Luxembourg For Finance is responsible for the development of the country’s financial sector. Silicon Luxembourg caught up with its CEO Nicolas Mackel to discuss the secret behind its success, the importance of regtech and his future goals.
You’ve been the head of Luxembourg For Finance (LFF) since 2013. What major changes has LFF undergone since you’ve been in post?
Since I joined, one of our main strands of activity has been explaining Luxembourg’s financial sector to various audiences, including international journalists. Concerning the content, a lot of our work has focused on business development, meaning going out to look for new financial institutions to bring to Luxembourg. This was especially important after Brexit when a lot of them were considering moving to Europe.
Lastly, developing Luxembourg’s fintech sector has been an important focus since 2014. At Luxembourg For Finance, our objective has always been to connect the existing industry with the solutions that are developed by startups and other fintechs.
When talking to international prospects about Luxembourg’s finance sector, what are some key points you try to get across?
Luxembourg is one of Europe’s leading financial sectors and has developed a sophisticated ecosystem which is one of the main reasons for its success. However, Luxembourg has and continues to be known for plenty of the wrong reasons. So my role is also about dispelling some of these misconceptions.
What are some of these misconceptions?
Many think that Luxembourg owes its success to tax advantages. However, today we live in a world with tax transparency and yet Luxembourg continues to be successful. For many, it is difficult to understand how such a small country can compete with cities like Paris. However, once financial players learn about our sophisticated ecosystem, they quickly realise that there are many reasons to set up shop here.
What makes Luxembourg such an attractive ecosystem to join?
There are different elements which make up our ecosystem. Talent and expertise would be the first, and this is something we have built up for at least the past three decades. For our flagship activity, investment fund structuring, we have all the necessary talent and institutions who can do this at the highest level. It’s not only the asset managers but also the lawyers, consultants and banks who work in this sector. Add to that the tax authorities and you have a perfect little Swiss clockwork that works together to deliver the highest quality and precision.
“I hope to consolidate Luxembourg’s role as one of the leading post-Brexit finance hubs in the EU which is geared toward a digital and sustainable future.”
Nicolas Mackel, CEO of Luxembourg For Finance
Which trends are currently shaping Luxembourg’s fintech sector?
There are many, but they are in different stages of development. Payments for example are already very mature. PayPal, Amazon and many others have set up operations in Luxembourg for quite a while. Regtech has also undergone interesting developments in the past years. In terms of strategy, Luxembourg did not necessarily want to become the next fintech capital of Europe, but we wanted to attract solutions to the local financial industry that were needed in order to transition into the digital era. And attracting regtech talent was crucial because of Luxembourg’s activities in risk management and compliance and so on.
Topics like blockchain, AI and cybersecurity are obviously also important and indispensable for the future. This is also why so many efforts are being made by the university and research institutes to see what needs to be done.
The pandemic has helped fast track digitalisation of the financial sector and has spurred growth in sustainable finance. How do you expect these changes to affect the growth of Luxembourg’s fintech sector?
One misconception that exists around both of them is that they are seen by some people as new or separate activities. In fact, I think what we are seeing is that it’s a transformation of the activities that already exist. There may be several new players in these areas but a large chunk of it is really related to the digitalisation of an existing ecosystem.
The same goes more or less for sustainable finance. Many look at sustainable finance as a replacement for the current system but the ultimate goal is to continue doing what the financial industry is already doing, only by shifting the objectives to support the green transition. It’s not about replacing the industry but about helping it pivot.
What do you hope to have achieved by the end of your third term as LFF’s CEO?
I hope to consolidate Luxembourg’s role as one of the leading post-Brexit finance hubs in the EU which is geared toward a digital and sustainable future. I also hope to ensure that it has access to the resources needed to achieve this goal because if we don’t manage to provide our industry with the talent they need in order to run their activities, then we have a problem.
This article was first published in the Silicon Luxembourg magazine. Read the full digital version of the magazine on our website, here. You can also choose to receive a hard copy at the office or at home. Subscribe now.
