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e-Business in International Financial Services:


The Government published its Strategy for the Development of the International Financial Services Industry in Ireland in 1999. It sets out a number of priority objectives for the development of Financial Services in Ireland. One of these is:

Both industry and the public sector regulators and policy-makers will participate in Government-led initiatives to identify and remove potential obstacles to the development of electronic delivery of financial services and to positively encourage its development; the regulatory authorities will adopt a proactive approach in this regard to ensure that Ireland is well-placed within Europe as a location for such business; the provision of high-bandwidth telecommunications links in the IFSC will be a priority. 

The huge growth in the financial services industry in the last few years (total IFSC employment at end-1999 was over 6,500 with a further 2,000 back-office jobs) has been facilitated by the sustained commitment given by Government in partnership with industry members. With the huge growth in electronic business generally and with the likely further disintermediation of the financial services industry (e.g. the growth of web-based funds supermarkets) a strong focus on the emerging sector of international financial e-Business by Government and industry alike is clearly required.

IFSC e-Business working group

e-Business presents both a huge challenge and opportunity for international financial services companies. With this in mind, the IFSC e-Business working group was set up by the IFSC Clearing House Group in May of this year to explore the current situation regarding e-commerce and international financial services in Ireland and also to assess future developments in the sector.

Two sub-groups were formed to focus on different issues. The first group produced the Statement of Irish Government Policy: e-Business in Ireland for the International Financial Services Industry. This booklet provides an overview of the legal, regulatory, taxation and infrastructural environment available in Ireland at present and it also provides contact points in the various Government Departments and offices.

The second sub-group set itself the task of identifying potential threats and opportunities arising from e-Business. A report by Andersen Consulting into the key trends and business models expected to emerge from the move to electronic commerce in international financial services was commissioned. A survey carried out by the Financial Services Industry Association (FSIA) of its members also provided useful information. Both the report and the survey revealed that the main determinants of decisions by financial services companies to locate in Dublin will continue to be the factors which have applied to date i.e.- costs, infrastructure, tax, skills, EU and euro membership.

A key outcome of the Andersen Consulting report and the deliberations of the Working Group is that Ireland and the IFSC must move up the value-chain in order to retain competitiveness. One impact of e-Business will be to facilitate the migration of the simpler back-office tasks to cheaper locations. Equally, e-Business creates new opportunities for the IFSC in the provision of services using new delivery channels and the new technologies.

The following recommendations have been endorsed by the IFSC Clearing House Group and the key Government Departments and Agencies. The recommendations suggest concrete measures to help position Ireland to take advantage of the growth in international financial e-Business:

Selling the message

The IDA will continue to build on its strong record of achieving growth in international financial services in Ireland. The financial services section of the IDA should be fully resourced to enable it to target financial services e-Business companies and to maintain Irelands high-profile in this sector. It is also vital that high value-added companies are targeted as this is where sustainable long-term jobs will be concentrated.

The Government Policy Statement and Irelands profile as a location for well-regulated international financial e-Business will be promoted overseas by all available means including IDA overseas offices, industry associations and industry members.

Successful international financial e-Business companies which have been attracted here will also be used as models to sell Ireland as a location.

A major conference or seminar in Dublin within the next eighteen months on International Financial e-Business would play a useful role in raising Irelands profile in this sector.

The Statement of Government Policy should be updated and reprinted annually.

The web version of the Statement of Government Policy should also be updated regularly. It can be an important marketing tool with the latest information on Ireland as a location for international financial e-Business and it also has the potential to be a one-stop portal for direct contact between potential investors and the relevant authorities in Ireland.

Getting the fiscal and regulatory environment right

Reputable e-Business companies will wish to locate in a well-regulated centre and Ireland should maintain its current high regulatory standards. The regulatory agencies should continue to ensure that they can respond quickly and effectively to applications from new and innovative forms of international financial e-Business.

The Government should examine all business law provisions to ensure that there are no legal impediments to the expansion of e-commerce in Ireland. This will assure potential locators that the lead Ireland currently has as a result of the Electronic Commerce Act would continue.

Examination of possible tax barriers should be carried out, e.g. bringing the VAT rate into line with the EU average. The reduction in the standard rate of VAT to 20% from 1 January 2001 is a positive step in this regard.

It is in Irelands interests to ensure maximum certainty for e-Business companies. It is therefore important that Ireland continues to take a leading role in all discussions within the EU and OECD. Ireland should provide as much certainty as possible on taxation issues in advance of a determination at international level.

Getting the infrastructure right

Whilst the increase of bandwidth by the Global Crossing and other projects is to be welcomed there is scope for continued improvement. In particular, the speed with which ISDN lines can be made available to customers needs to be increased.

The countrywide availability of generalised always-on access, both to homes and businesses, with a wide variety of different bandwidth options to suit different needs, should be a priority.

Increased e-Business modules in financial services and other business courses should be provided, as pointed out in the recent National Competitiveness Council and Forfas reports.


The IFSC Clearing House Group and the other IFSC working groups will monitor implementation of these proposals for action and identify new issues emerging.

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