AGEFI Luxembourg - décembre 2022

Décembre 2022 48 AGEFI Luxembourg Informatique financière T he rise of new technology is changing theway that finan- cial sectorsmanage their sus- tainable finance strategy—and this iswhere FinTechs enter the scene. FinTech creates a pathway for fi- nancial services and allows themto adapt to newregulations quickly and efficiently.A focus onESGre- porting (Environment, Social, and Governance) is increasingly a ne- cessity for all financial institutions, as a result of the sustainability im- perative and associated regula- tions. FinTechwill only grow to play amore important part in Luxembourg’s sustainable finance strategy as it works to facilitate the needs of institutions in this space. EU actions initiated a strategy change acrossfinancialentitieswithsustainability at its core. Some entities responded faster than others. While some decided to use this change as anopportunity toeither re- vise their entire strategy plan, a few an- nouncedthattheyplanonexpandingtheir strategy that already prioritizes sustain- ability.Anewsurvey co-authoredbyThe LuxembourgHouseofFinancialTechnol- ogy (The LHoFT) Foundation and De- loitteLuxembourg,exploreshowFinTech plays akey role in fulfilling theneeds sur- rounding sustainability. A key element of this report is how Fin- TechfacilitatestheuseofESGdataafterthe newestablished regulations of the EUac- tionplan.InMarch2021,concernedfinan- cialinstitutionswererequiredtoapplythe newESG regulations. This created a shift in the dynamic of the financial sector, as specificrequirementsforthefillingofpre- contractual documents were requested. The deadline for the submission of the documentswas foreseen in thebeginning of2022,whichmeantthattheactorsofthe financial sector had to act rapidly. We ex- pectthisintensitytocontinuewithnewre- quirements arriving even after 2023. (1) The reason for this change comes from the much needed growth and signifi- cance of, or education on ESG data. Going forward, ESG data is expected to be a key resource for financial institu- tions. This means that it has to be inte- grated in client’s reports on their sustai- nability preferences, in themanufacture of newproducts, and in the distribution of those products onto market. (2) The catalysing role of FinTech The FinTech ecosystem continues to spreadandblossominLuxembourg,with growing opportunities for service offer- ings.Therefore,itcomesasnosurprisethat sustainable finance is also a growth area, as FinTechs can seize opportunities to solve challenges surrounding sustainable finance regulations. FinTech innovators must anticipate fu- ture changes andbeprepared for regula- tionsimposedbyEUinstitutions.FinTech should always be one step ahead of tra- ditional financial institutions, andwe see this in Luxembourg with the dominant B2B segment of the FinTech ecosystem. As noted in our sustainable finance re- port by The LHoFT Foundation andDe- loitte Luxembourg, “the fact that many existingFinTechprovidersareexpanding their offerings with sustainability and ESG-targeted services is testimony to the sector’s agility.” (3) It is safe to say that Luxembourg makes useofitstech-friendlyregulatoryenviron- ment—and the report heralds the local techsceneas,“apremierwealthcentreand the second largest fund centre in the world.” (4) The country is known to be “a leadinglocationforFinTechdevelopment […] where there are ample opportunities andthesupportofanorganizationlikethe LHoFT”. (5) The report further highlights the variety of formats of the services that FinTech provides. They vary in terms of purposeandsoftware,hardware,applica- tionandalgorithm.And there isopportu- nity to drill down into specific industry sectorsoractivitiesneededbyFinancialIn- stitutions. (6) As outlined in the report, niches might include back-office-related branches of investment management (FundTechs), wealth management (WealthTechs),regulations(RegTechs),in- surance (InsurTechs), and green finance (GreenFinTechs). (7) On a global scale, FinTechs are thought to createasmoothtransitionintosustainable financewiththeiruseofdataanalyticsand artificial intelligence, and the hope is that they can also impact the global footprint byhelping economies inch toward a