Ahead of Siliconrepublic.com’s Fintech Focus week — and pre Budget 2016 — Elaine Burke sat down with Minister Simon Harris, TD, to discuss IFS2020 and the Government’s five-year plan for Ireland’s financial services industry.
As a Minister of State in multiple Government departments, Simon Harris TD has a selection of special responsibilities, including international banking. He’s not the archetype you would expect in this high-profile role given his youth (relative to his peers), which is often highlighted through his unofficial title as the youngest member of the current Dáil.
However, Minister Harris does fit the bill in some respects, as I meet him in Leinster House and he bustles towards me: a young professional in a suit and tie, files in hand, looking busy and on a mission – an image that wouldn’t look out of place in Dublin’s International Financial Services Centre.
Perhaps this archetype of a financial services industry worker is too limited, though. Some might even say it’s damaging.
In discussing Ireland’s financial services strategy, IFS2020, I am compelled to ask about the issue of diversity in the sector, and Minister Harris wastes no time in telling me this is something he feels “very strongly” about.
“I agree with you fully on the diversity issue and that’s why I was very eager in the first instance to try and shake up, if you like, what was the Clearing House Group, disband it, and replace it with an Industry Advisory Group,” he said.
This Industry Advisory Group, which had its first meeting with the Minister’s IFS2020 Public Sector Co-ordination Group this summer, has one-third female representation. It’s not an even distribution, but to anyone observing the industry as a whole, it’s a marked improvement on the norm.
“We do have a number of very senior executives in the international financial services operating here in Ireland who are female, and very formidable businesspeople. But most rooms you go into are pretty much generic in terms of the demographic,” admitted Minister Harris.
Diversifying the financial services sector
Society’s gender gap is an issue at the forefront of many minds in 2015 – thanks to rising online voices and international campaigns fronted by famous figureheads, to list just two examples – and so, many leaders have felt compelled to chime in with their commitment to change. Too often, though, these statements are wishy-washy platitudes with little action attached.
Minister Harris, to his credit, demonstrated a deeper understanding of the diversity issue. Diverting the conversation away from gender – and underlining that it’s not for him, a man, to speak for the women fighting for greater equality – he spoke passionately about his vision of casting a wider demographic net to capture talent for the financial services industry.
If you’re not familiar with the IFSC, the collection of towering office blocks where transactions of unfathomable value are conducted on a daily basis sits amid areas of economic disadvantage on Dublin’s north quays.
“How many children or students from the catchment area in and around the IFSC can aspire to work there? Well, the answer is every single one of them can. How many of them actually know that they can aspire to work there?”
He leaves that last question unanswered, to a point.
Nestled in the IFSC, the National College of Ireland is working to counteract this with what Minister Harris describes as “brilliant work in trying to bring in young students from the surrounding areas of the IFSC, where there has been a tradition of economic deprivation over the years, and actually trying to provide them with opportunities”.
The problem is, kids don’t often dream of being bankers, and the staining of this sector throughout the European economic downturn hasn’t helped foster a good reputation for this particular career path.
“I think there is that view of banking, bankers, financial services — right up with a lot of other professions including my own, perhaps — that has taken a significant thrashing in terms of reputation during the international crisis. And, to be quite honest, with a lot of justification in this country in terms of financial services and the damage that domestic (as opposed to international) financial services did to our own economy,” said Minister Harris.
Of course, there’s an agenda in wanting to fix financial services’ bad reputation and recruit workers from all backgrounds, as competition for professionals has intensified in recent years and shows no sign of letting up.
There’s little to stop qualified Irish professionals from seeking employment in the bright lights of London, but, while our attractive neighbour presents stiff competition, this nearby rival also has its benefits.
“You could view it as a challenge. You could also view it as an opportunity,” said Minister Harris.
“I tend to see that relationship between Britain and Ireland as competitive but symbiotic. I tend to believe that there will always be certain operations carried out in London; there will always be certain parts of the operations carried out in Dublin and in Ireland. And it is about the two islands, if you like, being the hub for international financial services, and for innovation and for fintech in the European Union.
“We are the only English-speaking country in the Eurozone. We do, as a country, I think, very well, bridge the gap between Europe and the United States,” he added.
