FinTech in Ireland
Collaboration between FinTech industry and International Financial Services will be critical to drive job creation
Currently 5,000 people employed in FinTech industry in Ireland, potential to double by 2020. Five key factors identified that will shape success of FinTech industry in next 5-10 years.
The growth potential of the FinTech industry is a key component of the IFS 2020 – A Strategy for Ireland’s International Financial Services Sector - published this week.
Deloitte analysis, based on company research, shows that the FinTech industry directly employs approximately 5,000 people, and has the potential to double by 2020. Much of this potential will stem from the collaboration opportunities between the FinTech industry and financial services companies which will predominantly be driven by the projected spend on IT services by financial service firms in Ireland.
David Dalton, Head of Financial Services, Deloitte Ireland commented: “Many financial services firms are struggling with outdated legacy platforms and IT architectures which are hampering their ability to grow and innovate.
“Whilst some financial services firms have been cautious about new FinTech start-ups, particularly where they are disrupting traditional business models and competing for customers, we are increasingly seeing a symbiotic relationship developing, which is helping to address these legacy issues in FS companies. Collaboration with FinTech companies that both disrupt traditional business models, but that also optimise existing business operations will be critical for FS companies. The key challenge for the FinTech industry will be to guide financial services industries to transform their business models and demonstrate the benefits of working together.
“Our view is that the FinTech and financial services industries are inter-related and mutually dependent. The connectivity between the two sectors needs to be significantly enhanced.”
Deloitte has identified five key factors that will shape success of FinTech industry in next 5-10 years:
1. Connectivity: the Government and industry partners must work to build connectivity and lessen the ‘awareness gap’ between indigenous FinTech firms and financial services companies operating in Ireland. This can be addressed locally via co-industry ‘get connected’ type events through to the establishment of cross-sector government policies. In this regard, Deloitte will be co-hosting a ‘speed dating’ event with the Banking and Payments Federation Ireland for their members and FinTech companies in May this year.
2. Talent: The Deloitte Talent in Banking Survey 2014 identified the ‘Google Factor’ as the reason why software services is the most popular industry for business graduates in Ireland. Banking was the third most popular industry. The opportunities for IT professionals within the financial services arena needs to be communicated to graduates. What’s more, in order to fill this demand for ICT professionals, education policy at second and third level will remain critical. For example, the UK has begun tackling this issue by making computer programming a mandatory subject for all students aged between 5 and 16. Initiatives like this will need to be introduced here in Ireland.
3. Innovation: Ireland needs to emulate the success of the top FinTech global hubs such as London, New York and Berlin. There have been specific successes in the establishment of R&D hubs, primarily driven by EU and national initiatives. The fostering of an innovative mind-set at national level to create the right conditions for innovation, investment, and collaboration activities and hubs is imperative. A combination of Ireland’s R&D tax credit regime and the Knowledge Development Box regime to be introduced later this year should help support increased innovation in Ireland.
4. Investment: On average, only €16 million out of €400 million in venture capital investment in high-tech companies, has been invested in FinTech companies over the last three years. FinTech companies need to avail of this significant untapped VC potential in Ireland and to focus on international VC firms that are looking for investment.
5. Cyber: Cyber security is a critical issue in financial services companies, as incidents continue to increase. This has led to a flood of investment in companies that provide cyber security software, solutions, and services including R&D investment. The large number of FS and FinTech companies in Ireland provides a level of critical mass, with the potential to position Ireland as a Cyber Centre of Excellence, acting as the engine for policy formation, investment, skills development and operations throughout Europe.
The accompanying Deloitte infographic provides an overview of both the financial services and FinTech industries, with an estimate of employees, and types of companies, in each domain.
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The information contained in this press release is correct at the time of going to press.
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