Funding to support the financial system

One of the first conversations I had with Seán Dorgan, then the CEO of the IDA when I started in SFI, was related to a proposal that had come from the Department of the Taoiseach that more research and training be carried out in the area of financial maths.  The IFSC is a spectacular success story but it needed an extra layer of activities to keep it as a world leading location for financial transactions.  The concern which had been expressed by the IFSC Clearing House Group and by an analysis of the future skills performed by Forfás was that the more routine administrative tasks at the IFSC would be moved to less expensive locations and hence that the IFSC should shift to higher levels skills in financial management as opposed to administration.

When you reflect on this transition a number of things become obvious: 1. Jobs which are routine and relatively low skilled are very mobile. 2. The higher education system had not spontaneously responded to the provision of skills which were required for financial services and hence the number of good quality third level and fourth level graduates were inadequate. 3. Even if they were graduates it would be inadequate if they were simply absorbing external research. They also needed to be involved in cutting edge research that would make Dublin the location for financial services in the future.

SFI is limited in the terrains that it can act in but we quickly decided that financial mathematics could be viewed correctly as a component of ICT. Although it would be fair to say that ICT as an industrial sector was the more normal target for investments in this area to date.  The steps from this decision through to the announcement yesterday of an SFI Strategic Research Cluster (SRC) into financial maths and computing led by Anthony Brabazon, UCD with the involvement of lead researchers from DCU and NUI Maynooth and an immediate engagement by Pioneer Investments, Ryan Capital and the Institute of Bankers in Ireland were multiple and complex.  SFI was founded to support top-level research and this will apply to this activity as all others.  Peer review was required to sort out the eloquent from the excellent and restructuring of the project occurred along the way.  The outcome is something extremely robust with top-class research groups engaged.  It is interesting to note that one of the participants Paulo Guasoni from DCU was attracted to Ireland in the first instance by the SFI Stokes Professorship scheme and hence our intention of strengthening skills in crucial economically relevant areas has already paid fruit in this case.

The topics that are being considered by the group are those that seemed familiar to all who worry about the economy: asset management, risk assessment, our major topics with other related areas also covered.  One might regret that these functions were not fully in place at an earlier stage but it is likely that the need to make wise decisions based on mathematical modeling derived from all of the information which is loaded daily onto the world system will not disappear.

This SRC is the nineteenth in the series established by SFI.  Each of them addresses a different specific research subject.  All of them engage multiple industries (typically four) and the research programme is set up following discussions with the industries.  It follows that these SRCs are industry led and the engagement of industry from the start of the project means not only that the concepts are of interest to industry but they also have an engagement because of their financial commitment which is obligatory after a start-up phase.

The financial mathematics SRC is a good example of mathematics which may sometimes seem esoteric been applied in fields of very practical need.  It was therefore very appropriate that the announcement was made by the Tánaiste, Mary Coughlan during Mathematics Week and, given the composition of the scientists involved and their location that it was part of the Innovation Dublin week.

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