Blockchain Industry Growing in Irelandbr>
Ireland is booming in blockchain, and there’s more to come. The area known as “Silicon Docks” in Dublin attracts most of the attention, but technology firms are beginning to spread out to surrounding areas as well. Last year, a blockchain hackathon event in Ireland attracted more than 150 technologists and FinTech entrepreneurs collaborating on creating new apps and services using blockchain.
Keith Fingleton is the Chief Technology Advisor within the Financial Services Division in the IDA, Ireland’s investment promotion agency. It’s a non-commercial, semi-state body partnering with potential and existing investors to help establish or expand operations in Ireland.
He talked with Block Tribune about what’s going on in Dublin and throughout the country.
BLOCK TRIBUNE: Why is Ireland “poised for a blockchain explosion,” as your promotional material states? Give me the basics.
KEITH FINGLETON: I guess, just to take a step back very, very briefly, and I will answer your question in one or two minutes. I guess what you have in Ireland is historically a very, very strong financial services base. We have a lot of the major banks in the world, we’ve got a big financial management space, aircraft leasing, insurance. So financial services is alive and kicking and very strong in Ireland at the moment.
Coupled with that, though, is an incredibly strong technology sector. So you’re probably aware of the strength and the depth of the technology story that Ireland has, and it’s really going back to almost the 50s and the 60s, when IBM came to Ireland and they started making machines. They don’t make machines any more; they’ve moved, and the country has moved with the likes of IBM over the years. True to different paradigm shifts in technology, be it into mainframes to client servers to cloud, etc. So what you have then is two very strong industries in Ireland, and really, if you look at where blockchain has landed first, it’s somewhere around financial services.
So here we have financial services companies who are coming to Ireland to invest very heavily in technology, and that’s based on the technology and financial services story.
When blockchain came up and about a number of years ago, after it went through its bitcoin hype and people started to look at the underlying technology that is blockchain, a lot of financial services companies started to do proofs of concepts and started to look at how they could innovate around what blockchain could offer. And that’s where the financial services institutions of Ireland started to look at this with a degree of seriousness.
Probably around two-and-a-half-years ago, we spotted this trend in the IDA. We would have very close relationships with all of our financial services clients in Ireland, our multinational clients, and the area that I take care of within the IDA is that I take care of all technology within financial services. So on a one-to-one basis, I was having a lot of interesting conversations with the Who’s Who of the financial services world. And to be quite honest, they were all at the same level of progression in relation to the blockchain options. In other words, they were doing proof concepts, kicking tires, and trying to figure out what this meant to them. They were also, actually, trying to battle with the same challenges, they had the same questions, the same uncertainties.
In the nature, almost, of what blockchain is, which is a very collaborative technology, we invited a number of financial services companies to join what became known as the Irish Blockchain Expert Group. Really, that’s just a safe environment for large, multinational companies to come around the table and discuss all things blockchain-related. We extended that, then, into the broader ecosystem. We brought in academics, we brought in research institutes, we brought in startups, we brought in other government agencies. So it became then a very broad discussion around blockchain adoption and what really needed to be in place from an Ireland, Inc. point of view in order for blockchain to flourish.
We’ve around 100 members now in that group. We meet on a monthly basis. It’s chaired by the IDA and there is a lot of industry collaboration as well. So to give you an example of how that group has progressed: really at the start, it was a lot of people trying to figure out what the heck this thing was. It was on the front page of The Economist, their senior management were asking them what it is, what their view on it was. So people were scrambling around, trying to get an answer to some of those questions. They now have the answers to those questions, and they’ve moved on to what I would classify as almost, ‘How do you operate blockchain within large scale enterprise environments?”
So we’re now beginning to deal with these questions like standards. Not the most exciting area in the world, but it’s obviously something that needs to be in place in order for blockchain to work. Our standards party in Ireland, in conjunction with our industry members, are really doing a lot of work on an international basis now to see what standardization, or standards within the blockchain space, looks like.
BLOCK TRIBUNE: Ireland had an Internet boom and then it went bust. It had a property boom and then it went bust. What’s different about blockchain?
