After years of one-way traffic, the Irish Financial Services & Fintech outlook for 2015 is promising. Senior Irish financial executives, and bankers in particular, are returning to Dublin. They will face a changed landscape with recent employment headlines centred all too often around the proliferating FinTech sector, or larger firms using Ireland for a data or cyber security hub.
However, the tide across the more traditional financial services sector is turning. Credit Suisse is currently seeking regulatory approval in Dublin ahead of relocating its European prime services business from London. This is major news for Dublin. This is a significant, risk-taking business, a world away from the back office operations which have become the mainstay that populate the banks of the Liffey. Whilst Credit Suisse’s competitors will been watching this closely, many of them are already quietly moving other roles to Dublin, some of them much further up the value chain, under the radar on a piecemeal basis.
For well compensated Irish expats in particular, these developments present opportunities to return home. There is an increase in senior financial services talent returning to Dublin for the first time since the crisis. Senior bankers can now return to Ireland without suffering the eye-watering pay cuts that were on offer a couple of years ago.
Earlier this year, the Irish government outlined an initiative to increase jobs in the IFSC by 10,000 within 5 years. Dublin has slipped drastically in rankings compiled for the Global Financial Centres Index, from 10th in 2009 to 70th in 2014. The flight of banks like Commerzbank and Goldman Sachs during the recession years didn’t help Ireland’s ability to lure marquee talent to the docklands.
Banks are now under intense pressure to cut costs in the face of increased regulation and lower profits from their investment banking arms. Many international banks already have a presence in Ireland, either for tax reasons or to house their fund administration businesses, so logistics are considered favourable.
Ireland presents a strong proposition for financial services firms. We occupy the same strategically important time zone as London and there is a much vaunted, well educated, English speaking work force. Critically, there are much lower real estate and labour costs than competitor banking hubs.
There are other pressures causing the return in demand for talent: a skills shortage exists, particular in the regulatory space, as firms adapt to the rigours of the Single Supervisory Mechanism. Both domestic and international banks will pay a premium for experience gained outside Ireland across risk, analytics, cyber security, audit and compliance.
Whilst it remains to be seen whether other international banks follow the bold steps of Credit Suisse, the prospects for the FinTech sector look altogether more assured. A combination of factors, such as legacy technology issues and regulatory headaches for mainstream financial services firms, are causing bountiful opportunities to firms operating in this sector right now. Looking to the future, there is also the widespread expectation that a new generation of customers will gradually turn away from one-stop shops and opt for single channel providers for their financial products.
From a talent perspective the challenge for these firms will be to mature from a strong technology proposition to a more wholly structured and institutionalized business. As businesses mature, there will be a requirement for fresh talent to populate new CEO / COO positions as firms adjust to the operational demands which come with scale, whilst a Commercial Director will be required to drive sales in new markets.
After several years where compliance and non-core businesses dominated the agenda we can hopefully look forward to a new era of growth across both the traditional financial services and Fin Tech industry. The shadow of the regulator will never be far away but current trends suggest significant cause for optimism.