AGEFI Luxembourg - juillet août 2025

AGEFI Luxembourg 42 Juillet / Août 2025 Informatique financière By Romain SWERTVAEGER, Partner, Fintech Leader & Florent CHARLIER, Senior Manager, Audit, EYLuxembourg T he fintech industry emerged alongside the growth of e- commerce almost two decades ago, and has since then experienced an incredible expansion, at least until the Covid pandemic, where the industrywas the key driver in venture capi- tal funding globally. Since then, the post-Covid pande- mic economic downturn and the relative drying up of venture capital funding – while artificial intelligence (AI) has taken central stage – has questioned the trajectory of an in- dustry once seen as posed to overtake tradi- tional finance. Fintech, has the revolution finally happened? Yesandno.Itisundeniablethatoverthepast20years, thefintechindustryhasevolvedfromanicheindustry toonereshapinghowconsumersinteractwithfinan- cial services. Most fintechs have tended to integrate withtraditionalfinanceandtraditionalbankingrather than fully disrupt the financial industry, or even un- dertake traditional incumbents. However,wewouldberemissnottoconsiderthatan industrythatdidnotexistfewyearsagohasnowsuc- ceeded in many ways. Indeed, fintechs, through in- novation and the development of services and technologies – which did not exist at the turn of the new century – have now become an integral part of the financial industry, transforming thewaywe pay, lendmoneyorusewealthandassetmanagementso- lutions.And this is just a start. Indeed, while fintechs have mostly and initially de- veloped inpayments, lending, andbanking,we now see a significant impact of fintechs in other sectors, such as wealth management or in the insurance in- dustry. The development of tokenization, the use of the blockchain technology through digital assets or stablecoins,and–theunforeseenornotunderstood– impacts of decentralizedfinance (DeFi) on the future of finance are many areas where fintechs have been, are and will be instrumental in developing services and products offerings which did not exist 10 years agoandprobablystilldonotexistnow.Overall,while fintechs have not replaced traditional finance and bankingplayers,theyhaverevolutionizedourwayof approachingfinancial services. The industry has also seen the emergence of global playerscompetingwithglobalbanksinpayments,in- vestment or lendingwhileothershave takenadiffer- ent roadpartneringwith traditional actors,withboth developingtheinfrastructurebackboneforthefinan- cialindustryaswellasofferingaccesstofinancialserv- ices in areaswhere banks have struggled todo so, by facilitatingfrictionlesstransactions,cross-borderpay- ments, or consumer credit. The dry out of financing, a sign of fintechs slow-down? Assaidearlier,thefintechindustryhasseenindustries (such as that of AI) taking most of the spotlight and access to funding in our post-pandemic world. Fin- techs have also seen their gross fundingdecline since 2021, combined with declining valuations. Giving it a closer look, this is not necessarily bad news as the fintech industryhas shownmorematurity, requiring less access to venture capital funding as in the past whilestillmaintainingitspositioningasoneofthetop threeindustriesinwhichventurecapitalfundsarein- vesting. This trend re-emphasizes the fintech indus- try’s continued interest for investors as well as its criticality for the future of financial services. It is also worthwhile noting that fintechs, after years of heavy spending and heavy investments, have fo- cused on profitability, cost efficiency andmarket ex- pansion – this also being a sign of the industry’s maturity – while reinventing themselves inlightofevolvingconsumerdemands, geopolitical events and economic shifts. The future for fintechs is still bright Despite current market fluctuations, less- enedfinancingaswell as the emergence of new technologies, the future of fin- techs remains bright, with strong fundamentals. Indeed, the industry – due to its pro- file – remains at the center of long-term trends and change, such as the rise of embeddedfinance,andalso followsthepathofnewreg- ulations, while integrating the new demands and needs of consumers. The industry still remains at the forefront of thedevelopment of keychanges in thefinancial industry, suchas thede- velopment of new payment rails and technologies with stablecoins takingmore andmore space to fa- cilitate cross-border payments while becoming widely accepted across the industry. Other major developments such as “buy now pay later” solutions developed during the Covid pan- demic are now regaining