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Karen Cullen, Secretary to the Ireland for Finance Committee on fintech opportunities
Opportunities and challenges posed by fintech in Ireland
Fintech, as a term of art, describes the impact of digital technology on financial services. It is an important issue for the next phase of development of the Irish economy and one that the Department of Finance takes very seriously. Karen Cullen, Head of International Financial Services, Risk and Compliance Unit, Department of Finance and Secretary to the Ireland for Finance Committee, writes.
The role that technology plays in all our lives came into sharp relief during the pandemic, and many commentators refer to 2020 as a digital threshold year, marking a shift to a new era. It was also the year when we in the Department of Finance established the Fintech Steering Group, under the Ireland for Finance strategy, as our considered response to this multidimensional policy issue.
As a relatively new international financial services centre, Ireland has always had technology as a crucial feature of its development. Without the advances in telecoms in the 1980s it would not have been possible to attract the new investments that have grown into the vibrant financial services sector in Ireland that we enjoy today. Through my role as the secretary to the dedicated Government strategy to develop international financial services, Ireland for Finance, I have seen first-hand, just how critical fintech has become. It is an opportunity we have focused on for some time and one that has accelerated as an increasingly important driver of growth for people and organisations in the public and the private sector.
It is a critical factor behind the recent investments from both indigenous Irish firms that are fostered by Enterprise Ireland and the multinationals whose operations here are supported by IDA Ireland. It is also a trend that is common across all sectors, banking, insurance, and investment management and is of particular importance in the payments sector where Ireland has established a leadership position.
enterprise, questions are being asked of what will happen to cash in the architecture of the global banking system of the future and what function digital assets will perform in financial intermediation. The policy choices we make in financial services will need to balance the protection of consumers and enterprise in a way that fosters the innovation that is driving the efficiencies that fintech offers.
For industry, fintech is increasing what is already a complex business and the introduction of more technology is making greater demands of the management teams of the existing regulated firms. At the same time for new entrants the compliance requirements necessary for consumer protection and financial stability are a new challenge for them to navigate. “To deliver on our ambitions for fintech, and to address the challenges it brings while capitalising on the opportunities, the Department of Finance is focusing on what has worked well for us in the past.”
The focus of the Fintech Steering Group, which was initially comprised of Principal Officers from across all divisions of the Department of Finance, was to:
• coordinate the Department’s policy positions for fintech;
• collaborate with the wider public sector, regulators, and industry;
contribute to the EU policy debate on digital finance; and
communicate with the global fintech ecosystem on the full range of government supports for firms and updating them on regulatory developments.
The European dimension of fintech is an important element for Ireland as the technologies being deployed in financial services require a scale that exceeds our population. With our access to the single market and the European Commission’s focus on digital finance, we are uniquely positioned as an English speaking international financial services centre. We also have the added benefit of a common law legal system and a strong technology sector that includes the leading global software firms.
Under the 2022 Ireland for Finance Action Plan, we are widening the steering group to provide access to different perspectives on the policy questions we face in digital finance. By expanding the group, to include more voices from outside the public sector, we are offering stakeholders an opportunity to constructively shape the landscape of fintech in Ireland. In doing so we are extending our reach, drawing on all of our talents as a jurisdiction and maximising the networking capability that Ireland enjoys both at home and abroad.
The steering group is a valuable platform for us to collectively shape the direction of fintech and the role that we want it to play as a positive force in the Irish economy, facilitating innovation and supporting citizens and businesses. The approach is consultative and careful while being active and agile at the same time, as we look to capitalise on the conditions that we have created in our international financial services sector, where employment is at a record high.
Our aim in developing and enhancing the Fintech Steering Group is to develop pragmatic policies that address the challenges we face today while creating a robust platform for positive action in the future. This requires us to be in a position to learn and lead at the same time as we look to make possible a reimagined financial services sector, one with ever closer links to science and technology.
To deliver on our ambitions for fintech, and to address the challenges it brings while capitalising on the opportunities, the Department of Finance is focusing on what has worked well for us in the past. We have put partnership with industry and collaboration at the heart of the process with a commitment to develop a positive future of fintech in Ireland which creates opportunities while protecting people and businesses.
Ireland for Finance 2022 action plan published
The Department of Finance has published its 2022 action plan for the implementation of the Ireland for Finance strategy, the fourth of its kind since the publication of the strategy in 2019. The strategy aims to develop Ireland’s international financial services sector up to 2025.
2022’s action plan seeks to address five key themes: sustainable finance; fintech and digital finance; diversity and talent; regionalisation and promotion; and operating environment. Under sustainable finance, the priority is said to be the implementation of the Sustainable Finance Roadmap, published by Sustainable Finance Ireland in October 2021.
Actions from the roadmap that are to be undertaken as part of the action plan include: the establishment of an international sustainable finance centre of excellence; the acceleration of access to sustainable finance knowledge and skills; the development of a sustainable fintech strategy; the establishment of a public-private climate and sustainable finance group; and the assessment of the viability of a climate funding platform.
Five measures are given priority status in the fintech and digital finance sector. These include the implementation of the second phase of the Department of Finance’s Fintech Steering Group and the development of education resources in order to support people engaging with fintech. A not-for-profit organisation, the InsurTech hub, will be funded along with a website to support the development of insurance technology services, and two programmes of activity will be delivered, to support native fintech companies’ growth in international markets and to raise global visibility of Ireland as a fintech hub.
In order to guarantee the creation of new jobs in the sector, the Government pledges to launch the Women in Finance Charter under the theme of diversity and talent. It will also complete the study commissioned by the Expert Group on Future Skill Needs on the international financial services sector and review the International Financial Services apprenticeship programme.
The Government aims to achieve further regionalisation and promotion of Ireland as a location for industry through continued promotion of the European Financial Forum, led by IDA Ireland and the Department of Finance. Lastly, in order to improve the operating environment, the Department will continue its engagement at the European level to assess proposed directives and regulations, liaise with other government departments and offices, and negotiate and liaise with the finance departments of other member states to advance and protect Ireland’s interests.
In his foreword to the action plan, Minister of State with responsibly for Financial Services, Credit Unions and Insurance Seán Fleming TD states that on top of these key themes, fintech is a priority for the plan: “Ireland is strongly placed to benefit from strong bases in both the finance sector and the technology sector in our economy. Our fintech sector is broad, including not only new so-called ‘disruptive’ start-ups but many financial services firms that are highly ‘tech enabled’.”
