A group that represents financial-services firms in Ireland has said that the establishment of a ‘regulatory sandbox’ would “substantially increase” Ireland’s attractiveness to innovative companies in the sector.

Chair of Financial Services Ireland (FSI) Joe Heneghan (pictured) told the organisation’s annual lunch in Dublin that Ireland could be a hub for the next generation of financial-services firms.

The Central Bank is shortly due to look at the benefits of setting up an Irish sandbox, as part of a review of its innovation hub.

Managing risk

Regulatory sandboxes allow firms to test innovative products in the market within a framework that is approved by the local regulator.

FSI says that this model, which is in place in a number of other jurisdictions, allows for the benefits of innovation to be realised, while managing and mitigating risk.

“I believe that an Irish regulatory sandbox could represent a ‘level shift’ in terms of making Ireland an attractive place for innovative firms to establish themselves,” said Heneghan, who is also chief executive of Revolut Europe.

“We are currently undertaking research to explore the innovative practices implemented by leading jurisdictions within their sandboxes. Our objective is to identify and understand the most effective strategies that can be adopted in our own context,” he added.

Action plan

The Central Bank’s review is part of the Government’s Ireland for Finance Action Plan 2023, which sets out a series of actions to be taken this year to further develop the sector in Ireland.

Figures from IDA Ireland and Enterprise Ireland show that employment at financial-services firm grew by around 6% to 56,000 last year.

Heneghan also welcomed the Government’s decision to seek to host the new European Anti-Money Laundering Authority.

He said that FSI would work with industry stakeholders – including the Department of Finance – to promote Ireland’s candidacy.