momentum, while the in- dustryisalsoheadingtowardssupportingthewealth andassetmanagementindustryinitsneedofdigital- ization through tokenization of real assets or funds’ shares. Such developments enable the industry, through its capacity to innovate, to remain relevant. This is also achievedvia innovation,AI-drivenfinan- cial products ormachine learning-related innovation that bring value to fintech offerings. Overall, the in- dustryremainspivotalinachangingworldwherere- tail customers and investors are looking for newand efficientsolutionstoconsumeorinvestwhilefocusing onmore sustainable solutions. What about Europe andLuxembourg? While Europe has seen major players developing in the industryand tobenoted inseveral key segments, i.e.,payment,lending,wealthandassetmanagement or insurance, most of our European champions are based in the UK, while continental Europe lags be- hind. Thus, the EU takes the risk to become fully de- pendent on innovation and solutions coming from other continents – or at least from outside the Euro- pean Union. This is a crucial opportunity for the EU torespondeffectivelybyconcentratingitsinvestment efforts on supporting existing and emerging Euro- pean champions. The EU possesses significant re- sources and tools to finance these champions, rein- forcing its competitive position. Otherwise, similar to previous technological revolutions, the EU risks be- coming merely an extension of the value chain for Asian or US incumbents, failing to develop its own capacitytocompeteinanincreasinglyglobalizedmar- ket. As an illustration, the UK in 2024 represented more than 65%(1) of European total investments in thefintechindustry,whileinvestmentsfellby25%be- tween the first half of 2023 and 2024 inEurope. Thus, it is becoming urgent for European countries to change direction as the current status quo could be- come soon irreparable. While the absence of European champions is a key issue for the European economy and the future of its sovereignty, Luxembourgwill still have a key role in the European ecosystem thanks to its capacity to at- tractforeignplayerstosetafootontheEuropeanmar- ket throughLuxembourg. ThesituationinLuxembourgissomewhatunique,as developing a fintech champion headquartered there presents challenges. These include limited access to significant funding, a lack of a sizable local market to supportgrowth,andsometimesmoredifficultaccess toatalentpoolcomparedtootherEuropeancountries. However, Luxembourg’s strategic positioning, busi- ness-friendlyenvironment—includingitsregulatory framework—and expertise in the financial industry providekeyadvantagesforattractingglobalchampi- onstoestablishtheirEuropeanoperationsinthecoun- try. Moreover, Luxembourg is now facing a crucial needtomodernizeitsexistingfinancialinfrastructure andindustrytoremaincompetitive,moreparticularly in thewealth and assetmanagement industrywhere tokenizationwillundoubtedlybecomeakeytrendin the near future. These elements are keys for the sur- vivalandthefuturedevelopmentoftheLuxembourg financial industry. In conclusion, fintechs have seen tremendous growth and have brought significant innovation in a financial industrywith a crucial need of modern- ization anddigitalization. Fintechs have also served as a bridge in a world driven by e-commerce and digital habits – not only in how we buy and con- sume products and services, but also inhowwe ac- cess financial services and products. Fintechs have also reached a level of maturity enabling them to rely more on their own financial capacities, while partnering and co-existingwith existing traditional financial institutions opens the door to further in- novations aswell as opportunities for Luxembourg, which should definitely keep up the pace as a key hub for fintechs in Europe and across the globe. 1) UK Fintech Sector Dominates Europe with 65% Share of All DealsDoneinFirstHalfof2024-NewAnnualReport Fintech, where do we stand? T he Luxembourg House of Financial Technology (LHoFT) announce that Governance.com has been selec- ted as the winner of the Catapult: Future Foundation – Mutualisa- tion Initiative 2025. The selection followed a rigorous evalua- tion process, culminating in a final deci- sionmadebyanindependentjuryandthe program steering committee, composed of professionals from across all sectors of Luxembourg’sfinancialservicesindustry. Three high-potential solutions had been shortlisted: Governance.com, Proximus/ Wecan, and Ume. Governance.com was ultimately chosen as thewinningproject. The jury recognized the exceptional capabilities of all threefinalists, highlight- ing their