On the second day of ICT Spring, which took place on September 15th and 16th, international and local experts gathered at the ECCL – but also virtually – to participate to the Fintech Summit. They discussed the latest trends of the boiling financial technologies sector, addressing the post Covid-19 era and cryptocurrencies. The morning session was moderated by Frank Roessig (Fintech Leader, Head Digital Solutions, Proximus Luxembourg).

Beyond Covid-19: a world of opportunities for FinTech companies

The first session focused on the impact of Covid-19 and on the opportunities it created for Fintechs. Nasir Zubairi (CEO, LHoFT) took the stage to introduce the topic and discuss the financial technologies landscape in Luxembourg. “What a year it’s been. Businesses have been disrupted in an incredible way, due to an enemy we can’t even see. But it also means a lot of opportunities as the financial industry is the potential solution to the crisis we are facing. And digital will play a big part in it”, first explained the CEO. According to him, financial industry players are no longer slowing beasts and are putting digital solutions at the core of their strategy. Nasir Zubairi then discussed the rising interest in Regtech solutions such as KYC, digital identity, data management and e-signatures. “There are also more hacking risks and therefore a need for cybersecurity competences. The world is changing and many sectors will look to digital to ensure their future,” he added.

Live from Brussels, Pauline Brunel (Venture Capital Investment Manager, BlackFin Tech) focusing on the state of European Fintech financing. “The amount of investments in Fintech is increasing globally and exponentially”, started the expert who then explained that the global scene was dominated by North America (more specifically the USA) and Asia (mainly China), with Europe ranking third. “In Europe, the UK is leading the way, followed by Germany and Sweden, with the two countries benefiting from the success of N26 and Klarna, notably. The latter raised 650 million dollars in 2020. “Fintech is one of the most financed industries in Europe and it has been for the last 5 years. There has also been a growth in deal size, and more mega rounds. This trend is going to continue,” she added. Pauline Brunel then focused on the difference but European VCs and American investors, before explaining that the amount invested in 2020 is “not too bad” looking at the health situation. She concluded her presentation: “There is optimism: European VCs and Fintechs have raised more money than ever”.

“Open X – the power of open ecosystems and strategic partnerships” was the name of the presentation delivered by Félix Amez (BeLux Innovation Director, Accenture). The expert first shared his definition of Open X, which consists in the development of open ecosystems, and then focused on setting up such open ecosystems. “You need to apply the innovation architecture and start from the business problem to later investigate how tech can help you solve it. You also need an environment to bring the different actors together: for instance, Accenture can provide a studio to its customers. Finally, companies need to connect with incubators”. The expert then welcomed Amélie Madinier (Director, Hub@Luxembourg, Village by CA) on the virtual stage to announce a strategic partnership between the two entities. She added: “We are excited to explore this new opportunity together and will combine our strengths, using our international knowledge. We share the same values and notably a strong willingness to support the local ecosystem”.

Tom Holgersson (Director of Innovation, Scale-up and Expansion, Findec Sweden's Fintech hub) then took the stage and gave the audience an overview of the Sweden FinTech ecosystem. “At Findec, we focus on Fintech, Regtech and Insurtech. Our mission is to boost the Fintech ecosystem through knowledge, network and collaboration. Before setting up Findec, there was a lack of communication and collaboration between the financial institutions, the innovative startups and the regulators”, explained Tom Holgersson. According to him, Findec is like a spider in the web, connecting all actors which allows them to later validate their ideas in Sweden but also across the border.

