Jersey has no divine right to retain its finance industry and cannot afford to be complacent, Jersey Finance’s chief executive told a Global Horizons audience. Emily Moore reports
THE more events that you attend, the more familiar you become with certain words – and, in the context of 2023, it seems that the most oft-used word is challenging.
Certainly, this adjective was mentioned a number of times during this month’s Jersey Finance Global Horizons event, which reviewed some of the organisation’s activity last year and set out its latest four-year plan.
The first person to use the term was the organisation’s chairman, Jason Laity, who said that despite “a challenging” year, the Island’s finance industry had emerged in “decent shape”, with strong performances across the funds, banking, corporate activity and private wealth divisions.
But, as he and Jersey Finance chief executive Joe Moynihan stressed, the global landscape remained “complex”, with geopolitics a particular concern for those in the sector.
“As we started building the plan, we spoke to the government, regulator and more than 100 businesses about the macro issues which are impacting the industry now and those which they expect to see impact the industry over the next four years,” said Mr Moynihan.
“The overwhelming concern was geopolitics and the fact that the world is in a state of polycrisis. If anything, I would say that this situation is worse at the beginning of 2024 than it was last year but, while the global situation is worrying, it also offers opportunity for the Island.”
At the heart of this opportunity, he added, was Jersey’s reputation as a jurisdiction of stability and certainty, something which he said was supported by the Island’s expertise and growing global awareness of its services.
Speaking after the conference, he said that while the challenges were plentiful, the industry itself was in “a pretty good shape”.
“That’s the key message that I’d like people to take away,” he said. “We can’t be complacent and we have to remember that we don’t have any divine right to have this industry. Financial services is a very mobile sector, so we have to work hard to maintain our position as a leading international finance centre.
“Key to that is focusing on our enablers. We have a very good legal system, we are well regulated and we offer a stable and secure environment for investors. While the recent vote of no confidence [in former Chief Minister Kristina Moore] may trigger some questions among international investors, they are unlikely to be concerned as long as they do not perceive that there is likely to be a sizeable change in policy.
“I think the Island is sensible enough to avoid that, although I wouldn’t want to see another vote of no confidence in six months’ time.”
This emphasis on stability is all the more important, Mr Moynihan adds, because of the volatility seen in many areas of the world.
“While the polycrisis may bring opportunities, it also generates some concerns, and a key one at the moment – particularly among GCC countries – is whether the geopolitical situation will force them to choose a side between China and the USA, something which they don’t want to do,” he said.
“While the political situation is already volatile, if Donald Trump becomes the US president again, there could be another political swing. During volatile times, many investors will look to diversify their holdings, not for any nefarious reasons but to try and protect their family assets and succession planning.”
And this is an area in which Mr Moynihan says the Island has seen considerable growth.
“Family-office activity has increased significantly, with a number of individual family offices setting up in Jersey or family offices using local service providers such as Crestbridge or Stonehage Fleming,” he said. “The value of such work is also significant and, while it can take several months to get the business on board, once you have secured it, you will generally keep it, and the wealth will continue to grow.”
Identifying growth areas is a key priority for Jersey Finance.
“As we drew up our plan for the next four years, we asked our member firms whether we were focusing on the right locations,” Mr Moynihan said.
“The feedback was that we were in the right places but that we could focus more on the US market to see whether there was scope either to expand the funds proposition there or look at private wealth opportunities.
“We also see tremendous potential to continue growing our business from the City of London, which is why we continue to build our profile in the capital and host a number of events targeted at our key audience.”
And it is not just in London that the team hosts a range of high-profile events. While last year’s private wealth conference in the city attracted an audience of 450 who heard from, among others, keynote speaker Robert Peston, the organisation also has a regular presence in selected key jurisdictions.
“Every year, we run a leadership perspective series in the GCC, which Amy [Bryant, deputy chief executive of Jersey Finance] leads,” said Mr Moynihan. “We also have a strong presence in Dubai, Saudi Arabia, South Africa and Singapore, a country to which several businesses in south-east Asia have relocated because of the problems in Hong Kong.”
Driving the success of these events, and underpinning Jersey Finance’s overall approach to its work, is collaboration.
“This is huge,” he said. “I always say that we can be the best marketing operation in the world but, when the rubber hits the road, if our member firms don’t deliver, all that hard work is for nothing. But I have great confidence in the financial services sector and, in some ways, the level of expertise that we have here makes the Island easier to sell.”
But while the Island has plenty to recommend it, Mr Moynihan admits that there are still obstacles to overcome.
“Competition is one of the biggest ones,” he reflected. “Other jurisdictions are also out there fighting for business and, although we don’t criticise other places, we know that some of them push narratives which are not necessarily true. In the funds area, for example, Luxembourg will claim that you can only do certain things in Europe if you go through Luxembourg.
“Sometimes the final decision is based on a friendship or an acquaintance in a certain jurisdiction. But, as I said earlier, a lot of the success comes down to stability and certainty. If you take the GCC, for instance, Jersey is now very well established and the priority there is to make sure we stay front of mind and don’t lose any ground to our competitors.”
To maintain its competitive advantage, the promotional body is not just focusing on the key pillars of security and regulation but is also striving to enhance its knowledge and understanding of two of the hottest topics of the moment – sustainability and AI.
“Our goal is to be not just a leading international finance centre but to be a leading sustainable international finance centre,” said Mr Moynihan. “To this end, we have joined the Financial Centres for Sustainability, a collective of international finance centres whose goal is to work together to achieve the UN Sustainable Development Goals and the Paris Agreement.
“We also worked with Andrew Mitchell, of Equilibrium Futures, to build our knowledge and understanding of a number of sustainability initiatives. Through this approach we have not only built up our own expertise but have supported the industry to develop its knowledge.”
Continuing the collaborative approach, the organisation has also commissioned Grant Thornton to undertake a survey which, in the words of Mr Moynihan, aims to bring “AI from something up here to something more practical”.
“What we want to understand is how the application of AI could help an individual in a job to make that job role more efficient,” he said. “Building that understanding will require input from industry but, ultimately, we are hoping to produce a practical piece of work which people will be able to use to make their business more efficient.
“Increasing efficiency in the sector is key, particularly when you are facing a skills shortage and a recruitment challenge.
“In such an environment, there are two solutions, one is outsourcing – which brings its own set of challenges – and the other is finding technological answers.”
In such a challenging but opportunity-filled environment, it is clear that Jersey Finance, in collaboration with government, the regulator and the industry, has a lot of work to do if it is to achieve the ambitions listed in its four-year plan.
“The plan is ambitious and, as with all plans, there are bound to be some deviations,” said Mr Moynihan.
“As Mike Tyson said: ‘Everyone has a plan until they get punched in the mouth.’ But while there may be some bumps in the road, we are confident in the industry and confident that the industry remains in good shape. There will be challenges, but those challenges will bring opportunities and the collective goal has to be to protect the business we have, protect our reputation and continue to drive growth across those core markets.”
