative products and services - the aim here is to leverage the expertise and international reach of State bodies to promote Ireland’s profile as a location of choice for IFS, through an enhanced and more coordinated approach to promotion, marketing and branding. Actions include developing an overarching “banner brand” to promote Ireland’s IFS sector.  

Driving continuous improvement in the operating environment and competitiveness of Ireland’s IFS sector – the related actions focus on talent and infrastructure development and include reviewing the Central Bank’s authorisation service standards and extending the State’s network of double taxation treaties, as well as updating existing treaties.  

Driving Research, Innovation and Entrepreneurship in the IFS sector, with a particular focus on financial technology and governance, risk and compliance – actions regarding this priority focus on two related areas, namely providing a supportive eco-system to stimulate increased innovation in financial services generally and in FinTech in particular. In this respect, one of IFS2020’s key objectives is to facilitate collaboration between multinational financial services companies, domestic start up firms and centres of research so as revolutionise the use of technology in financial services.  

Developing job-creation opportunities from emerging IFS sub-sectors & new markets – this strategic priority is focused on developing new opportunities for IFS sub-sectors including Funds, Payments, and Business Process Outsourcing. Related actions include: establishing an indigenous “funds services cluster” with the aim of positioning Ireland as a centre of excellence for emerging fund services, particularly in risk and compliance; creating a payments forum and developing a sectoral strategy for payments; and developing the international financial services capability of the business process outsourcing sector, including a proposed “framework” of engagement with the banking industry. A further action focuses on identifying the opportunities afforded by the European Commission’s proposed Capital Markets Union in the area of securitisations – McCann FitzGerald has been centrally involved in developing this market in Ireland.  

A new implementation framework – the implementation of IFS2020 will be supported by a new model of engagement involving the heads of the key Government Departments and state agencies forming a new Implementation Committee working in partnership with key industry stakeholders through the new IFS Industry Advisory Committee.  

Comment

IFS2020 provides an excellent opportunity to take stock of Ireland’s considerable achievements in the IFS sector over the past number of years. It also highlights the State’s support for the sector and its commitment to providing a flexible, adaptive, and well regulated environment to consolidate existing gains and foster growth in a sector which is developing with unprecedented speed and along frequently unpredictable paths.

IFS2020 continues Ireland’s well-established tradition of driving development through constructive cooperation between government and industry.