While, ultimately, he sees the competition from abroad as a mutually beneficial relationship, Minister Harris is still optimistic that, with the right competitive offering in the context of our growing economy, the talent migration could be reversed.
Unfortunately, since Budget 2016 offered little to Irish-based entrepreneurs, the danger of waving goodbye to talent and innovation as it ships across the Irish Sea has increased.
The start-up ecosystem
Speaking to me before the Budget announcement, Minister Harris was unsurprisingly prescient about what was to come.
“I also think we need to do more in terms of the interactions between the new young company that has that great idea but doesn’t have the resources of one of the big giants in terms of scale, and we need to look at incubators, we need to look at accelerators, we need to look at start-up space, we need to look at angel investors. And these are – without pre-empting what a fintech policy paper would look like – I think these are all key ingredients of it,” he proposed.
Sadly, provisions for this recipe were not to be found in the Government’s Budget, which riled the start-up community in Ireland. There’s still a lot to be gained for multinational corporations and foreign direct investment, but to feed one and starve the other is to leave the ecosytem lopsided.
IFS2020 has ambitious targets to hit in just five years, including the creation of 10,000 more jobs in the sector by the end of 2019. The Government may have forgotten the role the start-up community has to play in job creation, but industry veterans have not.
It’s largely been conceded that financial services shouldn’t compete with fintech, but should embrace, encourage and adopt it. We’re seeing this come to life with the establishment of start-up workspaces from major banking institutions and accelerators led by international bodies.
At the very least, the chief instigator of IFS2020 hasn’t neglected to consider start-ups and the emerging fintech industry. Shortly before our meeting, the minister had visited New York on a trade mission, witnessing an Enterprise Ireland-led pitch session putting Irish start-ups in front of US venture capitalists.
“We as a State need to provide more opportunities for those new young companies,” he said.
Minister Harris is looking in both directions, planning to make greater connections between Irish financial services and Asia, as well as North America, having visited Hong Kong for the Asian Financial Forum at the start of this year – the first time “team Ireland” had participated in this international event.
“There’s a really strong – small, relative to size – but strong and influential Irish business community now in Hong Kong, and they’re very eager to interact,” said the Minister.
The Hong Kong connection is one taken seriously, with the appointment of the first consul general of Ireland to Hong Kong coming last year. Peter Ryan was selected for the role, having served as deputy consul general for economic and public affairs in New York.
These supports on the ground in far-flung financial centres serve to assist Irish finance players, who need to scale to survive.
“Let’s be very honest,” said the Minister, “Ireland has a population of 4.5m people. If somebody here has the next big idea in the financial services space, we’re going to want them to export that idea, we’re going to need them to move to bigger markets, and that’s good.”
But a small Irish start-up isn’t likely to be able to do this alone. “You don’t want to send a young Irish company over there with a great idea, put significant taxpayer resources behind them (and rightly so), without actually giving them a fighting chance to succeed,” he said.
“Failure is not a problem. It’s absolutely worth taking a punt on a good idea – and we need to do that, particularly with this new technology and this new innovation space, but you want to also give them a fighting chance, a realistic chance.”
Telling the story in Ireland and abroad
Trade missions, mentoring and guidance is one thing, but before we can start selling Ireland’s fintech and financial services prowess around the world, we need to sell it to the Irish population.
Minister Harris knows the strength of a good story in doing this, giving people a champion they can aspire to emulate. He cites Colm Lyon as a great example, having this year sold Realex Payments to Global Payments for €115m before launching straight into a new venture, Fire Financial Services, and a new role as chair of the Fintech and Payments Association of Ireland.
“We’re beginning to have the stories that we can tell and I think those stories are much more than just about Colm Lyon and his company. I actually think they’re the stories that can inspire the 11-year-old girl sitting in a classroom in Crumlin that there’s a path there. And I think that is the really exciting thing,” he said as our interview neared its conclusion.
Lyon’s story is inspiring, but to get the effect Minister Harris hopes for – for people young and old to sit up and take notice – the rest of Government policy needs to fall behind IFS2020 and back the future of the financial services sector completely, start-ups and all.
Fintech Focus is a week of fresh fintech-focused content hosted on Siliconrepublic.com from 19 to 23 October. Stay up to date with the latest stories by subscribing to our news alerts, or follow the hashtag #FintechFocus from @siliconrepublic on Twitter.
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