The Swedish expert then participated to a round table discussion entitled “The most promising FinTechs in Europe”, moderated by Alex Panican (Head of Partnerships and Ecosystem, LHoFT) and with the participation of Don Ginsel (Founder, Holland FinTech), Francisco Estevan (CEO and Co-founder of Innsomnia, Founder and Advisor, LocalEurope Consulting and tufinanZiacion.com) and Pauline Brunel. Francisco Estevan and Don Ginsel started by presenting their own ecosystems and their specific roles. Then all experts shared their own experience of Covid-19 and how it impacted their hubs/activities/businesses. According to Don Ginsel and Tom Holgersson, the Netherlands and Sweden quickly adapted because they were already used to working from home, with the Fintech experts staying in close contact with their community. “In Spain the situation was more complicated but people learned how innovation could help transform business as well as the government, by cooperating with startups. Tech actually jumps from one sector to another,” explained Francisco Estevan. According to Pauline Brunel, “money is here and easy to raise. Most developed startups with facts and KPIs can raise money. Yet, usually people invest in people more than in ideas, therefore it was tougher when you cannot physically meet people”. Francisco Estevan then described the Talent Route program, with aims at creating a network with no owner, no rule, just to connect and foster innovation. Don Ginsel then discussed the need for fierce competition, which will raise the bar: “if the competition is too friendly, the winners won’t be from Europe”.

“The Promise of Fintech: Financial Inclusion in the Post COVID-19 Era” was the name of the presentation given by Purva Khera (Economist, IMF’s Monetary and Capital Markets Department): the expert shared the results of the IMF’s latest report on Fintech and financial inclusion post Covid-19. “Inclusion is driven by Fitech. In comparison to traditional financial services, Fintechs are more accessible, flexible, user-friendly and also cheaper”, she highlighted. How do pandemics change financial inclusion? According to the expert, it accelerated the shift towards digital financial services: “The Sars in 2003 accelerated digital payment and e-commerce in China. Yet, we still need to address the new risks that are emerging, for instance financial literacy: we need to make sure vulnerable populations are not left behind.” She also stated that it was key to invest in human capital so that innovation can continue to take place. She concluded: “This crisis was the first test of the resilience of Fintechs. Some were hit hard. There is a risk that the world becomes even more divided as some have access to financial services and some others do not. But we can close the gap, there is an opportunity to reach out for the neediest, help them and reduce poverty”.

“How to better handle KYC/AML processes in 2020?” was the question asked by Jonathan Prince (Co-founder, Finologee) to Pascal Bughin (Chief Operating & Compliance Officer, La Mondiale Europartner). As explained by the co-founder of Finologee, “we had a discussion with La Mondiale to identify the pain points insurance companies can face in the concept of KYC/AML, as there are new regulations and too many paper processes”. Pascal Bughin focused on the changes of operations and compliance, with the need to update clients’ information, also in order to improve their journey and the insurer’s relationships with its partners. “Brokers are involved in the process, from the beginning. It simply does not work when the partner just has to follow procedures. We need to show them the added value and relieve them from the administrative burden,” he underlined. As explained, digital is a key focus in the group, with many initiatives led in Luxembourg as La Mondiale Europartner is seen as an innovation lab. The expert finally shared his recommendations: “rely on your partner when it comes to the technical aspect, keep the focus on quality and work together”.

Tokenization & cryptocurrencies

The second part of the morning session, also moderated by Frank Roessig focused on the latest tokenization and cryptocurrency trends. The master of ceremony first welcomed Carlos Corea Lacayo (Chief Communications Officer, COMO Global) on stage, for a presentation entitled “Blockchain: Marginalizing the Center and Centralizing the Marginal. The Myth behind Satoshi”. The expert took the audience to a time traveling journey through three short stories. He first told the story of the 2008 financial crisis and the first even white paper discussing the creation of Bitcoin, written by the mysterious Satoshi Naktamoti. “It changed the course of history as he used modern technology to change the financial system,” added Carlos Corea Lacayo. He then shared the Ancient Greece story of Prometheus who decided to steal fire and give it to Humanity: it changed their lives. Finally he used the example of a Mexican God who converted into an insect to steal grain and share it with the people. He concluded: “When Humanity is not in good shape, a hero always comes in and wants to take something from the center to give it to the marginal. Cryptocurrencies changed and transformed the rules of the traditional banks”.

