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What has changed, and what has not in financial services Back  
FINANCE asked some of the leading lights of Ireland's financial services sector over the past 20 years for an insight into what has changed and what hasn't changed over the two previous decades, and found that the unrelenting internationalisation of the business and the increasing burden of compliance are some of the common themes that have emerged.
The past 20 years: things that have changed:

John Conroy, CEO, Merrion Capital
Internationalisation: 'The business has become much more international, and Irish companies now operate on an international stage. Well over 50 per cent of trading in Irish shares is now done internationally, while international ownership of Irish shares now stands around the same mark'.
John Conroy

Corporate governance: 'Compliance has become much more significant for Irish companies and is now a major cost burden'.

Research: 'Investors are demanding a different type of research product today, as they look for more independent and objective analysis'.

John Coffey, Head of treasury, BNP Paribas
Currency: 'There is no Irish pound any more - this was a currency we knew and loved .It provided a nice profitable franchise to the local banks and we always had an 'information arbitrage' over the external banks'.

Risk attitudes: 'Ireland is substantially less risk averse these days. There is a positive risk culture which enables entrepreneurial types to flourish'.

Multicultural society: 'We are now a multi-cultural society, learning more and more about other cultures as we travel more & more - both for business andor pleasure. Likewise we have more immigrants integrating to our society. This is also true for financial services'.

Competition: 'Increased competition and customer awareness which is improving pricing (& cutting margins!) across the board'.

Tom Healy, Out-going chief executive of the Irish Stock Exchange
Tom Healy

Technology: 'Back in 1987 there was no such thing as email, the internet or mobile phones. I remember when the ISE broke its link with the London Stock Exchange in 1995, the most elaborate piece of technology we could use was the fax machine. Of course, the business of the exchange was also transacted physically on the trading floor back then - now it's all electronic. At the time of the 1987 markets crash the media swarmed to the trading floor to film the action as it unfolded - today the floor is used as a boardroom'.

Changing ownership of Irish shares: 'In 1987 the vast majority of shares in Irish companies would have been held by Irish investors - today around 60 per cent of Irish shares are held internationally'.

Changing fortunes of the ISE: 'In 1987 the ISE made most of its money from domestic based trade. Today, it is mostly generated internationally, with the funds and debt listing business, which wasn't around in 1987, contributing around two thirds of the exchange's revenues'.

Pramit Ghose, Managing partner, Bloxham Stockbrokers
Financial services: 'There was no IFSC 20 years ago'.

The rise of Anglo: 'Anglo Irish Bank now accounts for 80 per cent of the market capitalisation of Bank of Ireland'.
Pramit Ghose

Air travel: 'The rise of Ryanair and the development of air travel'.
Emergence of the wealthy Irish: 'The rise in wealth outside of Dublin is quite remarkable'.
Changing investment market: 'The rise of niche hedge fund managers has been notable over the past number of years, for example there must be around 10 of these now operating in Dublin including ourselves, Focus Investments, Alder Capital and Pilot View'.

Mary Fulton, Partner, Deloitte
Regulation: 'The degree of regulation has changed beyond recognition and the pace of regulatory change has been become almost overwhelming for some businesses'.
Reporting standards: 'IFRS have entered our lives for good'
Financial services: 'This is not just a Dublin event any more - and that trend of businesses setting up in other parts of the country will continue'.

Staffing: 'Most of the wild geese who cut their teeth in the global financial centres such as New York and London in the 1980s seem to have come home at this stage - the Irish people returning with valuable experience in sophisticated markets abroad are fewer now. This has been replaced by the new Irish - we have at least 16 nationalities working in the Deloitte financial services practice in Ireland and that development is certainly beneficial'.

Pat Gaynor, Managing director, Bank of Ireland Corporate Ireland
Outsourcing: 'There has been massive growth in outsourcing, and the whole concept of shared services, with many global banks outsourcing functions to India. Bank of Ireland itself outsourced its IT services to Hewlett Packard'.

Compliance regulation: 'The level of compliance and regulation required in financial services has gone bananas, as domestic regulators add another layer of regulation to international standards'.
China: 'China has emerged as a global player, particularly over the past five years'.

Ambrose Loughlin, Partner, McCann Fitzgerald
Legal landscape: 'The landscape in which lawyers who specialise in financial services now operate has changed fundamentally in the past 20 years. In fact, it is almost impossible to identify anything that hasn't changed - apart from the levels of busyness!'

IFSC: 'The main catalyst for the significant growth in our banking and financial services practice in recent years was the establishment of the IFSC in 1987. Although we already had a major exposure to the international financial services market through aircraft leasing and other Shannon-based work, the success of the IFSC, founded on legislative and tax changes which originally were specific to it but are now universally applicable, has resulted in a well-embedded international financial services industry'.

Public-private partnership: 'The innovative and collaborative approach between the financial services industry and the public sector - Government, Financial Regulator and Revenue - which leads to a quick response to developments in global markets, and by competing jurisdictions, was a new feature of the IFSC and continues to be vitally important'.

Specialisation: 'Lawyers working in financial services have had to become specialised as the products have become increasingly sophisticated. Indeed , the IFSC spawned business in Ireland in areas such as investment funds, insurancereinsurance, capital markets which were non-existent or undeveloped in Ireland in 1987. The advantages exploited by Ireland of EU-led initiatives in many of these business areas was and remains crucial'.