KEITH FINGLETON: Well, it’s funny you say that, and of course you are 100% correct. But there are certain areas within the Irish economy that did not go bust, and one of those actually was technology. I’m only, what, two years in the IDA. I’ve spent my entire career within the technology sectors in Ireland. That did not go bust. That was more or less 100% employment, we could not get the staff quick enough, even at the height of the bust that happened here within the financial services area. Obviously that was, you know, not just in Ireland, but on an international level.
I think it’s an interesting angle, the bust question is an interesting one. We all know what financial services institutions have been up to between, say, 2008 and, pick a date, 2011, 2012, 2013. What they were up to was survival. They were just really trying to see how they were going to steer themselves out of this mess that they’re in.
When it came to innovation, when it came to looking at something bigger and better in relation to technology, they had bigger fish to fry. They were looking at survival rather than innovation. So a lot of those companies now are at least steadying the ship, and they can now take a breath and have a look around.
What we’re finding is, we all know what’s happening in the broader marketplace. The Millennials are hitting the marketplace, technology has come on in relation to computing power, the expectations of users in relation to the systems that they want to engage with. So there are lots of challenges the financial services institutions still have from the point of view of FinTechs taking their market share, etc. And they actually still have all of these other problems, which is burdened with legacy systems, and some would argue overburdened with regulation, etc.
Now they’re looking at what can we do. What can we do differently, where are the activities that really add no value to the company. One of those areas could be around regulation. Within our group at the Irish Blockchain Expert Group, we have a very big fund industry in Ireland. The fund industry is one of those industries that, quite possibly, will be affected by blockchain as a technology. A representative body, a firm for funds in Ireland called the Irish Funds, did a collaborative project with their members and Deloitte around money market reporting. So, really, it was almost creating a utility based on blockchain to remove something that was not of any competitive advantage to these companies. This was a burden that they need to do to meet a regulatory obligation. They all needed this and there was no competitive advantage.
So this is an example of where Ireland is. We’re quite a small nation. We keep using the tag line along the lines of “Small enough to try, big enough to prove.” Here’s an example of where people came together in a very collaborative manner under the umbrella of the representative body, they buddied up with a professional services company, Deloitte, and they produced something to the benefit of their users.
And you probably know some of the facts. Deloitte, for example, had set up, I think, it was their first blockchain labs. So their immediate blockchain lab was set up in Dublin. The guys in Deloitte have been at this now for close to two years, doing very good work for their clients but also going around to the rest of the Deloitte family globally and educating everybody in relation to blockchain.
BLOCK TRIBUNE: Go ahead. Continue.
KEITH FINGLETON: You were basically asking kind of why Ireland. I guess one of the points is we do have the financial services, we do have the tech, and we do have a very collaborative ecosystem. So all of the players you would want within a blockchain ecosystem have been at research centers. We put a lot of money into research centers in Ireland. We put a lot of money into academics to do high level research. One of the areas we’re pumping a lot of money into is data analytics and machine learning and A.I. and things like that. Also now, a lot of these researchers are looking at blockchain.
BLOCK TRIBUNE: One of the problems in many areas of the world is that there aren’t enough developers who are familiar enough with blockchain to help in the actual construction. That doesn’t seem to be an issue there?
KEITH FINGLETON: What we did actually was, we did a survey of our members because the common narrative is that there’s a shortage of resources in the blockchain space. We went back to industry and we asked them, “What does blockchain skills look like for you?” It was very interesting exercise, because of course you’re right; the down with the ones and zeroes in relation to the cryptology and the consensus algorithms and all of that good stuff. There’s very few people probably in the world who understand that at the one and zero level.
What our survey found was that technology was one of key skill sets needed. Distributed ledger technology knowledge was one of the key skill sets needed. But there was also others. Regulation standards, you know. Industrial design. Economics and finance, forensics and law, you know? Understanding money laundering, understanding contract law. How contract law is made because you need to understand that to understand smart contracts. Really understanding financial services around K.Y.C. and A.M.L., understanding messaging standards like SWIFT.
