The exceptional growth of the economy in recent years, allied to a boom in asset prices, has fuelled a dynamic surge in the domestic retail-banking sector. Overall employment in the Irish banking sector almost doubled, to 36,000 people, over the last 10 years, with most of the additional 16,000 jobs coming from the domestic segment.

Our domestic banks are second to none in Europe and we have a diverse range of international banks based here. Outside of the major centres of London and Frankfurt, no other location has a banking industry as robust, diverse and exciting .

Of course the rate of economic growth has now slowed and the asset price boom will stop at some point. These adjustments pose significant challenges for Irish banking going forward. It cannot rely on a booming domestic market to underpin further job growth and continued improvement in the nature and quality of employment. So, my sense is that future jobs growth will come from increased international banking activity in all sectors of our industry.

At this point, it is important to acknowledge that solid progress has already been made in internationalising our banking operations. The larger Irish clearing banks have made significant investments abroad, especially in the UK, US and Poland.

International banking has thrived here, through the IFSC, where 11,000 people work and where most of our indigenous banks and more than half of the world's top 20 banks have operations.

Taking these advances into account, how is the Irish banking sector positioned to meet the growing need for further internationalisation? How can we ensure that we continue to provide the quality jobs that our young people deserve? Ireland has an extremely competitive taxation environment, an excellent education system, a critical mass and wide variety of banking skills - backed up by an accessible and supportive State system.

In other respects, though, there are problems and potential pitfalls. The competition for international investment has become ruthless. Locations such as Spain, Poland and India are making serious inroads into our market and there are worrying signs that Ireland may have become complacent. The harsh reality is that we are just too expensive for a considerable portion of what we now do as an economy.

We need to take decisive action to address these issues and "move up the value chain". I suggest action in five key areas in order to lay the groundwork for a strong, internationally orientated banking industry.

Firstly, physical infrastructure must be improved rapidly. While this is, primarily, a matter for the Government, business must be even more vocal in promoting and supporting the tough decisions that have to be made.

Secondly, the favourable taxation structure must not only be retained but actively enhanced as our key competitive advantage. Attracting banking HQ functions is imperative as it is these operations that drive the value chain decisions. We need a favourable holding company taxation regime that many other European jurisdictions enjoy if we are to compete for such investment. I strongly believe that the industry has the best chance of reaching its full potential if we can maintain a combination of locally and internationally managed banks. Indeed, a substantial indigenous banking sector is key to maintaining Ireland's long-term economic sovereignty. There are already examples of small countries losing virtually all their indigenous banks and it would be unfortunate if we went down that route.

The next priority is to restore financial services to its rightful place as a key target sector for inward investment. I wonder how many senior executives in major international banks have been urged to consider establishing here in the last two or three years? There is no industry better suited to our skills base and structural environment than financial services but there seems to have been a fixation with "new age" industries recently. I am delighted, though, to see the IDA reinvesting in financial services, and the banking industry should, and will, give enthusiastic support to that effort.

The State should be encouraging research and development in financial services. Considerable importance is attached to this activity in other industry sectors but, in my view, it is just as critical for banking. There needs to be more effort devoted to explaining and developing R&D as it applies to financial services. The linkage between technology and financial services is fundamental. We should learn from our colleagues in the technology industry on how to formalise and support the R&D process for financial services.

Lastly, we must continue to focus on education - from school level right through to the work of professional education bodies like the Institute of Bankers. Our industry's support for education is world-class but we must maintain this momentum and ensure it is a major part of our branding effort for the sector.

Global banking is undergoing massive change. For instance, only three of the world's largest financial corporations, which were in the top 10 in 1993, remain there today. Every one of the current top 10 has been involved in significant restructuring or merger activity in the past decade.

More change is a certainty. We need to re-invigorate our industry's strategic direction, supported by our State agencies, if we are to compete for, and win, a sizeable share of international business.

Aidan Brady is chief executive of Citibank Ireland Financial Services plc and president of the Institute of Bankers in Ireland.