Dublin, Ireland

Dublin, Ireland General Overview & Fintech Landscape

First Edition

Dublin, the capital of Ireland, is a profitable location for financial services, thanks to the combination of high productivity and a competitive cost base compared to other locations with similarly sophisticated ecosystems. The country is part of the Eurozone, a member of the European Union and participates in the EU single market. Therefore, by locating one’s business in Ireland, multinational corporations gain a unique gateway into other major markets. Although hit hard by the crisis in 2008, Ireland experienced in 2014 the fastest economic growth within the Eurozone. Today, the country enjoys a robust current account surplus. As of this year, Ireland is considered the sixth freest economy in the world. In addition, the International Chamber of Commerce (ICC) ranked Ireland as the fifth most open economy worldwide. Ireland stood out as having the highest level of openness for foreign direct investment and also performed strongly in relation to its trade policies. This high ranking highlights the importance of international trade for the open Irish economy. The country is exports oriented toward sectors with high added value. Ireland is the fourth largest exporter of financial services in the EU. However, the other side of the coin is that this economic openness makes Ireland considerably influenced by global markets and, therefore, vulnerable to global economic cycles and to external shocks. Dublin has the potential to become a global fintech innovation hub along with London, Berlin, New York, Silicon Valley, Tel Aviv, Singapore and Hong Kong. This report aims to highlight the strengths of Dublin as a favorable city to conduct and implement business. Dublin’s skilled workforce, its work as a technology hub and even the supporting Irish startup ecosystem are only some of the elements we will discuss in this report, showing that Dublin a perfect location for international fintech companies seeking to expand and grow.

Pro-business economic policy The Irish government pursues a pro-business economic policy. Ireland has a consistent, decades-long policy of welcoming foreign-owned business. This policy is bearing fruit and it reflects in the international rankings.

Source: World Bank, 2018

This year, the World Bank ranks Ireland 17th worldwide, and sixth in the European Union, in term of ease of doing business. In addition, Ireland is considered to be the number one European country to start a business. Ireland is also in the top 10 globally in terms of protecting minor investors and paying taxes. Ireland requires low bureaucracy, which is very favorable to young entrepreneurs. In addition, the Irish labor costs are lower than the European average. A real competitive advantage compared to similar cities.

Favorable corporate tax rate environment Corporate tax rates have been one of the principal elements of the favorable enterprise environment in Ireland for more than three decades. Indeed, the open and transparent Irish tax regime is considered as one of the most businessfriendly in Europe or the Americas. A combination of a 12.5% tax rate and an exceptionally extensive and comprehensive set of double tax agreements with 62 countries makes Ireland a highly tax-efficient location. Such efficiency is particularly beneficial for international financial service operations. With the available 25% relief on qualifying expenditures incurred in carrying out R&D activities, the country positions itself as open to all companies undertaking qualifying research and development activities in Ireland or within the European Economic Area. The R&D tax credit is a significant source of tax saving for several startups and SME companies. Loss-making companies can also benefit from the R&D tax credit by receiving a cash refund of the credit, subject to certain conditions. Through these mechanisms, Ireland encourages and rewards genuine innovation.

Source: KPMG, 2017

Strong education system Ireland has the youngest population in Europe with one third under 25 years of age and almost half the population under the age of 34. Ireland’s population is forecasted to increase by almost one million people to 5.75 million in 2040. The country has one of best-educated populations in Europe. The share of 25-34-year-olds in Ireland with a third-level qualification is 52%, compared to an OECD average of 43%. In 2015-2016, of the 220,000 students enrolled in third-level courses across Ireland’s universities and colleges, more than 30% enrolled in STEM courses and 25% enrolled in social sciences, business and law courses. On the educational field, Ireland ranks in the top 10 globally for the quality of its education system, a university education that meets the needs of a competitive economy and the knowledge transfer between universities and companies. This offers multinational corporations a large pool of talent to hire from in Dublin. It is also complemented by the hiring of international talent by large multinational corporations. This unique combination has led to a young and diverse workforce.

The country knows this competitive advantage and is not resting on its laurels to maintain it. Therefore, the government has several action plans in place to make Ireland a global leader for technology talent and skills.

Financial center legacy Since 1987, Ireland has benefited from the presence of the International Financial Services Centre (IFSC) inside the country. Today, the Irish financial sector employs nearly 38,000 people in more than 500 companies, generating around €2.1 billion. These firms operate from more than 20 different counties throughout Ireland.

Source: IFSC

The IFSC houses financial institutions together with law firms, accountancy firms and tax advisors who support them. More than 250 of the world’s leading financial firms, including half of the world’s top 50 financial institutions, as well as major international trading companies, have internationally focused operations in Ireland. IFSC companies comprise of 5% of all EU cross-border financial services activity and now account for around 38% of all financial services corporation tax revenues. The Irish financial crisis and the response of the regulators led many financial institutions to move operations elsewhere and caused Dublin's ranking as a financial services center to drop for a time from 10th in 2009 to 70th in 2014. Since 2014, Dublin has rapidly recovered, developing a broader base of service offerings and rising to 30th place in the 2017 GCFI rankings. Ireland has particular strengths in: administration and management of funds; reinsurance; cross-border insurance and specialist finance, such as aviation leasing and asset finance.

