Ireland has ‘clear roadmap’ to maximise Brexit opportunities

The Government's existing International Financial Services strategy (IFS2020) provides a "clear roadmap to maximise" Ireland ability to attract financial services companies from London as a result of Brexit, Minister of State for Financial Services Eoghan Murphy has said.

The strategy, launched in March 2015, seeks to create 10,000 net new international financial services jobs here within five years. This sector already employs 38,000 people across 400 Irish and multinational companies.

“The result of the UK’s referendum brings opportunities and Ireland’s IFS sector can capitalise on investment opportunities in this environment,” Mr Murphy told a conference in Dublin on Thursday, which was organised by the Banking and Payments Federation Ireland.

“We have a highly educated workforce and a business-friendly environment, as well as being an English-speaking economy in the euro zone.

“There will be opportunities for Ireland arising from Britain’s decision to leave the EU. We will . . . seek to take those opportunities, many of which already form part of the IDA’s marketing strategy.”

Brexit-proofing

Mr Murphy also highlighted initiatives taken to Brexit-proof the economy, particularly for SMEs, by supporting increases in credit through the entry of non-bank finance providers.

“The success of this policy can be seen in the number of new credit providers active in the market, the increase in credit provision and the reduction in average interest rates for SMEs.”

Addressing the conference theme of “delivering service for customers”, Mr Murphy said the revised payment services directive (PSD2) would regulate new players in the market, enhance consumer protection, promote innovation and improve the security of payment services.

Value chain

“PSD2 is going to open up infrastructure and, in doing so, presents an obvious challenge for banks in terms of further disaggregation of the value chain, but it also presents opportunities. If banks do not quickly respond by providing services that consumers want, new players will.”

Mr Murphy noted the appetite of Irish consumers for payments services.

"Just last week, Visa's Digital Payments Study showed that 78 per cent of Irish consumers make payments or manage their finances using a mobile device, far in excess of the EU average of 54 per cent.

“Consumers are also embracing contactless payments, with 65 per cent of Irish people using a contactless card this year. These figures emphasise consumers’ demand for speed, simplicity, ease of use and instant access.”

Earlier, BPFI chief executive Noel Brett said the creation of a digital single market in the EU created challenges for traditional banks in terms of how prudential regulation treats investment in digital software and talent.

“Investment in software is penalised for banks generally, but especially so in the case of entities based in the EU,” he said.

“Here the accounting treatment of software as an intangible asset causes it to be fully deducted from core equity when calculating a bank’s capital requirements.

“Engaging and retaining digital talent is also affected. The rules have the effect of placing caps on variable remuneration in order to reduce the incentives for banking employees to take excessive risks. These same constraints do not apply to FinTechs and other non-bank operations.”