Nasir Zubairi (LHoFT): Luxembourg’s role at the heart of fintech innovation
Luxembourg House of Financial Technology CEO Nasir Zubairi says fintech innovation will be sent into overdrive by competition between US and Chinese digital giants. It’s an environment in which Luxembourg can attract the sector’s brightest start-up entrepreneurs.
What is on your agenda, 12 months after your arrival?
NZ: The inauguration of our new offices at the Dôme is coming up in March 2018, but my main focus today is to put all the ongoing noise about fintech into sharp focus. Fortunately, the financial industry has now assimilated how important fintech is and grasped the scale of its impact on the Luxembourg economy. Initiatives like FundsDLT or Infrachain in the blockchain sector also demonstrate how quickly Luxembourg can turn ideas into innovation by leveraging its unrivalled ecosystem of expertise. A lot of very interesting developments are taking place as the Grand Duchy expands the scope and depth of its international connections, particularly in Asia and on the US West Coast. This coming year we will focus, amongst other initiatives, on practical education that can add value to traditional institutions and start-ups alike, by helping them to develop their innovation and partnership capabilities.
« Luxembourg has all the ingredients to become a real international FinTech centre»
What will be the impact of new players on the fintech industry?
NZ: The biggest challenge and, potentially, opportunity to the financial services ecosystem are the so-called GAFA companies: Google, Amazon, Facebook and Apple. Companies like Amazon have REAL customer loyalty and represent about 25% of e-commerce. I see an even greater potential impact from Chinese players who have no legacy and therefore experience less constraints on the ability to innovate. The West Coast and Asia will continue to leapfrog each other. Do you remember in the 1990s, when Europeans had compact Ericsson and Nokia mobile phones while Americans were still carrying around devices the size of a brick? This gap existed because the US market had a legacy in mobile phones, and was therefore slower to innovate by developing smaller devices. Two decades later, all users worldwide have the same high tech. We can expect the same dynamic in fintech as Alibaba and WeChat stimulate the GAFA behemoths and vice versa.
Which trends do you see emerging in the sector?
NZ: Significant developments are already taking shape. In Luxembourg, Payconiq’s acquisition of Digicash will enable this ‘made in Luxembourg’ technology to reach a much broader market. Elsewhere, BNP Paribas has paid an estimated €200m for Financière des Paiements Electroniques, the start-up with an e-money licence behind the Compte-Nickel app, through which clients can open an account and get a credit card at a French tobacco vendor. It might not have all the functions of a bank, but a new Compte-Nickel account is opened every 30 seconds - people have clearly found what they are looking for in these ‘non-bank banks’. Luxembourg, as H.E. Pierre Gramegna recently noted, is a AAA home for start-ups, with the ability to position itself at the cutting edge of fintech innovation and attract the brightest entrepreneurs. Luxembourg has all the ingredients to become a real international FinTech centre. The culture is changing rapidly. Luxembourg has a history of agility and can transform itself faster than others.