A technological and digital hub It’s not surprising to see that all of the top ten “born-on-the-internet” companies are located in Ireland or that nine of the top ten global tech companies (Microsoft, IBM, Oracle, Intel, etc.) have an office in Ireland. These companies are adding more and more R&D and knowledge centers inside the country, further developing the innovation side of the Irish market.

The Digital Hub The Digital Hub is the largest cluster of digital media, technology and internet businesses in Ireland. The center provides office space and business support services to growing technology companies. It also provides digital learning and training opportunities to the local community. The Hub is currently home to 89 digital enterprises employing nearly 650 people. The campus provides space for companies to scale and grow, and serves as a EMEA headquarters of major international companies. The Digital Hub is also home to industry organizations such as the Irish Internet Association, NDRC and Silicon Republic. More than 200 companies have grown through the Hub since its founding in 2003, generating more than 2,000 jobs. These companies have included Etsy, Distilled Media Group (Daft.ie), Havok, Houghton Mifflin (Riverdeep), Amazon, Kavaleer and MTT.

Silicon Docks What was once a symbol of industrial decline, Dublin’s docklands area has become the single most prosperous area of the country, a symbol of how far Ireland has come in its recovery from the financial crisis of the 2000s. This former area of industrial wasteland gave way to one of the most dynamic technology and business hubs in Europe. Because of the concentration of European headquarters of high-tech companies, the area has been given the nickname “Silicon Docks” in reference of the Silicon Valley in California.

Strengths in the software sector An innovation hotbed in Dublin has also developed due to Irish software expertise, both in the domestic sector and from people working for multinational corporations. Ireland’s reputation as a center of software excellence is unrivaled in Europe. According to IDA Ireland, it is home to more than 900 software companies, including both multinational and local firms, employing 24,000 people and generating €16 billion in exports annually. The sector’s wide-ranging activities include software development, R&D, business services and EMEA/international headquarters. As the world’s second-largest software exporter, Ireland is recognized internationally as a leading location for companies in the software sector. Sixteen out of the top 20 global technology firms have strategic operations in Ireland, including Microsoft, Google, Apple and Facebook.

Synergy between the financial services and technology sectors Ireland fosters collaboration between the IT and the financial services sectors. The presence of big international technology players in Dublin, with Google, Facebook, PayPal and more, as well as the presence of the IFSC, creates a strong foundation for this. There are many spin-offs from the two sectors all over the country. The collaboration between the two sectors drives innovation and creates a strong fintech ecosystem, which is critical in driving job creation.

Brexit Due to their common history and their geographical proximity, Ireland and the United Kingdom share a lot of things. Today, Ireland is highly exposed to the British economy: the UK is the second-largest market for Irish exporters. It is also the first import market. Ireland is one of few EU countries to have a goods trade-balance deficit with the UK. On the one hand, a UK slowdown in growth or a potential recession would negatively impact Irish exports and investments to the UK. This is due to the strong sterling depreciation, which accounts for around 14% of Ireland’s goods export and 20% of services exports. On the other hand, Dublin, alongside Frankfurt, Paris and Amsterdam, has been touted as a potential challenger to London as the European capital of financial technology after Brexit. With Brexit, Ireland becomes the only native English-speaking country in the European Union. Although the knowledge of English is nowadays widespread, it remains a strong argument, with the common Anglo-Saxon culture and the proximity with London, for American companies who wants to enter the EU. However, so far, the vote to leave appears to have little impact on the city’s importance for the sector. “Brexit may be viewed nervously by some sectors but, for fintech, it promises to bring real opportunity.” - Chris Skinner

A focus on Dublin’s fintech landscape Fintech is a core component of IFS 2020, the Irish government’s strategy for developing Ireland’s financial services sector and it is clear that Ireland is well positioned to provide the kind of support required by the sector. Through this governmental strategy, the country puts real focus on the opportunities in fintech and that will help to ensure that the ecosystem and environment for fintech companies will continue to be supported and strengthened.

Successful Irish companies

Source: Banking & Payments Federation Ireland, March 2018

Fintech & Payments Association of Ireland The trade association for financial technology and payments businesses in Ireland. The FPAI represents fintech and payments business in Ireland to develop the regulatory, commercial and community ecosystem in which they operate. The FPAI is a not-for-profit organization established to further the interests of the stakeholders in the Irish fintech ecosystem. The FPAI activities are undertaken by a company limited by guarantee (Fintech and Payments Association of Ireland CLG) through its board of directors (the FPAI Board). The FPAI currently does not have an executive function and all of the members of the FPAI Board fulfill their role on a non-executive basis without remuneration. In January 2018, the FPAI became a full affiliate of the Banking and Payments Federation Ireland (BPFI).

In early 2018, B-Hive and the FPAI signed a Memorandum of Understanding that will allow them to collaborate and cooperate through areas of mutual interest.

About B-Hive B-Hive is a European collaborative innovation fintech platform that brings together major banks, insurers and market infrastructure players. Together, we work on common innovation challenges and build bridges to the startup and scale-up community. We aim to put Brussels on the map as the smart gateway to Europe and leverage on the opportunities offered by the digital transformation for the financial services industry. We believe that building bridges between important fintech hubs and the Eurozone enables both European and non-European companies to grow and expand.

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