Some 50 startup founders, industry players and stakeholders gathered to discuss the key stakes facing the fintech industry when Silicon Luxembourg launched its latest magazine dedicated to the sector.
Hosted in a former bank vault at the offices of regtech Governance.com on 3 July, Emilie Allaert, head of the Blockchain Lab, Bert Boerman, co-founder and CEO of Governance.com and Raoul Mulheims, co-founder and CEO of Finologee, spoke about the sector’s main challenges, including talent, funding and resistance to change.
“10 years ago it was one of the coolest things to do,” said Raoul Mulheims. The 2007-2008 financial crisis altered perceptions about the sector. But so too has the recent momentum behind purpose-driven work. At Finologee, the talent crisis has been more felt in business profiles than the tech profiles. For financial services firms struggling with recruitment, Mulheims recommended employers find ways to automate the unfulfilling tasks to free staff up to do more interesting work. He said that it was also important for the employer to introduce a purpose in its work. “If you’re just providing technical infrastructure you won’t change the world. but you might change the company to make it more attractive and meet certain criteria,” he said.
Lastly, on a global scale, he said the sector would benefit from putting forward role model projects where real innovation has been achieved, to show where change is taking place.
Regarding the fintech VC funding freeze widely reported in the trade media, Mulheims reckoned that the scale-ups with substance are still getting funded. Only the conditions will change. Bert Boerman said that for him the climate for VC was not “very appetising”, one of the reasons why Governance.com revised plans to do its first institutional fundraising in 2023.
“The question is do you need the funding or do you want it? Some firms need it to survive and build their product. But scaleups have a product and cash flow.” Governance.com chose a more modest growth path by creating a capital bond in 2023. Boerman also pointed out that smaller equity deals from business angels or loans can do a lot for scaleups.
On the subject of financial technology adoption, the panel discussed barriers lack of understanding, focus and courage. Multinational partners in Luxembourg lack autonomy of decision-making and individuals risk their careers by supporting a project they cannot guarantee will work. In wealth management, there is also a lack of urgency to change in part because of the specific way performance metrics are measured from one operator to the next.
Emilie Allaert said that the main barrier to blockchain and DLT adoption are psychological (fear of losing one’s job) and the feeling that the lack of knowledge about the subject is a roadblock. “What we see is people are trying to get the nitty-gritty details. They don’t just want to just implement the technology, they have to understand how it works from A to Z,” said Allaert, adding: “But, when the internet first came out, you didn’t need to understand HTTP and internet protocol.”
Education will be key to helping potential partners understand what they need to know about DLT and blockchain to implement a project. Companies can then test projects in a low-stakes environment like at the Blockchain Lab’s testbed. Allaert also lamented the lack of communication from financial services companies about their blockchain/DLT projects, often for competition reasons. She said: “I know they do not want to share what they are working on […]. But, they’re all making the same mistakes and they’re not talking about it.”
The event was held to launch the latest edition of Silicon Luxembourg dedicated to Fintech. You can read the magazine online here.