The first edition of the European Finance Summit took place on March 5th, 2020, at the European Convention Center Luxembourg, with more than 500 registrants. During the morning session, local and international experts focused on the topic of payments, discussing mobile banking and cryptocurrencies but also consumer needs and demands. Also, for the first time, InFinance organized a live streaming sessions, with more than 500 experts remotely following the conference.

Charlotte Boutelier (Head of Marketing, Farvest) officially launched the event and welcomed Master of Ceremony François Masquelier (CEO, Simply Treasury, Chairman of Luxembourg Corporate Treasury Association ATEL, Vice-Chairman of EACT), who broke down the program of the day, dealing with topics such as open banking, sustainable finance, and much more.


The evolution of the payment industry in Luxembourg

Marc Hemmerling (General Counsel Digital Banking, FinTech and Payments & Member of the Senior Management of ABBL) first took the stage. "The ABBL is one of the oldest associations focusing on Finance in Luxembourg. Different committees are working on more than 70 different topics, with more than 1000 experts taking part in them," started Marc Hemmerling. The expert than highlighted the numerous changes that are happening in the payment industry: new regulations, a changing market, customers' demands and innovative technologies. Marc Hemmerling kept on listing the challenges faced by financial players: new business models, new entrants which provide great customer experience and therefore new realities, even if most of them still rely on existing payment systems. "According to me, one of the most important parts is the one dealing with customers and their demands: they are better informed and protected. They also easily switch from one bank to another," he added, before focusing on the Luxembourg landscape. He underlined the fact that the government is pushing the idea of attracting actors that develop innovative services. "There is also a kind of pressure on the political side, with the European Commission pushing the industry in the development of an independent European Payment System," explained Marc Hemmerling, who continued: "there are 153 PSPs in Luxembourg, and our ecosystem is also composed of law firms, consultants, tech providers, etc. Luxembourg wants to become a payment hub, but there is still a lot of room to improve". He concluded his presentation by naming some of the main topics ABBL focuses on: PSD2 compliance, instant payments, channels and instruments (POS changing, ATM, mobile payments, web banking systems, etc.).


Consumers are driving the change

Michael Pechner (CEO, Digicash/Payconiq Luxembourg & COO, Payconiq International) then answered the following question: "Are we ready for a cashless society?". He started by saying that people in Luxembourg were lucky because the local environment encourages innovation: "people are keen on using new technologies. For instance, 45% of people under 35 in Luxembourg use digital payments on a regular basis". He then shared several examples, notably the one of the Nordics, where countries and their governments dive into digital programs with the goal to remove cash. Michael Pechner also went over the evolution of the payment industry, starting with the first coin created in 600 BC, the first paper printed in Europe in around 1650, etc., to arrive to the 2010s and the advent of mobile payment. He added: "the world has changed and the last 10 years have been about choice. Also, there are a lot of new players, coming from the tech industry. Moreover, we notice an important adoption of mobile payment in emerging countries. In China, Alipay and WeChatpay combine for 83% of payments". He also discussed the current situation of Luxembourg, where mobile payments are popular but where cash also remains important. "Who's actually driving this change? Consumers, as they now want new solutions, convenience and seamless experience. They pretty much want the Uber experience of shopping," explained the CEO. He also highlighted the fact that no cash means that digital transactions can all be monitored and that cybersecurity become even more important. He concluded: "cashless societies are about tech evolution and adoption. Technologies are on their way and allow quick and transparent payments, anywhere, at any time and with any device".

Michael Pechner also participated in a round table discussion around the topic of "consumer payments", along with Benjamin Belais (VP International Expansion, Lydia), and Jonathan Prince (Co-founder, Finologee), moderated by Patrice Fritsch (Principal, EY Luxembourg). "The payment landscape is evolving fast. We notice the desire of consumers to have on-demand payment services. New players now have significant positions in the market, disrupt bank and push them to transform," started the moderator. The experts then shared their own definition of consumer payment. According to Benjamin Belais, "there's a huge difference between the consumers' view and the tech payment world. It's actually a highly technological process, but consumers do not care about it". Jonathan Prince highlighted the fact that we notice a shift, with the power now belonging to consumers. He also explained that companies need to provide the most relevant payment means in specific context and that people will actually choose: "we need to offer a wider catalog of options to the consumers". Michael Pechner added that it is key to remove pain points and provide seamless payment experiences. The four experts then focused on the roles of Fintechs and banks. According to the CEO of Payconiq, we today see a cooperative system, with banks still having the trust of consumers, while relying on Fintechs to come up with innovative solutions: "we are moving toward a collaborative model". Benjamin Belais explained that Fintechs are leading the way in transforming the sector, because they face less risks and can more easily push more modern solutions. Patrice Fritsch then asked the participants about security and regulation. "Regulation is key in the financial industry and compliance is about understanding the tech, not stopping it. Regulators needs to work with the IT guys and understand the goals and impact, but also discuss with business. Because it can clearly kill the user experience," highlighted the Co-founder of Finologee. The Lydia expert agreed and added that banks apply regulation in different ways, while consumers now give trust to new players because they can smoothen their banking experience. The experts ended their discussion by fast forwarding to 2025. Jonathan Prince explained that we will see a reshuffling of the cards, with more options and a wide scope. According to Benjamin Belais, it will focus more on more and the users, as people are going for seamless payments. Finally, Michael Pechner underlined that it would be all about embedded payments.

