“High Growth Fintech Companies Have the Luck of the Irish” written by YapStone.
Think about recent strides that the Fintech sector has made in our economy and your mind may turn to bleeding edge technology hubs like Silicon Valley or New York. You may even consider world financial centers, such as London, Tokyo, or Geneva. But there’s a place that might fly low on your radar for obvious reasons — Ireland. It’s not as glamorous or well-known in international financial circles and it’s also been troubled by financial woes, unemployment and debt. Yet over the last two years, Ireland has steadily become a major hotspot for Fintech companies.
A country once caught in crisis has taken measures to turn things around – and it’s not just the infamous Irish luck spurring the boom in financial services. Ireland was ranked fourth on the Forbes List of Best Countries for Business in 2016, based on several factors, including GDP growth and GDP per capita. It’s also offering dazzling incentives that Fintech companies simply can’t ignore.
Let’s take a closer look at why so many are deciding to take root in the Emerald Isle.
The IFS (International Financial Services) sector is one of the pillars of the Irish economy – an economy well recognized for being one of the most competitive in the world. Right around the time that Fintech was becoming impossible for traditional financial institutions to ignore, in 2015, the Irish Government astutely launched a five-year-strategy for Ireland’s International Financial Services Sector (IFS2020).
The main objective of the IFS2020 is to consolidate and strengthen Ireland’s position as the global location of choice for specialist international financial services (IFS), including Fintech companies. This strategy included a thorough overview of the country’s existing strengths and laid out the steps to secure the future of IFS in Ireland.
A few years ago, YapStone selected Drogheda, Ireland for the company’s international headquarters and foundation for global expansion. Pete Rowan, VP of International Operations in YapStone’s Drogheda office says that the IFS is now at the midpoint of its strategy and things are looking good. The latest update on the IFS2020 Action Plan shows that provisional data for 2017 indicates the job creation target (10,000 net new jobs by 2020) remains “firmly on track, with current indications of further economic growth reflecting a strong pipeline of additional new jobs in 2017.”
As Ireland welcomes the Fintech industry to its shores, it’s proving to be beneficial for all. Fintech’s impact on the local economy has been nothing short of remarkable. IDA Ireland, the Government agency responsible for attracting foreign direct investment, recently announced that employment from foreign direct investment (FDI) had reached almost 200,000, the highest ever on record.
To add, the jobs created have also attracted Ireland’s tech savvy talent pool to the region. In the 2016 report on competitiveness, published by the International Institute for Management Development (IMD), Ireland was ranked the seventh best place in the world to do business. This was a major increase from sixteenth place in 2014. Ireland is also ranked fifth in the world when it comes to availability of skilled labor, which further increases its appeal.
In the wake of the UK’s decision to become independent from the European Union, Ireland has been quick to take advantage of the uncertain economic climate. Many companies in financial servcies are turning to countries like Ireland, which offers stability and continuity of measures promised.
The full implications of the UK’s exit from the EU are not yet known, yet in the midst of this uncertainty, more Fintech companies will likely seek stability – making Ireland’s attractiveness in the industry stronger than ever.
Tax breaks and incentives
With Fintech being one of the hottest industries around, competition is fierce amongst countries who want to establish themselves as Fintech hubs. Ireland is rising to the challenge by offering an extremely low corporation tax rate at 12.5% (the lowest rate in Western Europe) as well as attractive incentives for startups.
Some of these incentives include startup relief, which provides a three-year tax exemption for new companies with profits of under €320k, as well as marginal relief for profits not exceeding €480k. On top of that, Ireland offers an internationally competitive R&D Tax Credit regime, as well as full support and guidance for new players in the industry.
IDA Ireland is famously welcoming to new financial services companies, providing advice, assistance, and granting aid and incentives to international companies coming to Ireland. A wide range of support is available, from capital, employment and R&D grants, to assistance recruiting talent and finding office space. For international companies selecting an overseas base, the IDA ensures their transition is as smooth as possible.
New industry association
As the Fintech community prospers and thrives in Ireland, a new industry association has been created. The Fintech and Payments Association of Ireland was formed to act as the representative entity for financial services companies in the country. Fintech companies at all stages of operations can can seek support from this association and receive help to accelerate their growth. The association also aims to liaise with the government to ensure that Ireland continues to provide attractive incentives for Fintech companies, creating a win-win situation for all.
Luck of the Irish? That may be. But, add top talent, a welcoming and competitive place for new businesses, and major government incentives and it’s no wonder Fintech is looking to Ireland as the destination for global expansion.