Thomas Deely is the Program Director for the MS in Applied Analytics at Columbia University School of Professional Studies, that educates students to help their organizations understand the value of data-driven decision making, and ensure analytics recommendations are implemented. He previously spent 19 years with Goldman Sachs in the UK and the US.
When I first came to the New York office of Goldman Sachs from London in 1999 as a young Vice President, I was excited to work at the centre of global finance on Wall Street and New York.
In my first month, I had the opportunity to demo my project, a major technology investment into the Balance Sheet and Profit & Loss reporting to a Senior Partner, the head of the Global Controllers Division, along with a senior leadership team.
I entered the plush carpet office of the Senior Partner and ended up chatting to him as we waited for others to arrive. I quickly discovered he was not only from Ireland and from Kerry, he was from Ballybunion near where I grew up in Ballyheigue in North Kerry.
As the rest of the senior management filed in, we chatted about Ireland, Guinness, and other things.
The demo went really well and became a precursor to me extending my four-month stay to a rather longer seventeen years at Goldman Sachs in New York.
The talk in the NY office among the Federation Management team the next day was not so much about the demo but about how two players on such a significant global project came from locations just 15 miles apart in rural Ireland. It turned out actually that Irish personnel dominated the Federation and Risk Management functions at Goldman.
“The Green Phone is everywhere,” remarked one the meeting attendees the next day.
Pragmatic, problem solving approach
The predominance of Irish personnel is true throughout the risk and control functions of many other Wall Street firms.
Our pragmatic, problem solving approach plus the fact that most Irish people entered global financial firms through the support functions – technology, operations, finance, risk, and control, has meant that Irish people have played a vital role helping companies navigate the various financial crises which have unfolded over the last thirty years. We have produced more steady hands on the wheel than rogue traders.
And as technology becomes more predominant in financial services, we are now beginning to see this role manifest itself in interesting ways.
Quaternion Risk Management
One example from the 2008 crisis involved Dubliner Donal Gallagher, a Caltech PhD. Donal was brought in to perform triage on IKB, the first bank to fail during the global financial crisis. Donal leveraged his risk management expertise and attention to detail to pore over the complex risk models and legal agreements to help the German bank understand its risk exposures.
Today, Donal is CEO and Co-Founder of Quaternion Risk Management, based in Fitzwilliam Square, one of Ireland’s leading risk management firms looking to set the industry standard in risk management practices. Quaternion is building an international community around open source financial risk models, which has enormous potential to democratise risk management practices, in partnership with Tullet and Columbia University.
Prior to founding Quaternion, Donal spent time at Norkom, as did Geraldine Gibson, another Irish founder who is driving innovation in risk management and reporting with AQMetrics. Their ample motto reads “Know your risks, always be compliant.”
AQMetrics have been nominated for global fintech awards and are solving the emerging regulatory reporting domain with easy to use, best in class solutions. In a short space of time, AQMetrics have become a recognized leader in data analytics and complex risk monitoring for fund managers.
The Role of Academia
Ireland’s expertise in risk also manifests itself in innovation in academia. The Governance Risk and Compliance Technology Center (GRCTC) hosted at UCC is a great example of academia partnering with government bodies such as Enterprise Ireland, the IDA and successful companies such as Fenergo and others.
Another example is the Nova Innovation Center at UCD, a stable for emerging companies nurturing the best ideas and talents of Ireland’s most promising students and future leaders.
Corlytics, founded by John Byrne, one of Ireland’s leading entrepreneurs, is a great example of a company which has emerged from Nova at UCD. Corlytics have created a database of all regulatory fines globally which will enable firms to model regulatory risk. Corlytics are leveraging emerging technologies to drive insights and working with international regulators and financial services firms, tackling a space of enormous opportunity.
These are just a few examples of founders and initiatives I have been lucky enough to meet from the other side of the Atlantic in NY. There are many more not referenced here, and it would take a much longer article than this to cover.
The Centre of Paralysis – James Joyce
The anomaly here is that on a normalised basis, Ireland owned the largest banking failures during the financial crisis. Irish banks, with Irish management, regulators and risk management teams conspired to produce one of worst examples of financial mismanagement during the 2008 crisis while there was lots of competition for that title internationally.
It is important to distinguish between the three engineers mentioned above and others like them who demonstrate vision, leverage technology to make the financial system safer from the bottom up and receive international success, and the types of individuals who flourish in the parochial financial services environment which fostered Ireland’s crisis.
Ireland has the foundation of an ecosystem in the space of financial risk management and compliance with a cluster of companies and universities driving the innovation with conviction. Building on their foundation requires continued nurturing, focus and investment.
The Government and organisations such as Enterprise Ireland and the IDA have played a key role over many decades in nurturing and evangelising Ireland as a hub for financial services.
“There have been many recent FinTech announcements: Deloitte have set up their EMEA Blockchain Lab in Dublin, MetLife have announced the opening of a new Global Technology Campus in Galway. Global FinTech leader YapStone has opened their international headquarters in Drogheda. Infosys have opened their first non-Indian R&D center in Ireland, specializing in disruptive technologies. This is in addition to financial services companies already in Ireland with a significant technology presence. These include Citi, MasterCard, Aon, Fidelity, Prudential, Deutsche, Bank, Credit Suisse, and UnitedHealth Group,” – Keith Fingleton, Chief Technology Advisor, Financial Services at IDA Ireland.
We are now seeing the emergence of “high impact entrepreneurs.” These individuals achieve large scale international success and demonstrate what can be achieved to the next generation. More importantly, they recycle their capital, knowledge, mentorship, and expertise back into the local ecosystem and support emerging entrepreneurs. It’s what has been happening in Silicon Valley over many decades. Colm Lyon, the founder of Realex Payments and Fire, is a great example. We will have many more in the coming years.
Ca bhfuil an Aonadharcach?
For Ireland to graduate to the top tier of innovation within financial services risk, an indigenous anchor home grown firm needs to emerge, scaling globally from within Ireland; a Unicorn or “aonadharcah” to use the Gaelic term. This will happen sooner than we expect.
There is an opportunity now to climb further up the value chain into the risk management domain as regulation becomes more pervasive and events such as Brexit create an inflection point.
The raw material has always been there. With our innate talents and now with the accelerating forces of technology, it’s within our grasp to develop this expertise from within Ireland. There is no reason Ireland cannot become for financial services risk and compliance what Israel is for cyber-security risk, for example.
When the next financial crisis comes, the green phone will ring again within the risk and control functions across financial centres as global firms look for help to manage their risks.
This time, the call will also be picked by an emerging set of CEOs and Founders, based out of Ireland.
Thomas Deely will be speaking at IT Tralee Cantillon 2017 in association with FEXCO, Ireland’s only one-day FinTech Forum on March 30th.
*Picture – Columbia University