Mark Twain once quipped, “reports of my death have been greatly exaggerated”. Although he was referring to a mistimed obituary, fast forward 100 years and he could well have been speaking about the UK financial services industry over the past few years.
In the run-up to Brexit, there was much talk of London losing its dominance in financial services as Brexit played out, but this has certainly not been the case. The effect of the pandemic on the financial services sector – a 3pc reduction in output, 2pc of eligible staff furloughed – is negligible when compared to other industries such as hospitality.
The UK remains one of the biggest financial services markets in the sector globally, and there are many exciting opportunities there for ambitious Irish companies.
One of the biggest areas of opportunity is in technology, as the financial services industry in the UK is undergoing a rapid and wide-ranging modernisation cycle. This is partly driven by the pandemic as companies grapple with remote working, retaining or attracting good staff and partly driven by exponential operability offered by AI, natural language processing and API connections.
This is great news for Ireland, as we have a strong reputation for innovative technology solutions, especially in fintech and cyber security. The UK financial services industry is looking for a wide range of technology solutions including HR technology, compliance and regtech, payments, bionic underwriting in insurance, process optimisation and especially technology that can open up new revenue streams. Insurance is a sector that is really starting to embrace digitalisation.
With more Managing General Agents (MGAs) coming to the market that are entirely technology-based, there are plenty of opportunities. Irish companies – such as Codeast, who recently announced a partnership with Willis Towers Watson and Unitek, an early stage company based out of Malahide – are getting lucrative deals in the space.
The reputation of Irish insuretech is growing in the City, and Enterprise Ireland hopes to see more entrepreneurs developing scalable solutions in the future.
This technological modernisation is reflected in the make-up of financial services boards of management. Whereas once a board of directors was almost purely made up of accountants, lawyers and bankers, now there is strong representation from experts in technology, often coming from other industries. This gives a strong indication of the way in which the industry is going. However, technology companies should always be careful to focus on the ‘Fin’ rather than the ‘Tech’ to ensure the solutions are suitable for financial services.
Despite few staff being furloughed during the pandemic, the City of London was empty. While remote working, project managing remotely, and communicating and selling remotely were considered “nice to haves” before the Covid-19 pandemic, it’s now becoming clear that they are here to stay and are now considered essential to compete within the industry and to attract talent.
At Enterprise Ireland, we are working with financial services clients on adjusting their products and processes to suit remote selling. This is still an area with plenty of opportunities for Irish companies with innovative solutions.
Some Irish companies have recently made the move to set up a presence in the UK either to be regulated in the market or to keep a close proximity to their buyers. Most recently, Global Shares and Currencyfair have established offices here and this is a trend that will continue.
Sustainability is also an important area for innovation. The market is ripe with opportunities for Irish businesses to take advantage of this development.
At a number of recent events in the UK, our Enterprise Ireland executives have noted that this is a consistent topic of conversation among the most senior personnel in the industry. There is clearly a strong and increasingly urgent need for solutions in the areas of sustainability and ESG.
Despite Brexit, the UK remains one of our most important export partners – and the financial services sector in particular is full of opportunities for ambitious Irish companies with the solutions needed for the post-Covid world. Now is the time to tap into this lucrative market.
Jack Finucane Clarke is Senior Market Adviser for Financial Services and Digital Technologies at Enterprise Ireland's London office.