Jump on the bandwagon…


In case you have been hibernating over the last year and have missed what is now making the Luxembourg financial center pulsate, take note: it contains just 7 letters and it’s called… FinTech! The Politicians and institutional organizations, which include foremost, Luxembourg for Finance and the CSSF, are working hard to put the country on the European – and world – stage for innovative ecosystems in this area. We really hope they have more success than Lee Sedol, the Korean Go player champion who recently lost four out of five games to AlphaGo, Google’s artificial intelligence Go-playing computer system.

Initially, Luxembourg may have seemed like just a promised land for FinTech startups who wanted to shake up the financial sector. These startups would benefit from the local government’s appreciation and awareness of the digital opportunities created by FinTech startups. They could find a large number of potential B2B clients here. Being based in Luxembourg they could more easily access the European market. And since the regulatory environment in Luxembourg is optimal for helping the FinTech sector grow, FinTech startups would feel that Luxembourg would be a safe choice for developing their businesses.

However, Luxembourg is certainly turning into a full-fledged FinTech hub. Now, Luxembourg will have to meet a few challenges to reflect and nourish the FinTech sector’s growth. It is important, for example, that regulation not be too strict, and not adopted too slowly. We jumped on the FinTech bandwagon, a sector ripe for development in Luxembourg, and now we need to focus on the direction in which we take the sector’s growth.

Luxembourg essentially missed the crowdfunding bandwagon. In a country such as Luxembourg, the ability to create equity crowdfunding platforms and attract investors across Europe, should have been possible and even a good match for the country. There was NUBS, a promising platform based on the “gifts and rewards” model. However, in a finance center that serves sophisticated investors, whether professionals or individuals looking for return on investment, it might have been better to create a regulatory environment where other crowdfunding formulas would have had the opportunity to emerge. It is too bad that Luxembourg missed the boat when it came to crowdfunding.

But let’s get back to FinTech! Besides, Luxembourg should not be a follower and hop on every bandwagon. Rather, it should be a leader in areas where it can best excel. And it is clear that the country cannot support and promote equally every sub-industry associated with FinTech. There are simply too many: mobile payments, cyber security, encrypted currency, virtual currency, crowdfunding, lending, data analysis and management… We need to clearly outline Luxembourg’s FinTech priorities after assessing its unique characteristics, and then articulate and publicize the country’s strengths and chosen sub-industries.

Meanwhile, the enthusiasm generated over the last year and a half around that word FinTech continues to rise. More and more Luxembourg startups are playing their cards right. It is the same for many foreign startups which, thanks in particular to licenses issued by the CSSF, such as the license for an electronic money institution, see Luxembourg as an ideal platform from which to expand their businesses in Europe.

At the FinTechStage event, held in early February 2016, the Minister of Finance, H.E. Pierre Gramegna, announced the future development of the LHoFT – Luxembourg House of Financial Technology. The LHoFT will be for the Luxembourg FinTech sector what Level39 is for London’s technology startup sector. Since there are no 39-floor buildings in Luxembourg, LHoFT will probably be built a bit closer to the ground and entrepreneurs, both literally and figuratively.

Luxembourg for Finance seems to be pulling all the actors – institutional, public and private – in the same direction, helping the FinTech sector to grow. Luxembourg is on the right track.



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