Realising the potential of Ireland’s financial services sector

The international financial services sector in Ireland employs more than 40,000 people and numbers in its ranks 11 of the top 13 insurance companies in the world, 17 of the top 20 global banks, and 14 of the top 15 aviation leasing companies.

The sector is responsible for servicing $4.2 trillion in assets under management.

These impressive statistics have made Ireland a globally recognised hub for financial services but the country could do even better, according to Paul Sweetman, director of Financial Services Ireland (FSI), the Ibec sector association representing the full suite of financial services companies in Ireland.

“We want Ireland to be in the top 20 global financial centres by 2025,” he says. “That’s a 50 per cent improvement on our current Global Financial Services Index ranking of 30th in the world, which already represents a significant improvement from 38th in 2019.”

That ambition is articulated in the FSI strategy document “Ireland: Financial Services Powerhouse for Now and the Future”. “There are five goals to achieve within the strategy,” says Sweetman. “The first is to establish Ireland as the global centre for technology and financial services integration, innovation and leadership. The second is to make Ireland the pre-eminent global location for diversity and culture in the industry.”

The other goals cover improvements to the business environment for the sector, making Ireland a global leader for talent and skills in the sector, and establishing this country as a world-class location for sustainable finance.

Critical role

This is far from empty rhetoric, according to FSI chair and chief executive of Mediolanum International Funds Furio Pietribiasi. "It is not just a statement of ambition. I really believe there is an opportunity in the market. If you think about the economic crisis, which is one of the largest in history. Financial services has a critical role to play in the recovery as it provides the plumbing for the real economy."

He points out that all the financial supports for economies globally are being channelled through the plumbing provided by the financial services sector.

The sector is also facilitating the investments required to move to the new sustainable economy required by climate change. “We are all on a sustainability journey,” says Pietribiasi. “The financial services sector is enabling governments and companies to borrow money and access capital at low rates to pursue sustainability agendas.”

While the sector can assist Ireland to achieve its climate action targets through the provision of finance, the whole environment, social and governance (ESG) investing area provides growth opportunities for the industry here as well. “The ESG agenda is incredibly strong and is being pursued globally,” says Sweetman. “If a financial services firm has an in-house ESG unit they should consider putting it in Ireland. Attracting those units is a growth opportunity for Ireland.”

Fintech is another future growth opportunity. “The digitalisation of financial services is a massive opportunity for Ireland,” says Pietribiasi. “Ireland is already well-positioned and should take advantage of its existing technology and financial services ecosystems.”

Resilient sector

This country’s response to the Covid-19 has created a further opportunity. “The financial services sector here is incredibly resilient,” Sweetman notes. “It stayed on and it was always open to service clients. Companies globally are looking for strong, resilient locations. Ireland is doing very well in that respect and is coming to the fore on the list of countries that responded well to the crisis.”

He points out that growth has been very strong over the past number of years and this momentum can be built upon. “The corporation tax contribution from the sector over the six years from 2014 to 2019 increased by 137 per cent to €2.47 billion, that’s 23 per cent of the overall corporation tax revenue collected by the state. The sector contributed €19.3 billion to GDP. That has gone up by 30 per cent since 2014. And there are 9,000 companies in the financial services sector, an increase of 36 per cent since 2014. We can use the financial services sector as a beacon for growth at a time when we need it most.”

While the industry will pursue its own growth agenda, Sweetman believes there are some actions required from government as well. At a very practical level, the passage of the Investment Limited Partnerships (Amendment) Bill into law to enable greater participation of private equity in public projects here is one.

“Another thing we would like to see is the establishment of an industry stakeholder forum between regulators, industry and government. It is the norm internationally to have them. Robust regulation is very important, and a forum would add to that. We need to work in collaboration with government and regulators to realise the potential of the industry.”