low- energytransition. (8) “Dataisboththemain area of focus of ESG FinTechs and the main area of need for [financial institu- tions]. Here, FinTechs can support with datacollection,integrationandconsolida- tion, as well as quality assurance and re- port production.” (9) The European CommissionemphasizesintheEUGreen DealhowvitalFinTechsarefortheaccom- plishment of sustainability goals, as “on a cross-sector scale […] they can accelerate and maximize the ‘impact of policies to protecttheenvironmentanddealwithcli- mate change.’” (10) Financial Institutions vs FinTech’s perspectives Both Financial Institutions (FIs) and Fin- Techs are seeminglymotivated toengage more in sustainable finance. However, the report notes that “Luxembourg fi- nancial actors regard the topic as a bur- den and a financially costly constraint, rather than something that will create opportunity.” (11) In this context, FIs con- tinue to face challenges related to data availability and its management. This makes “the redirectionof financial flows to more sustainable choices more com- plex and burdensome.” (12) By taking a closer look on how exactly FinTechs engage with ESG, a fewpoints become apparent: On a global perspec- tive the E pillar seems to be FinTechs’ main focus point. However, in Luxem- bourg, the “G pillar is better catered for than the E and the S [pillar].” (13) Presum- ably, the reason for this is the creation of a certain type of safety net that was es- tablished by the government after the fi- nancial crisis of 2007-2008. The government took its lessons learned andstrengthenedagovernance-oriented culture for thefinancial sector.Although “the S pillar seems to be less served by theFinTech industry inLuxembourg,” (14) it could grow through FinTech subspe- cialties like InsureTechs, sustainable fi- nance FinTechs (SFFs) and impact- investment-orientated FinTechs. While all ESGpillars are present in Lux- embourg’s financial ecosystem, not all receive the same amount of recognition or the same opportunities. As one con- clusion fromthe report, avaluable future discussion point would be the creation of more joint projects between those pil- lars tomutually improve and strengthen them. After all, one of Luxembourg’s uniquedifferentiators according tomost of the study recipients is the proximity between relevant players in Luxem- bourg’s ecosystem. A joint report between The LHoFT andDeloitte Luxembourg Co-authored together with The LHoFT Foundation, our report examines Fin- Techs’ impact on sustainable finance in Luxembourg and beyond. Based on 27 interviewswithFinTechs, financial insti- tutions (FIs), associations andother pub- lic entities, and complementary desk research, the report identifies enabling factors andpotential obstacles that could impact FinTechdevelopment inLuxem- bourg and ends with a series of calls for action. Through the interviews and the ex- tended research that was conducted for this joint report, we clearly see the great potential that FinTechs have for the sus- tainable finance sector. With this report, we intended to present the different ac- tors in Luxembourg and demonstrate howthey are contributing, with the help of innovative technology, to sustainabil- ity in the finance sector and beyond. Read more about the opportunities sus- tainablefinanceprovidesforFinTechsand Luxembourg in the report: Fintech for Sus- tainable Finance : Technology as an enabler of Luxembourg’sSustainableFinancestrategy .It is now available on the LHoFT website: https://lhoft.com/en/insights/fintech-for- sustainable-finance. By Francesca MESSINI Sustainability Leader Giulia BRUNI ROCCIA Senior Manager Risk Advisory, Sustainability, Deloitte Luxembourg 1)TheLHoFTandDeloitteLuxembourg, FinTech for sustainable finance , 2022, p.17. 2) Ibid. 3) Ibid . 4)ERCBLuxembourg,“Luxembourg,thebestlo- cation for FinTech development,” video, 2:59, June 8, 2015. 5) Ibid. 6) Ibid. 7)TheLHoFTandDeloitteLuxembourg ,FinTech for sustainable finance , 2022, p.17. 