The Amazonisation of financial services

After the break, Nicolas Mackel (CEO of Luxembourg for Finance) gave a keynote speech focusing on the transformation of financial services. He first stated that the digital disruption, just like the Coronavirus, affects the older generations/companies. "It can even be fatal to those that apply older models," he added, before explaining why the European financial services industry was in bad shape. Yet, Nicolas Mackel added: "there is a remedy: we need to embrace digital. We published a report entitled the Amazonisation of financial services". He then explained that this "platformization" strategy was made of several components: consumer-centric business models, creating a marketplace increased by regulation, etc. He highlighted the fact that there are five Fintech unicorns in Europe, all active in the payment industry: "our continent is the most harmonized area in the world, and the power of a single market can be leveraged so firms can go beyond local markets. The EU is the most integrated market in the world and regroups more than 450 million consumers. We need to regulate, and through the EC and its president Ursula von der Leyden, we will be able to fuel economic growth and job creation".


All you need to know about Libra

Thibault de Barsy (Vice-Chairman & General Manager of the Emerging Payments Association for the EU) then shared a video discussion on cryptocurrencies he just had with Bertrand Perez (Managing Director & COO, Libra Association). The latter first described Libra's mission: "the current system is penalizing the people who are already less privileged and that is why the UN wants to reduce costs by 2030. Today, 1.7 billion people are excluded from the financial system. There are a lot of stable coin projects and a lot of innovation starts to appear". He then explained that the current problems with the use of cryptocurrencies are the volatility of the price and the performance. "Libra is a safe, transparent consumer-friendly and open-source global financial solution that will break down the barriers for billions of people. That is our goal", he highlighted. The association is currently composed of 20 members and growing. It oversees the development and the management of the infrastructure that will allow different players to create an ecosystem and a wide variety of services built on top of the Libra blockchain. He also discussed regulation and Libra's reserve of assets, but also focused on the association's added value. Thibaud de Barsy ended the presentation by stating that the Libra projects was the "most exciting financial experiment of the century".


The Promise of Fintechs

Balazs Barna (Head of European Expansion, TransferWise) participated to the summit via video and stated: "moving money cross-border is costly. And banks are hiding fees most of the time: they are not transparent". He then explained that the founders of Tink came up with a new solution to move money more efficiently and making it as easy as sending an email. He then compared the fees and time to transfer money whether people use banks or Transferwise. Balazs Barna explained that the solution was first destined to people and is also now also offered as an infrastructure, and allows small businesses and corporations to send money more efficiently. "The major neobanks in Europe, for instance, are currently using our services," added the Head of European Expansion. According to him, Fintechs can offer high quality products at a much lower price, and can also be available for everyone. As a conclusion, he explained that banks need to learn from tech companies, understand data and what customers want: "bring them innovation and they will have no reason to leave your bank!"


Open finance and its impact on the entire industry

Olivia Vinden (Head of Fintech & Innovation, Alpha FMC UK) then moderated a panel discussion focusing on Open Finance. Jan van Vonno (Research Director, Tink), Marc Hemmerling and Jacques Pütz (CEO, LUXHUB) took part in the discussion. "Open finance goes beyond payments and open banking, but clearly builds on the success of PSD2," started the moderator. The experts then discussed innovation and regulation. As explained by Marc Hemmerling, "any business needs rules. In the financial sector, we are sometimes dealing with overregulation. Banks are actually asking for a regulation which allows them to do business. For instance, PSD2 is pushing banks to innovate". According to Jan van Vonno, the concept of open banking is not new: innovation has been there for years, but banks now need to abide to strict regulatory conditions set by the EC. He then distinguished innovation coming from Northern countries to APIs that are being developed in Southern countries. "It has to do with digital maturity," he added. Jacques Pütz explained that PSD2 was already in production in Luxembourg and added that it was a question of change and culture. He stated: "competition between banks is important, and so is collaboration". The expert then distinguished open banking from open finance, stating that not that many players are currently focusing on b2b but that open finance will add value to the banks who could unbundle their solutions and offer them through APIs. The four experts then focused on the benefits of open finance for customers: a seamless service according to Marc Hemmerling and a complete overview of their finance, at lower costs, as explained by Jan van Vonno. The latter added: "we do not compete with banks; we rather work with them to create killer apps. In the near future, KYC and strong authentication will make the difference. The authentication mechanism needs to be seamless". Jacques Pütz concluded: "TPPs will be the new European champions".


Alexandre Keilmann

Photos: Dominique Gaul

Publié le 06 mars 2020