By: Nicola Stokes
Over the past few years, the popularity of blockchain has been steadily increasingly. The decentralised ledger technology transparently records and stores the details of transactions on a shared network making it very valuable to financial services – bringing benefits to internal processes, day-to-operations, and client experiences, to name a few. Ireland has been positioning itself at the forefront to meet industry demand and is quickly becoming a leader in this space, writes Nicola Stokes, Financial Services Technologist at IDA Ireland
While blockchain technology in financial services has been taking root at a breakneck pace across the globe, Ireland has been positioning itself at the forefront to meet industry demand.
Ireland’s fintech sector, which sprung out of the confluence of software, technology and financial services firms that established their EU headquarters and R&D operations in the country over the past decades, has, along with its educational institutions and Government backing, created a vibrant ecosystem and a talent pool well suited to developing blockchain solutions. As of 2021, many major financial institutions such as Citi, J.P. Morgan, Mastercard and Fidelity Investments have chosen Ireland as the location for their blockchain labs.
Ireland has sought to be an early proponent of this technology and has been steadily establishing its credentials in the enterprise blockchain space to become one of Europe’s leading locations for its development alongside the UK and Switzerland. What initiatives are facilitating the success blockchain in Ireland and what’s next for the industry?
Attractive talent pool
Blockchain firms have been scaling in technology centres such as London and Silicon Valley, where they have become increasingly attuned to the rising competition and cost for top blockchain talent. In fact, according to the 2020 LinkedIn emerging jobs report, blockchain (as well as AI and data security) is one of the top emerging industries in the English-speaking world. Firms are tackling this growing sector in innovative ways, such as enabling remote working and increasingly tapping into regional talent pools. This has offered staff a greater choice of locations, which can lead to better quality of life for them and lower attrition rates for employers – particularly in Ireland which is known for its young, well-educated and productive workforce, with 33.3% of the population under 25 years old.
A prime example of this is Mastercard a major payments processor, who established a blockchain team in Dublin to develop amongst other things, their blockchain capabilities in the area of digital currencies. It is also a means of de-risking global operations from headwinds such as rising rents and salaries which are often insufficient to retain staff in major centres such as London, New York or San Francisco.
Geopolitical risks such as Brexit and the impact it may have on the distribution of data and services across the EU are now also firmly on companies’ agendas when selecting a location for new offices. When the Trade & Cooperation Agreement (TCA) between the UK and the EU all-but ignored financial services, resulting in “passporting” rights ending along with the transition agreement in January, many UK firms have been pinning in their hopes on being granted “equivalence” as a third-country supplier. With negotiations dragging on, Ireland has been well-positioned to support global financial institutions in their business continuity with full access to the EU financial services markets and longstanding and close ties to the UK – going well beyond a common language, time zone and comparable legal system.
A thriving ecosystem
Another attractive element to the blockchain industry in Ireland is that a compact ecosystem is quickly emerging. Blockchain labs find themselves alongside other cutting-edge technology such as AI, data analytics and machine learning as well as industry experts in insurance, trade finance and digital assets – such as IBM, Mastercard, Fidelity, Facebook, tZero, Coinbase Trade iX, WeTrade, Consensys, Deloitte, Accenture and Coinbase (See Figure 1). This means we can expect to see blockchain being deployed in an increasing number of specialist areas.
Figure 1: Blockchain Activity in Ireland is quickly evolving, attracting many different players and creating a vibrant ecosystem
In fact, in the fast-moving digital assets space, many industry leaders are choosing Ireland to create their innovative blockchain products. Some recent activity includes Facebook’s development of the ‘Novi’ wallet, which is being developed in Dublin, BNY Mellon’s new custodial digital asset services which will operate a unit from Ireland – and R3 which has established their European R&D hub in Dublin, working on solution to integrate cross boarder payments for CBDCs.
One uniquely Irish example is the aircraft leasing industry. With over 60% of the world’s aircraft leased from Ireland, it has proved an ideal testing ground for introducing new efficiencies. Aircraft Leasing Ireland, a cross-industry working group consisting of lessors, tech firms, law firms, manufacturers and IBEC, have been investigating the digitalisation of hundreds of pages of aircraft maintenance documents and storing them on the blockchain in order to increase transaction efficiency, introduce transparency and to reduce fraud. In addition to this, they are also looking at aircraft parts traceability, aircraft trading as well as airport and consumer applications. The potential to apply these innovations to other large assets such as ships or trains may not be far behind.
Strong regulatory support
Ireland’s strong position as a blockchain hub is partly due to the strong regulatory support that has come from industry groups, research hubs and government bodies.
For instance, today, IDA Ireland – Ireland’s inward investment agency – counts over 430 financial services firms employing 44,000 staff alongside upwards of 105,000 in the technology sector. The IDA Ireland is also one of the founding members of Blockchain Ireland, Ireland’s industry body for the sector and has worked alongside major industry players to position Ireland as a location for blockchain development. This is all part of a broader play set out in the Irish Government’s new financial services strategy, Ireland for Finance 2025 which establishes a high-level framework to coordinate the development of the fintech and blockchain ecosystem across the private sector, academia and Government.
Irish academia has also been actively supporting the establishment of this sector with Irish government dedicated to creating industry-driven higher education programmes to ensure the workforce is keeping pace with the fast-changing landscape and skill requirements of the sector. Technology Ireland ICT Skillnet & Dublin City University launched Ireland’s first blockchain masters whilst Dundalk IT launched a Certificate in Blockchain and Distributive Ledger Technology, highlighting the ambition of academia to work in tandem with industry in ensuring the Irish workforce remains globally competitive.
The Irish government continues its strong pro-business track-record. Named as one of the best countries in the world for ease of doing business, new trends are constantly being monitored to ensure that sectors are supported in their growth. For instance, when demand grew for Artificial Intelligence (AI) skills in Ireland, the University of Limerick launched a newly created innovative Master’s programme – in collaboration with the Irish Centre for High End Computing (ICHEC) and leading industry players such as Accenture, Google and Citibank – to ensure that the talent pool is ready to address current and future industry needs. With other industry-driven programmes being developed – such as a Master’s programme in Cyber Security & a Master’s in Immersive Software Engineering initiated by the Collison Brothers at Stripe and University of Limerick – Ireland is gearing up to provide the skills and knowledge that leading financial services will require in the coming years.
Additionally, IDA Ireland- and Enterprise Ireland-funded Centre for Applied Data and Analytics (CeADAR), located within University College Dublin has collaborated on a number of blockchain projects with global leaders in the financial services sector. This has given PhD students invaluable exposure to live industry applications of the technology.
Independently, the Central Bank of Ireland has established an Innovation Hub which provides a framework for engagement outside of the formal regulatory approval processes for fintech innovators and has through this, been studying the global regulatory frameworks being established to govern cryptocurrencies.
As one of the most talked about trends in the technology and finance industries, blockchain technology is very much on the rise – and Ireland has been positioning itself at the forefront. Being the 10th most popular location for foreign direct investment in the world yet hosting just 1% of the EU’s population, this stands testament to Ireland’s position as a small but incredibly active player on the world stage.
Blockchain is still at its early stages of development, and this ecosystem will continue to evolve over the coming years, especially as venture capital and research & development money continues to flow into the space. Ireland, with its attractive talent pool, vibrant ecosystem and strong regulatory environment, will be ready to support the next wave of the industry.