In January 2015, a Conference wholly dedicated to Fintech companies was held in Luxembourg. The term “Fintech”, a contraction of “Financial” and “Technology”, has long aroused concern and distrust from Luxembourg financial players.
However, the Luxembourg market has now been made aware of the undeniable importance of these start-ups specialized in financial technology, which have already created over ten thousand jobs in the country (11% of total jobs in Luxembourg).
We are witnessing in the changing financial landscape the emergence of two types of
Fintechs: the so-called “traditional” Fintechs, which are complementary to the major players in the financial sector, and the “disruptive” Fintechs, highly innovative and more at odds with the traditional functioning of the financial sector.
If Luxembourg is presented as a serious contender to become a major hub for Fintechs due to its flexible regulations, highly attractive tax regime, favourable IT environment and an effective data storage system, Luxembourg is aware that efforts have yet to be made in order to compete with other major Fintech hubs such as London, Paris or Milan.
These efforts must focus on two points: flexibility and innovation.
More flexible legislation must be adopted to allow Fintechs to proliferate on a larger scale, particularly by promoting the arrival of new talents such as IT engineers, and by providing better access to funding, which remains sparsely accessible to these companies.
Luxembourg is becoming increasingly conscious of the challenge it faces, and the growing number of progressive initiatives taken, such as think tanks, is a testament to the Government’s will to diversify the country’s economy by promoting Fintechs, and Luxembourg will surely and quickly adapt its already highly attractive regulatory framework to this new revolution from which the entire financial sector will benefit.