Finance Minister Paschal Donohoe says Ireland’s financial services sector needs a new strategy and has unveiled a consultation paper titled Ireland for Finance Strategy 2026-2030.
In introducing it, the minister coined a new catchphrase, the Four Ds — deglobalisation, digitalisation, decarbonisation, and demographics, News.Az informs via Irish Examiner.
He says his department recognises the Four Ds are reshaping the global economy and resulting in a complex set of challenges for the financial services industry, a key platform of growth in the Irish economy over the past decade.
Brexit supercharged the Irish financial services industry as UK-based corporations shifted their European offices to Dublin to ensure they could continue a free flow of assets and funds across the EU.
According to data from EY’s financial services Brexit tracker, at the end of 2021, over 400 UK financial services role relocations to Europe were announced, taking the total number of jobs leaving London to maintain access to EU markets to over 7,500 to date.
The financial services boost from the Brexit shift from London to Dublin has continued, and the sector now employs 140,000 people in Ireland, 60,000 of them in the IFSC — now ranked the third leading financial centre in Western Europe, after London and Frankfurt, according to the global financial centres index.
The financial services industry is big business for Ireland, with over €4.9 trillion in assets under management. More than 1,000 fund managers from 50-plus countries have assets administered in Ireland, including 17 of the top 20 global asset managers. But the minister is right: The challenges of the Four Ds could derail the sector.
The deglobalisation strategy being pursued by the Trump administration in so many areas as they drive to ‘make America great again’ could be shifted at any time from tariffs on products made outside the US, to a focus on financial services, with a demand on US corporations to bring home service jobs to the US.
What gives these teeth is that a significant number of those employed in the Irish financial services sector are in US banks such as Citibank, Bank of America, JPMorgan, and US Bancorp. But many jobs in the sector are created by US tech companies located here, such as Airbnb, eBay, Facebook, Indeed, LinkedIn, Microsoft, PayPal, X, (Twitter) and Google.
The changed geopolitical environment, fuelled by the Trump administration’s protectionist agenda, has fed into other countries taking a similar strategy, resulting in a fragmented landscape for international corporations located in the IFSC.
And whereas digitalisation will continue to reshape how financial services businesses operate, the need to keep up to speed in the AI and cybersecurity space will be challenging, requiring trained staff with a fusion of technology and financial skills at a premium.
At the heart of decarbonisation and the associated green transition are the commitments of Ireland and the EU on climate and sustainability objectives. These present fresh challenges as the Trump administration pivots towards continuity of fossil fuels.
Pivoting away from the green agenda is already underway, particularly with US corporations, leaving many in the financial services sector who have been channelling investment towards projects aimed at meeting these sustainability objectives in an embarrassing bind.
Demographic challenges in the EU and, in particular, in Ireland, are also impacting the sector. These range from low female participation to population ageing, and a shrinking working-age population. But perhaps the most intractable challenge is that the need for acceptance of more ethnic diversity in our working population will increasingly be necessary to support employment in all sectors, in particular in the financial services sector.
However, the minister is probably aware of these challenges and is more interested in getting some indications of where the opportunities are in financial services. He is asking all stakeholders in the sector to submit their views by September 19 on how Ireland can maintain and grow its position as a leading global hub for international financial services.
Top of the list is likely to be homegrown ‘unicorns’, startups that have reached a valuation of €1bn or more. Some prominent Irish examples include Intercom, Fenergo, TransferMate, Wayflyer, and of course Stripe.