 

Romain Swertvaeger (Audit Associate Partner, EY Luxembourg) then moderated a remote round table discussion with Pascal Gauthier (CEO, Ledger) and Jean-Marie Mognetti (CEO, CoinShares). The discussion started with the presentation of both companies and of the joint venture they formed with Nomura Bank. ““Digital assets and tokenization have changed the definition of assets, which affects all layers of the financial system. Our vision is to become the enabler of this evolution and act as an interface between trade and the digital world. Komainu has created the first turnkey solution that establishes the trust required by institutions to gain exposure to digital assets,” explained Jean-Marie Mognetti. The expert then focused on regulation: “how regulation is trying to make digital assets fit in the existing regulation is not satisfactory. It does not really embrace assets. I hope to see it evolving in the future”. Jean-Marie Mognetti and Pascal Gauthier then both explained the role of their companies in the Komeinu joint venture. “We needed to find a partner which brings years and years of existence. Nomura brings this Japanese heritage around the tradition of trust and duty,” explained the CEO of CoinShares. Pascal Gauthier added: ”as a tech company, we secure private keys and make them easy to use. We power custodians with tech. Our goal is always to empower companies”.

The organizers then welcomed Caroline Malcolm (Head, Global Blockchain Policy Centre, OECD) for a keynote on the role of the Blockchain Policy Center. She first reminded the audience of the mission of her organization: be a global reference point for policymakers as they want to address the challenges raised by DLT. “There has been a huge amount of investment in the sector. At the country level, China and the US are dominating, as Europe only has a small slice of the pie. But initiatives are taken to change that picture in the years to come,” explained Caroline Malcolm. According to her, there are also industry challenges that need to be tackled: how to change the narrative and look at the positive development and innovative approach it can bring. She explained that the EU will put a framework that will support a greater level of innovation in the future. She also discussed the use of the blockchain technology during the Covid-19: “it could help when it comes to health – research data sharing, track and trace, health passports, etc. – recovery (with loan disbursement) and resilience. Caroline Malcolm then described the current key DLT developments: CBDC, asset tokenization, trade finance, supply chain, credentials and digital entity. Finally, when it comes to the main policy issues, she listed data management (security and privacy), governance of decentralized systems, interoperability and education/skills development.

The morning session ended with a round table around the topic of tokenization and cryptocurrencies, moderated by Bernard Nicolay (Adjunct Professor, Solvay Brussels School of Economics and Management (ULB)), with the participation of Nicolas Cantu (Engineer, Chain Accelerator co-founder) Biba Homsy (President, Luxembourg Blockchain Association), Romain Swertvaeger and Fabrice Croiseaux (CEO, InTech). “My interest in blockchain started 6 years ago when the only known use case was around cryptocurrencies. Now there are more opportunities: financial sector, logistics, health, etc.” started Fabrice Croiseaux. Nicolas Cantu focuses on the technical aspects and explained that even though the infrastructure is not sure, many operations are executed through this digital infrastructure: “we need to build the next infra for the digital age”. Biba Homsi explained that needs and trends depend on professionals: constraints are different for companies: “they need to find guidance that suits their risk appetite”. She then talked about a report that was recently leaked and that deals with the regulation of crypto assets in Europe. Finally Romain Swertvaeger focused on the development of e-commerce, digital payment and stable coins. He added: “Covid-19 accelerated the trend to go to a cashless world. According to me, the big thing to come is the development of stable coins and digital Euros and USD”. All the experts than shared their key takeaways, Biba Homsi and Fabrice Croiseaux highlighted the need to do and learn, Nicolas Cantu advocated the widespread use of strong cryptography and privacy-enhancing technologies – or cypherpunks – and Romain Swertvaeger insisted on the huge potential of this tech.

 

Alexandre Keilmann

Photos: Dominique Gaul


Publié le 21 septembre 2020