strategic alignmentwith indus- try demands and reflecting the high standard of the competition. Hind El Gaidi, Program Chair, noted that Governance.com’s designation as the chosensolution represents just thebegin- ning, as the complementarynatureof the remaining two proposals presents com- pelling opportunities for collaborative ventures in the near future. The announcement was made at the LPEA Summer Party, concluding an intensivemulti-weekprogramorchestrat- ed by LHoFT with active participation from the jury and steering committee members. The comprehensive process included a bootcamp from May 19-23, pitch presentations at Nexus on June 18, andfinalsteeringcommitteedeliberations andvoting on June 30. ProgramMission and Impact The Catapult: Future Foundation was designed to drive industry collaboration and create shared digital solutions for data and document exchange across financial institutions in Luxembourg. This mutualisation initiative addressed oneofthefinancialindustry’smostpress- ing challenges: creating secure, efficient, and scalable solutions for data and doc- ument exchange that benefit the entire financial ecosystem. The program, launched in June2023withsupport from Luxembourg’sprincipal financial associ- ations, including LPEA, ABBL, ACA, ALFI, LuxCMA, LuxSE, andL3A, exem- plifiesLuxembourg’sdistinctive strength in fostering innovation through mean- ingful public-private partnerships. LHoFTCEO, Nasir Zubairi, commented: “Congratulations to Governance.com on theirwell-earnedselectionbytheJuryand SteeringCommittee. Their solution stood out for its maturity and vision, in a race that was exceptionally competitive, with Proximus/Wecanalsoshowcasingahigh- ly credible and innovative solution. The quality of all submissions and the excep- tional engagement from industry profes- sionalsreflectboththeurgencyofthechal- lenge and the collective will to address it. The LHoFT team now looks forward to working with Governance.com and the SteeringCommitteetodriveadoptionand realizethegoalofatrulymutualisedsolu- tion for data anddocument exchange.” The Selection Journey Froman initial pool of over 30 innovative applicants from across Europe and Asia, sixfinalistswere selected througha rigor- ous evaluation process. These companies thenparticipatedindetailedproposalsub- missions, intensive workshops, and pre- sentationsduringthebootcampandpub- lic events, culminating in a final vote by the Jury and Steering Committee com- posed of 16 of Luxembourg’s leading financial services stakeholders. Participants engaged in 10 sessions with over 20 leadingfinancial institutions, reg- ulators, and industry experts, focusing on key themes including: mutualisation in the financial sector, efficient data and documentmanagement, integrationand interoperability, enhancing client expe- rience, and regulatory and compliance challenges. Rigorous EvaluationCriteria The selection process focused on critical evaluationcriteriathatensurethewinning solution delivers meaningful impact across the financial ecosystem. These includedmutual benefit, regulatory com- pliance, interoperability, and cyber resilience, with a focus on shared value, adherence to Luxembourg and interna- tional regulations, seamless integration, and strongdata security. Finalists The six finalists in the bootcamp show- cased innovative approaches to mutu- alisedfinancialsolutions.Governance.com tookfirst placewith itsdigital governance and compliance platform. Other partici- pantsincludedProximus/WecanComply with a blockchain-based regulatory doc- ument exchange; Sonata One, offering a centralised onboarding and compliance hub; ume, a community-led documenta- tion exchange; U-Reg, an AI-driven RegTech platform; and Vestlane, provid- ing automated onboarding and compli- ance solutions. Next Steps andProgramEvolution Following this recognition, Gover- nance.com will work closely with the LHoFT andPrgramSteeringCommittee to prepare concrete industry adoption pathways. The collaboration will focus onrefiningtheplatform’scapabilitiesand establishingplans forwidespread imple- mentationacrossLuxembourg’sfinancial ecosystem. Building on the success of this inaugural program, planning has already com- menced for the Mutualisation Program’s nextchapter.Theexpandedinitiativeaims to extend mutualisation principles into other critical financial services areas such as ESG, continuing Luxembourg’s lead- ership in collaborative fintech innovation. Governance.com, Winner of the Catapult: Future Foundation – Mutualisation Bootcamp 2025 ANew Era for Secure Data Exchange in Luxembourg Finance ©LHoFT