8)TadiwanasheMuganyi,LinnanYan,andHua- ping Sun, “Green finance, fintech and environ- mental protection: Evidence from China,” Environmental Science and Ecotechnology 7 , (2021): pp. 1-8. Sébastien Duchêne, “Review of Handbook of Green Finance,” Ecological Economics 177, (2020): pp. 1-5. Ran Tao, Chi-Wei Su, Bushra Naqvi, and Syed KumailAbbasRizvi,“CanFintechdevelopment pave theway for a transition towards a low-car- boneconomy:Aglobalperspective,” Technological Forecasting and Social Change 174, (2022). 9)TheLHoFTandDeloitteLuxembourg ,FinTech for sustainable finance , 2022, p. 11 10)GreenDigitalFinanceAlliance,“FintechEm- power People to Green Their Home”, accessed August 16, 2022. 11) The LHoFT and Deloitte Luxembourg, Fin- Tech for sustainable finance, 2022, p.29. 12) Ibid. 13) The LHoFT and Deloitte Luxembourg, Fin- Tech for sustainable finance, 2022, p.26. 14) The LHoFT and Deloitte Luxembourg, Fin- Tech for sustainable finance, 2022, p.27 . FinTech meets sustainability to enable Sustainable Finance Strategy in Luxembourg O n 16Novembre, the IT community reunitedon the occasionof the iconic IT neGala, occurring at LuxExpo the Box, inKirchberg. Speeches and a quiz featuring seasoned experts punctuated the dinner, followed with the awaitedLuxembourg ICT Awards ceremony. Discover the names of the rewardednominees! The event was in full swing following the awaitedLuxembourgICTAwardsresults! This year, the ceremony featured 9 cate- gories, of which each award aims to pro- mote andhonor thebest practices and the bestsolutionsonthemarket–providedat national level. Each finalistwas presented but, who are this year'swinners? - BGL BNP CIO Wealth Management Arnaud Clément received the CIO of the Year award. Christian Kettmann, CIO, CFL andwinner of the 2021 editionwent on stage to officiallypass on the torch in a moving speech. - LuxProvide received the ICT Business Partner of the Year award for its leading- edge technologies to accelerate economic andsocialprogressthroughenablingtech- driven companies. - POST Telecom received the Telecom Innovation of the Year award for its "DigiWald"project.POST–inpartnership with Waldbillig – deployed 5G Fixed Access Points in citizens' houses to cope with the lack of fiber and offer fiber-like broadband services. - Devoteamreceived theMost Innovative ICT Training Programme award for the launchof its newacademy "Your Journey to theCloud". -WEOSAS received the Best Use ofAI & Data award for its use of data from space andAItotacklemajorenvironmentalchal- lenges (water resourcemanagement, gro- wing urban forests, preparing for natural disasters...). - Rsecure received the Young ICT Revelation of the Year award for helping SMEs to protect themselves from cyber risks, notably thanks to Rsecure's smart box EGIDE tomanage the entire IT infra- structure. - Centre des Technologies de l'Infor- mation received the Digital Transforma- tionProjectoftheYearawardforthereali- zation of the pilot project in the context of the digitalisation of student loans, the 3 public actors, i.e. the Ministry of Higher Education and Research (MESR), the Ministry for Digitalisation and the GovernmentITCentre(CTIE),havejoined forceswith Spuerkeess. - Finologee received the ICTOutsourcing Services Provider of the Year for building thenewgeneration infrastructure for out- sourcing and managed services opera- tions for financial industry players in Luxembourg. The distinguished Inspirational ICT Personality of the Year award was given to Mohamed Ourdane this year – POST Luxembourg Head of Cybersecurity department–forhispassion,contribution and resilience in always taking up any challenges. The jury tookapoint of honor toacknow- ledge this underrated talent. ITOne Gala 2022 - Discover the winners Arnaud CLÉMENT, CIOof the Year award ©Sabino Parente Abonnement aumensuel (journal + éditiondigitale) 1an(11numéros)=45€abonnementpourLuxembourgetBelgique-55€pourautrespays L’édition digitale du mensuel en ligne sur notre site Internet www.agefi.lu est accessible automatiquement aux souscripteurs de l’éditionpapier. NOM:....................................................................................................................................................................... ADRESSE:.............................................................................................................................................................. 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