It may be only 8 years away, but many representatives of Luxembourg’s financial centre have clear visions of a 2030 of higher technology but also a commitment to ESG values, but which may be a challenge to bring about. They spoke in a “10×6 Luxembourg - Financial centre 2030” event organised by Paperjam and Delano on Tuesday night.
Nicholas Buck, CEO of SEQVOIA, surprised the audience by declaring that “we are not a financial centre.” As long as we keep referring to Luxembourg as a financial centre, he argued, “It’s a mistake, because it doesn’t highlight what we really are good at.” We are really good, he said, at “servicing, assembling the product, it’s the packaging of the wrapper information and then the way that product is sold, distributed and serviced over its lifetime.” Stating he agreed with other presenters, he issued a call to action “let’s know who we are. And then digitalise all of this, power it with technology, because if you are the best assembly plant in the world around financial products, you need to be obsessed with one thing and that’s efficiency and getting things right and bringing products to market quicker.”
Claude Marx, directeur general of Luxembourg’s CSSF regulator, appearing by video due to a CSSF ban on in-person events due to Covid, outlined the constant change in Luxembourg’s banking sector over time, and said that the banks of the future, those that “survive and emerge as winners” will combine trust, talent and sustainability. He said he believed that two models could emerge: “Agile, integrated, innovative banks specialised in core market segments or geographies or what I would call Lego banks, assembling in-house expertise and different blocks from third party providers.
Challenges but opportunities
Luxembourg House of Financial Technology CEO Nasir Zubairi outlined a fairly pessimistic view of the next 10 years. However, he said, opportunities are there. He said that Luxembourg needs to double down on sustainable investing, and start looking at the “operational infrastructure” to “build-in efficiency and scalability from an early stage”. He also made a case for mutualising infrastructure through Luxembourg’s “close-knit community and sense of collaboration and taking another look at crypto, “catering for the existing market of crypto assets and also leveraging it for tokenisation.”
Jessica Holzbach, advisory board member at Ilavska Vuillermoz Capital emphasised that despite the arrival of fully digital banks, “we’re still very, very early in the space.” She pointed out that many of the new services are like “putting lipstick on a pig”, since “in the background, everything is still running on old pipes. Many banks focussed on improving the user experience and user interface. “Now, it’s also time to innovate in the background,” she said.
Unsustainable processes
Michael Fox, branch manager and head of securities services at J.P. Morgan Luxembourg emphasised how many banks are still coping with “unsustainable processes”. He argued that banks should stop seeing fintech and start-ups as the enemy. “They can actually provide us solutions and big companies to partner with, where we have feature shortages, where we cannot actually provide for certain services to our clients then we can collaborate.”
Falk Fischer, CEO of Julius Baer, spoke of the megatrends already under way as a way to see the future. He mentioned digitalisation as an example. He argued that robotics and digital technology generally will ensure the digitalisation and automation of everything. “The key is that it has to be cheap, fast and reliable,” said Fischer, adding that “more often than not, technology has allowed private banking to gain market share.”
Social changes
Francesca Prym Gigli, CEO and Member of Board of Directors at UBS Fund Management took a somewhat different approach by speaking about the social changes, such as population increase, technology development, and in employee expectations, such as in flexibility. She also mentioned the change in the skills required by employers. She observed that “we can expect to have employees based in different jurisdictions, but working for the same company, even in Luxembourg, for example, and being different as well, from a religious and cultural point of view.”
Arnaud Jacquemin, CEO of Société Générale, saw a 2030 financial centre where environmental and social awareness infuse the centre’s role in financing the economy. He outlined possible financial centre actions in support of biodiversity, environmental standards and antipollution norms, contributing to the fight against greenwashing and imposing transparency. He also mentioned his employer’s commitment to the technical transformation of artificial intelligence and distributed ledger technology.
No barriers, please!
Luxembourg for Finance CEO Nicolas Mackel wrapped up the evening by issuing a call to resist “any barrier to the free flow of financial services” stemming from the rise of antiglobalisation and economic nationalism. It’s also crucial to maintain the country’s competitiveness, especially in the area of tax. Luxembourg needs to focus on climbing the value chain “by bringing new and higher value activities to Luxembourg” in order to deal with our high cost structure. Attracting talent from abroad is another priority area. “We will need to focus on finding the right mix of measures to make Luxembourg appealing to this talent pool.”