The synergy between the IFSC and Northern Ireland
As stability and growth return to Ireland, the talent, resources and eco-system north of the Border can help the IFSC to leverage its international position of leadership and stay ahead of the competition, writes Alastair Hamilton.

The success of the IFSC in the past 25 years is owed above all to the calibre and talent of the workforce in Ireland. Consistently, talent is identified as a primary driver in attracting foreign direct investment (FDI) to any country, ahead of factors such as tax, regulatory environment or cost. The depth of domain expertise now in Ireland sets the country apart from many would be financial services centres elsewhere in Europe. However, maintaining this edge in an increasingly competitive global market will require the IFSC to tap into fresh labour pools on the island, to power the continued growth of international financial services firms while reducing their exposure to the effects of possible talent shortfalls. In this context Northern Ireland offers the IFSC both a synergistic solution and an opportunity to pre-empt the future talent challenge.
Alastair Hamilton

This was recognised in 2008 when then Finance Minister, Brian Cowen , announced the relaxation of the minimum activities regulations to enable companies in the IFSC to carry out middle and back office support activity for Irish Domiciled Funds in Northern Ireland. At the time, the primary drivers for the move in the IFSC were wage inflation and staff attrition, brought about by the rapid growth of the funds sector. Northern Ireland represented, and continues to represent, an almost separate source of talent for the IFSC, with a significant and largely untapped pool of accountancy and finance professionals. Cities like Newry, Belfast and Derry can offer companies in the IFSC a high quality, cost effective and easily accessible platform through which to grow their activities on the island.

Furthermore the North is internationally recognised as a ‘go-to’ centre for financial software development, in particular for sophisticated capital markets technology. Recent collaboration in this area has seen international companies including Citi and NYSE Technologies join research centres at Queen’s University Belfast and the University of Ulster to jointly address areas relating to high performance computing and embedded systems.

Northern Ireland's growing reputation for middle and back office activities within the financial services sector comes on foot of recent growth in areas including financial services software development, infrastructure support, fund administration, operations (reconciliation, settlement, clearing), analytics and risk management.

Financial services in Northern Ireland employs over 26,500 in more than 1,200 firms. Some of the international financial services companies that have established operations are Citi, The Allstate Corporation, Liberty Mutual, NYSE Euronext, and, most recently, Capita, PriceWaterhouseCoopers, and CME.

In 2011, there have also been significant developments, for example, the decision by the Chicago Mercantile Exchange (CME) to establish an office in Belfast , and in the establishment of operations in Northern Ireland by professional services and consulting firms such as PriceWaterhouseCoopers, SAP and Allen and Overy during the year.

Northern Ireland’s first mover advantage in legal process outsourcing (LPO) projects was underscored with the announcement that Allen & Overy LLP - one of the world’s largest international law firms - is to locate a new support and legal services centre in Belfast. The announcement follows Herbert Smith's decision to locate an outsourcing operation in NI, the first top UK law firm to do so. These arrivals follow in the footsteps of Citigroup (Citi) - a pioneer of legal and compliance near shoring in Northern Ireland located in the Titanic Quarter.

Building on the foundations that have been laid down in Northern Ireland over the past several decades in financial services software development, notable in the output of graduates, Northern Ireland today is one of the world's top 10 centres in financial services technology.

It is the intention to 'move up the value chain', with abundant Northern Ireland skills such as quant modelling and actuarial expertise being employed to provide support opportunities for international financial services companies in the IFSC for example.

The Aerospace industry is also one of Northern Ireland's most important industries, with the world's fourth largest aircraft manufacturer, Bombardier comprising a key part of the sector, which employs over 7,500. With the IFSC hosting one of the key global clusters in the aircraft leasing industry, the scope for synergies on an island basis is also noted in these complementary sectors. With the global aerospace market demonstrating real growth during the present period of economic difficulty, Northern Ireland is well set to increase its export potential and create new jobs.

Clearly we are living in a different economic era in 2011, however as stability and growth return to Ireland, the talent, resources and eco-system north of the Border can help the IFSC to leverage its international position of leadership and stay ahead of the competition.

(This article appeared in the Finance Dublin Yearbook 2012).