According to Luxembourg’s Prime Minister, Xavier Bettel, “the challenge now is to capitalize on Luxembourg’s strengths and more consistently build up innovation in this area. The actors are mobilized; new developments are on the way!” We had the chance to talk to Mr. Bettel and get his opinion as to whether Luxembourg can become a world leader in the FinTech sector. (Xavier Bettel during the interview in his office. Photograph: Olivier Minaire)
Fintech seems to be the current buzzword. Do you really believe in the emergence of this sector in the Grand Duchy?
Yes, I do. We don’t have any other choice. For decades, we have always been able to challenge ourselves and define the needs and products of tomorrow. We did it successfully in the ‘60s, ‘70s, ‘80s and from 2000. Today, we are ranked second in the world in terms of investment in the funds industry. Although Luxembourg covers a relatively small portion of the earth’s surface, we actually rank at the top for aerospace innovation.
Considering our size and our ability to innovate in many different sectors, we’re an established player in the FinTech sector. It’s becoming more and more important to Luxembourg’s economy. While Bitcoin is a great example of how technology can help innovate the field of finance, there are many other possible innovations in this area, and it is necessary that we continue to invest in the FinTech sector and create other innovative products of value. Today, we cannot imagine finance without technology, nor technology without finance.
How can Luxembourg turn into a FinTech hub that is internationally recognized as well as the hubs of London or Singapore?
We already have a number of essential ingredients in the development of this sector. We have extremely advanced skills and an internationally recognized level of data security and infrastructure, as well as an international interconnection point. We have a financial sector—including fund industry— among the largest in the world, which is also a magnet—an attractive feature—for technology companies in the financial sector. We have regulators who are not afraid of innovation but, on the contrary, are willing to go with it and adapt! The challenge now is to capitalize on Luxembourg’s strengths and more consistently build up innovation in this area. And we must do more branding abroad. The actors are mobilized; new developments are on the way!
Which FinTech sectors do you find most relevant to Luxembourg’s development?
In Luxembourg, we have already seen a certain concentration of active players in electronic payment and data security, both areas we should certainly continue to grow. Beyond this, areas revolving around issues of identity, such as KYC and “smart compliance,” the Blockchain and big data, are areas that are highly relevant for the financial sector, and which also present opportunities well beyond finance. It is on these areas that we should focus our efforts, particularly in terms of research.
What actions has the government taken to boost the sector?
The government initiated the movement by putting FinTech at the heart of its priorities, including by raising the topic as a priority of the Digital Lëtzebuerg initiative. We aim to ensure a regulatory environment that is conducive to innovation and to support research and development, which is the task of the public sector. We are working hard on this. However, the real dynamism must necessarily come from the private sector and stakeholder engagement of the country. This is where the real key to success is, in my opinion.