Ireland is in the perfect storm for fintech with the right ingredients to build start-ups of scale, says Accenture's Alastair Blair.
Ireland is at the intersection of the finance and technology worlds but needs to move fast in order to reap the rewards, Accenture’s country manager Alastair Blair says.
From the early 1990s until now, Ireland built a financial industry from zero through the International Financial Services Centre (IFSC) and today more than 35,000 people are directly employed in IFSC companies across the length of the country from Donegal to Kerry as well as within the IFSC district of Dublin.
But a new storm of opportunity is about to break thanks to the smartphone revolution, which puts a digital endpoint in the hands of billions of people on earth, disrupting how we used to look at our relationships with money, banking and services.
The power brokers in this brave new world won’t just be traditional banks but companies like Apple with its Apple Pay platform or fast-emerging young companies like Stripe, headed by young entrepreneurs John and Patrick Collison from Nenagh. There are also social media sites like Facebook, which is aiming to put payments inside Facebook Messenger to make e-commerce more personal and fluid.
Ireland is already the core digital R&D hub for companies like MasterCard and Fidelity, for example, as the consumer of the 21st century represents a challenge and an opportunity for traditional financial services companies.
In a new strategy, IFS 2020, the Irish Government aims to build on Ireland’s strengths in finance and technology to ensure it reaps the whirlwind.
The intersection of finance and technology
For Alastair Blair, country manager of Accenture in Ireland, Ireland needs to move fast because it has the ingredients to be a world player in the perfect storm that is finance and technology.
“For five years we ran our Fintech Innovation Lab accelerator programmes out of London and New York and last summer we decided to expand to two new cities: Dublin and Hong Kong.
“Why Dublin? We think there is a unique intersection of technology as well as broad-based financial services from consumer to retail, management to payments and wholesale banking, the full swathe.
“When you think of companies like Citibank, BNY Mellon or Zurich and what they are doing here, Ireland is a hotbed of finance and technology.”
He has a point. For IFS companies, Ireland has been ranked first for availability of skilled labour and second in Europe for financial skills. Ireland is also the fourth largest exporter of financial services.
Some €3.2 trillion worth of assets is currently under administration in Ireland. Not only that but we are carving a unique niche in aviation finance with 14 of the 15 top global aviation leasing firms located in Ireland and 50pc of the world’s leased commercial aircraft are owned or managed from Ireland.
The experiences of the Fintech Innovation Lab in Dublin have taught Blair that Ireland needs to double down to create start-ups of scale that can hold their own in a world where start-ups like Uber and Airbnb are disrupting the world of services.
Blair, who was recently appointed chairman of the new IBEC Digital Economy Policy Committee, urged that a visionary approach to supporting start-ups is critical because job creation by start-ups will in effect represent the next wave of FDI.
He pointed to frictions like start-up space and in a recent interview warned that Dublin has a six-to-eight month window before available start-up space in the city centre is ‘sold out’.
Fintech disruption led by the smartphone
“Disruption is the key word here. Today the digital economy is being disrupted by companies that didn’t exist 15 years ago – Facebook, Uber, Airbnb.
“Technology is so pervasive and the distribution system of choice for financial services is now the smartphone, and not the bank branch or centre.
“The smartphone has enabled disruption on a massive scale that could not have been imagined 10 years ago.
“Up until recently payments was a separate industry in its own right, aimed at banking and financial services. But now payments is a part of everything we do, booking tickets, buying coffee, just tap and go.
‘The consumer of the future has no interest in the processes of the past. The consumer is interested in simplicity, ease, completion and security’
– ALASTAIR BLAIR
“This is fundamentally different to everything we thought before. It is fascinating to think that payments is instant, not something that you have to wait three days to clear. Payments are going person-to-person, peer-to-peer, without the needs of an intermediary.
“There are no longer middlemen – with your smartphone you deal directly with the organisations themselves. Thanks to the smartphone the bricks and mortar wall has been removed between the business and the customer.”
Success in fintech, he believes, will be driven by those who can remove frictions and make payments more fluid.
“I don’t think consumers will have any interest in a complex process in the future. In recent years, Amazon introduced the one-click process.
“The consumer of the future has no interest in the processes of the past. The consumer is interested in simplicity, ease, completion and security.”
Returning to his point about start-up space and harnessing Ireland’s lead in IFS, Blair said many of the pieces are in place.
“We have the best legal, financial and other ancillary services that have been built around the tech firms that have located in Ireland from Silicon Valley in particular.
“And I think we have a unique environment here based on proximity and a nimbleness that we can take advantage of.
“The challenge is two-fold. How do we keep and grow something here and how do we encourage start-up founders to stick at it for the long haul rather than sell out after Series A?
“The second issue is space. We need space for the new wave of fintech companies but we need to keep them proximate to the existing financial services firms as opposed to distributing them.”
Blair believes Ireland needs to make a statement when it comes to fintech and create a start-up district just like it had with the IFSC in the 1990s.
“I’ve seen it in San Francisco with my own eyes – the proximity of companies in walking distance of each other is incredibly powerful.”
Siliconrepublic.com’s Fintech Week (17-21 August) brings you new stories every day from this exciting new field. Get updates by subscribing to our news alerts or following @siliconrepublic on Twitter.
