Thierry Seignert, Chairman FTL, took part to the PSF Connect event of PwC.
Please find below the speech of Thierry Seignert :
Thank you Cyril and your team for organizing this event for our cluster and for giving the opportunity to our association Finance & Technology Luxembourg to share some views with our peers
Was the digital transformation something addressed here 5 years ago? Not sure
Were block chain and Machine Learning known or tackled here in Luxembourg or in this area of the planet about 2-3 years ago? Not sure. Nobody doubts today about their potential to reshape the way of working of almost all the industries.
As we can see, the world is changing fast, very fast and the globalization is now close to our borders.
Expectations of our customers, of the markets, the countries, and the regulators are evolving also very fast
Thus for a financial sector, for our financial sector of which the PSF’s are part of, the main dilemmas today are
- The move or collaboration between the Classical Financial Institutions and Fin techs,
- The collaboration between Fin & Tech,
- The Business Models for some of PSf’s, with commodity business when more added value and expertise are expected,
- cost reduction vs increase of complexity / increase of regulations
- Offerings of services available at local level vs global level
- Current way to act seen as a certain conservatism when disruptive approaches will define an alternate way to act.
Therefore, changes are expected and there is no other alternative than to support them.
In this context, 2 questions have to be raised:
First, is Luxembourg ready for these changes?
And secondly, If yes, for which goals?
Luxembourg must determine in which domains it wants to be recognized in term of Business, in term of expertise.
By voting in 2003 the legal frame relative to the PSF/S, Luxembourg wanted to protect his banking secrecy and to become a center of excellence.
Over the years, we can say now that is was a success but with the pressure of the markets, of our customers, of our mother companies on our costs, the pressure of EU on Luxembourg, the changes relative to the banking secrecy, the arrival of the Fintech’s, and the general adoption of the cloud, this unique framework started to be seen as a form of anachronistic protectionism. As a consequence something had to happen.
On top, in order to anticipate an European regulation currently under discussion which is called ‘Free flow of data’s’, Luxembourg decided to initiate a project of law to adapt the famous Art 41 relative to the professional secrecy within the financial sector.
In few words, this text contains 2 approaches
- A FI will be able to externalize within its group under an NDA by simply informing its customers
- A FI will be able to externalize outside its group under an NDA with the consent of its customers.
I let you to think about that, should this issue not be known by you.
But as you can imagine, the impact for the full financial sector, not only for the PSF’s, as well as for the country could be seen as important. We estimate the impact to several thousands of jobs. Nobody knows as an impact analysis should be done upfront.
However, is this not an opportunity for the country, for the market?
I repeat, the train of the globalization, the train of the cloud started and it is now arriving at Luxembourg’s doors. We must definitively anticipate that.
We are a country of services, we must become a country with more added value services and with expertise. Our potential is high and our abilities are wide. Let’s redesign/adapt the objectives of the country and of our financial sector. For that, Finance & Technology Luxembourg offered its support to the government and already started a think tank to assess our strengths and define our own goals supporting that trend.
For us as PSF, at term, we’ll have to adapt our business models. But let’s recognize that in term of approach, it is always better to design a business model with anticipation than to stop it. But I insist, the goals will have to be known upfront.
On top, communication around that project of law/ these expected changes will be key at domestic level but also abroad if Luxembourg wants to be a strong recognized alternative to UK with the Brexit.
The next few months will be important. A gateway will have to be built between our past and our future.
Luxembourg is now at a new moment of his history.
We must remain ambitious and believe in our strengths.
We will further discuss these issues about block chain, FinTech and the future of the financial sector in Luxembourg during our annual conference on November 29th at the same place. Feel free to join us!