Regulation: 'The unique selling point of Ireland in a competitive global market is that it is a well-regulated, low tax centre within the EU with the availability of first-class professional advisers, including legal services. The role of the Financial Regulator has expanded considerably from 1987 when the most frequent contact was to obtain exchange control clearance.

Gavin Caldwell, Chair of the Government's Asset Management Task Force and chairman of Pensco
Pensions: 'There has been a complete change from defined benefit (DB) schemes to defined contribution (DC) schemes. Back in 1987, DB schemes accounted for close to 100 per cent of all pension funds - today, in terms of start-ups, virtually all new schemes are DC - I haven't hear of anyone getting into business establishing a DB scheme'.

Investment industry: 'The industry has changed dramatically over the past 20 years. Back then, everyone in the Irish market managed a common product for a common client base. Today, with the great growth in the wealth management market, managers are producing a very specialist investment product offering for a very diverse client base'.

Exchange controls: 'Until the lifting of exchange controls on January 1st 1989, investors were completely restricted from investing abroad. Pension funds could only invest 10 per cent of their cash flow outside the country, which meant that bonds accounted for a large mix of the portfolio'.
IFSC: 'The introduction of the IFSC is arguably the most dramatic change over the past 20 years. I recall talking to the IDA back in 1987 about what an investment fund was - today fund administration is one of the major financial services sectors in Ireland'.

William Slattery, CEO, State Street International
Value chain: 'The skill levels in the business have changed dramatically - for example the funds industry now employs over 9,000 people, services over $1 trillion in assets and a third of the global hedge funds industry, and some of the best service providers in the world are now located in Dublin. Twenty years ago none of that business was here'.
William Slattery

Office infrastructure: 'There has been an enormous improvement in the quality and volume of office accommodation, which has become an attraction in itself'.

Staffing: 'Today there is a much broader, skilled work force than 20 years ago when we relied on the domestic sector for skills. Now there is over 20,000 people working in the IFSC with the skills for any future development'.

PJ Henehan, Partner, Ernst & Young
Corporate governance: 'The increased compliance burden on business worldwide'.
Economic fortunes: 'The transformation of Ireland from a poor country with high unemployment to being a recognised global player in financial services'.

Dublin comes of age: 'The transformation of the city into a top tourist destination with excellent hotels and top quality restaurants albeit a tad pricey!'

Gerry O'Carroll, Partner, Watson Wyatt
Pensions: 'A defined benefit pension becomes less certain than 20 years ago'.
Demographics: 'The life expectancy of Irish people has increased by 40 per cent'.
Investment: 'Property exposure has become a national obsession'.
Globalisation: 'Irish ownership of overseas assets increases dramatically'.

Damian Neylin, Partner, Investment Management, PwC
Skills: 'The level of the financial services skills base in Ireland is now vastly different'.
Banking: 'Our two biggest banks remain independent entities'.

The past 20 years: things that haven't changed:

The markets: 'I'm not sure anything will ever change in the markets - the drivers of investment markets are exactly the same as 20 years ago and the various asset classes will live forever. Moreover, the arguments for investing around the investment cycle are the same today as they were in 1987'.

Independence: 'The top five companies in the Irish market are still independent as none have been subsumed into the business of international competitors. This reflects their success in growing their business, and the hard work done in investor relations, as well as proving the worth of the respective management teams'.

Staff: 'The quality of people available in Ireland in international financial services is still very high and the quality of the people working in accounting firms also remains high!'
Support: 'From the Government for the industry continues to be strong, as does the political consensus'.

Outlook: 'Optimism is undimmed. In my view the opportunity for Ireland in the international financial services industry remains very positive - as long as we continue to be willing to innovate in the provision of products and services, remain focused on nurturing key skills such as numeracy and communication skills, and are welcoming to those coming from other countries.
Earnings: 'The profit motive still works!'

Working methods: 'The day-to-day work environment hasn't changed much since 1987, despite all the claims of tele-working and the end of the office. People still come into the office every day and sit at their desks for roughly the same length of hours'.

Banking is still bricks and mortar: 'Despite the arrival of the internet age, retail banking is still a bricks and mortar business and BOI still has the largest amount of branches in the country. Similarly corporate banking hasn't changed that much - it is still a relationship business, it's all about getting to know your customer and meeting their needs - exactly how it was back in 1987, although the tools, such as blackberries and email, may have changed'.

Dominance in stockbroking: 'The two biggest stockbroking firms in 1987 - Goodbody and Davy - are still the biggest today'.
Stamp duty: 'Investors in Irish stocks still have to pay 1 per cent stamp duty on each share transaction - the highest such rate in the world'.

Indigenous industry: 'We do not yet have enough home grown multinationals compared with say The Netherlands'.

Dynamism: 'There remains a considerable sense of dynamism about the IFSC which characterised the launch of the IFSC back in 1987. The 'can-do' attitude amongst the private sector is still there, despite the increasing size of the centre and the level of bureaucracy. This dynamism is one of the distinguishing features of the IFSC, and sets it apart from competing jursidcitions.

Government's approach: 'The support structure from the state for the IFSC remains unchanged, for example in the form of the Clearing House Group, as well as support from the Government and the Regulator. It is still a very positive feature of the centre'.

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