Technology is changing the financial industry

LFF is a public private partnership created by Luxembourg government and the Luxembourg financial industry to contribute to the development of the Luxembourg financial centre. Our objective is to develop the financial services industry such as the investment funds business, wealth management, Renminbi, Islamic finance and of course also fintech. Nicolas Mackel, CEO of Luxembourg for Finance (LFF).
 
What does FinTech represent for you?
For me fintech is a phenomenon best described as the way technology changes financial services. Technology is in effect changing the entire financial industry and the accelerating pace of change is affecting everyone. Luxembourg being one the leading financial centres, currently number 3 in the European Union (Global Financial Centres Index 18, 2015), must however respond to this challenge with a clear strategy. The main focus for LFF is to create an environment where we can accompany the digitalisation of financial services to help the Luxembourg financial industry to position itself in this new digital environment.
 
Some industry observer say that Luxembourg have a window of opportunity of only two years to become a competitive FinTech hub?
We do have a sizeable and diversified financial industry and we will build on these assets. I am convinced that Luxembourg is strategically positioned to become one of Europe’s fintech leaders by 2020 by offering the physical, regulatory and investment environment for financial technology businesses to bring new products and services to market. We will focus on our expertise and attract the parts of the global fintech ecosystem that has a natural alignment with the existing financial industry in Luxembourg.
 
What priority sector do you see for FinTech in Luxembourg?
The obvious candidates are blockchain, big data, and digital distribution and payment segments. As important are matters like security, compliance, KYC which are crucial for all fields of the financial industry.
 
Will FinTech create job losses in the future?
The rise of fintech will not necessarily lead to job losses in the financial industry. Financial players and fintech will collaborate rather than compete. Eventually, IT will play a larger role in the creation of new jobs. In Luxembourg the employment within the financial industry represent appr. 45.000 financial sector jobs. In 2015 there has even been a slight overall job increase. While there is indeed a small decrease in banking jobs (appr. 1-2%) it is compensated by job increases in other parts of the financial sector, such as financial sector professionals and asset management.
 
 
Will the FinTech strategy for Luxembourg mainly impact and transform the existing banking & financial sectors or lead to creation of disruptive start-ups?
It is clear that everybody, whether big or small, will be affected. The start-ups are for me the way to a solution. They are the instruments that will help the whole financial industry to manage this transition towards fintech. To realise this goal what we really need is an increased co-operation between disruptive start-up enterprises and established financial businesses. I do not think that the disruptive fintech businesses will be able to substitute established financial market players. By the same token existing businesses need startups to provide necessary impetus for innovation. Hence, the need for both cooperation and “co-opetition”.
 
You have announced the creation of a “House of Fintech” in 2016. What is it?
The “House of Fintech” is a platform where all different communities of the fintech ecosystem in Luxembourg will interact. We want to encourage synergies between all stake holders by establishing a physical networking space where people can meet to exchange ideas and concepts. It will be operational before the summer.
 
Can Luxembourg compete in FinTech with its proven regulatory agility?
Absolutely. For example, in 2015 Luxembourg authorised the first European license for a virtual currencies operator as a payment institution. One of our country assets is a financial authority (CSSF) with extensive experience in reconciling the demands for market flexibility with requirements for risk management and compliance. In February 2014, the CSSF was the first European regulator to acknowledge virtual currencies as scriptural money.
How about FinTech and R&D?
For us it extremely important to leverage the intellectual firepower of the University of Luxembourg. We have a unique chance to integrate into the “House of Fintech” initiative the research resources of SnT now developing a dedicated fintech expertise; as well as other parts of the University with fintech competencies. We will do what we can to stimulate partnerships between the Luxembourg financial industry and the University.
 
FinTech Gazette / January 2016