Financial services face ‘wave’ of regulation
Lawyers at business-law firm Mason Hayes & Curran (MHC) say that financial-services firms are dealing with the most uncertain environment in recent years, while preparing for “a significant wave” of incoming legislation.
An MHC survey of almost 400 professionals working in the area found that 25% believed that Ireland faced a risk of economic contraction in 2026.
The survey, carried out at the firm’s annual financial-services briefing, found that 44% of respondents expected modest growth, while 31% anticipated a flat performance.
Assumptions ‘pressure-tested’
Rowena Fitzgerald (MHC partner and co-head of financial regulation) said that Middle East conflict and higher energy costs were adding to the pressure on firms.
“We are seeing clients pressure-test their assumptions and plan for faster changes in conditions,” she stated.
“The question for boards is no longer if things will change, but how fast and how prepared they are when they do."
Four in ten survey respondents (40%) identified competitive pressure as their firm's biggest growth challenge this year. One-third pointed to regulatory change, followed by operational capacity at 27%.
Calls for simplification
New legislation facing firms includes banking-reform measures, updated consumer-credit rules, a revised payments-services directive, and a new EU-wide anti-money-laundering (AML) rulebook.
Liam Flynn (MHC partner and co-head of financial regulation) said that the number of licensed banks and insurers in Ireland had fallen over the last ten years, even as total assets had grown, meaning that fewer firms were sharing a larger market.
“Despite years of industry calls for simplification, the volume of incoming regulation has not reduced,” he stated.
Flynn said that, while Ireland had made progress in attracting payments and fintech firms, it had taken a “very cautious” approach to crypto and digital assets.
“We have ten crypto firms licensed here, compared with over 20 in the Netherlands and 50 in Germany. Other markets are moving faster, and that is something Ireland needs to reckon with," he stated.
Consolidation
The briefing heard that the pace of consolidation in the market was accelerating, with two recent high-profile transactions – Austria’s BAWAG agreeing to buy PTSB and Zurich's acquisition of Generali's Irish general insurance business – reflecting a global shift towards fewer but larger, more capitalised players.
The event also heard that geopolitical developments were also increasing complexity for firms operating across borders, particularly in areas such as sanctions and capital-markets activity.
Daragh O’Shea (MHC partner and head of debt capital markets, structured finance and derivatives) described sanctions compliance as “a key operational risk” for firms, especially those with international exposure.
Non-bank lending
The MHC survey found that cost reduction was identified as the primary driver of consolidation in the sector by 37% of respondents, followed by market competition (32%) and artificial intelligence (31%).
Irene Nic Chárthaigh (MHC financial-services partner) said that non-bank lenders now accounted for roughly 30% of new SME lending in Ireland, making private credit what she described as “a core systemic pillar” of domestic financing.
“Recently, there has been a trend towards consolidation in this space as firms deal with cost and competitive pressure," she added.