All of these skills actually bubbled up and what came out was that we actually are producing a lot of graduates and Ph.D. students in a number of these areas, and while we’re going to invest more in the short term all that was needed was to bring in academics, make them aware of the opportunities around blockchain, and encourage them to encourage their own students to do, for example, final year projects or masters’ theses around blockchain. So now within the universities, even though people probably didn’t learn blockchain as part of their course, they’re no doing projects around confidentiality in blockchain and using blockchain as a source of identity and distributor’s autonomous organization in the blockchain. These are now masters and thesis subjects that people are looking at.
BLOCK TRIBUNE: Tell me a little bit about the Silicon Docks area. Where is it and how many companies are down there and is there a sense of camaraderie among them?
KEITH FINGLETON: The Silicon Docks area was really created as soon as Google landed. So Google has around 6000 employees now over three connected buildings within that space. It was a major rejuvenation area as well, so we have a theater down there, lots of coffee shops, lots of cool places to hang out. Google landed; on the back of that we had the likes of Facebook and Twitter and law firms have come in as well to work with those companies, and then a lot of smaller companies as well.
What we’re finding is that for some big name multinationals, it’s a very attractive area to come. For example, when Daiquiri came to virtual reality and augmented reality, that’s where they decided to land.
Now, that has had a knock on effect because, like a lot of areas where these tech companies are centered, everybody wants to be beside them, but not from a physical infrastructure point of view, that is impossible. So then all of a sudden for a mile radius around that, you’ve got another layer of technology companies, and another layer of technology companies. But what we’re also finding is a lot of technology companies are coming to Dublin, but a lot of them are also moving into different parts of the country.
So for example, today I was at an announcement where Yapstone, one of the more innovative payment companies, have created 200 jobs on top of the current 100 jobs that they have about an hour north of Dublin in a town called Drogheda. Last week we had MetLife announcing Galway, which is a city on the west coast of Ireland; they announced a dev-ops center of excellence. Last year, First Data announced in Tipperary, in Nenagh in Tipperary, that they were going to set up an R&D facility looking at data and fraud and security. So there’s lots of these examples where Dublin and Silicon Docks is the go-to location, but there is an awareness of regional locations as well in Ireland.
BLOCK TRIBUNE: Is the government offering any tax breaks or other incentives?
KEITH FINGLETON: We have a very competitive corporation tax rate of 12.5%. That’s available to all companies here. On top of that we have various programs to encourage innovative activity. One of those programs is run through our tax authority, our revenue commissioners, and for eligible innovative activity there’s a 25% rebate, so that can be, if you’re a profit centered, that can be off of your tax bill. If you’re a cost-centered, that can be a check in the post. So 25% is very, very attractive to multinationals coming in here, and in top of that, the I.D.A, the organization that I work for, we also have a program of support available for people who want to do innovative activity here.
The last point worth mention is, we also have a very competitive intellectual property regime. Intellectual property that was created here, that’s housed here and licensed here, revenue off that is taxed at half a corporation tax rates. That’s 6.25%.
BLOCK TRIBUNE: Who are the biggest players in Ireland blockchain?
KEITH FINGLETON: The Deloitte and their lab has been a big win for us in relation to the whole blockchain space. We organized, the beginning of October, we had a blockchain for finance conference in Ireland. There was nearly 300 people from the finance world descended on Dublin over those two days to discuss all things blockchain related. Lots of innovation leads from all of the world’s banks and insurance companies were in town over those few days. We have some interesting startups in this space. One that I want to name check is AID:tech. A-I-D colon tech. They have won awards left, right, and center in relation to what they’re working on, and that’s underpinned with blockchain solutions. We had the likes of State Street, who are doing a lot of work here in relation to collaborating with local universities to produce Ph.D.s in blockchain.
We have, over the last few years, we’ve run either Europe’s or the world’s, depending on who you want to believe, largest dedicated blockchain hackathon. That’s been here over the last few years. So there’s just a number of things just to name check before we leave.