Beyond the 360 approach: the future of FinTech
On May 21st, on the first morning of ICT Spring, international experts discussed the latest Fintech trends during a session entitled "Behind the 360 approach". They notably exchanged around the topics of Artificial Intelligence and new business models, in a session moderated by Pascal Denis, Partner & Head of Advisory, at KPMG Luxembourg.
Jean Hilger, CIO of BCEE and member of ICT Spring board officially opened the 10th edition of ICT Spring: "This event is an incredible success story. For instance, when you travel to China, people know Luxembourg for its steel industry, finance, but also for ICT Spring".
He then welcomed Pascal Denis (Partner & Head of Advisory, KPMG Luxembourg) who acted as Master of ceremony: "We are looking at a holistic point of view of Fintech, which raises a wide range of concerns and questions". He then asked a couple of questions to the audience: which Fintech do I need to partner with? Which funding models should I favor? How to protect against cyberrisk? Pascal Denis also announced the official launch of the KPMG Lighthouse, which aims at anticipating the future and unlocking it with data-driven tech. "It's KPMG's new approach to solve client issues with technology," he added before introducing the next speaker.
Maurice op het Veld (Partner, KPMG Netherlands) gave a presentation entitled "In AI we trust?", insisting on the question mark. "AI is everywhere: at work, in our lives, also in our social lives," he started, before sharing a concrete example on the use of AI and analytics to predict cycling results, before even starting the race. He then explained that the trust and transparency factors were crucial when it comes to AI, from customer experience, to reputation and the brand. The expert then summarized two of the latest publications of the European Commission and CSSF, dealing with ethics in AI. "It comes down to the quality of the algorithm, its effectiveness, its integrity and also its resilience. First, you need to understand what kind of AI you already have in the organization, and then map it. Ethical discussions are also key: what about corporate values and compliance?" he concluded.
Is it FinTech or TechFin?
Chris Skinner (Author, Speaker and Troublemaker) then took the stage: "banks are still needed and they are seen as a trusted value store. The industry is regulated, which also reinforces trust. Yet, over the last years with have seen the rise of Fintech, which combines finance and technology. It is changing the face of finance, augmenting banks and taking friction out. It also helps with financial inclusion". The Fintech guru then compared the growth of Stripe and JP Morgan Chase, highlighting the fact that banks are trying to keep up with the changes linked to digital and Fintech. "Teenagers who can code are currently changing the landscape of finance and are creating the future of financial services. They actually want to change the system, but not necessarily by destroying banks, but rather by collaborating with them. It's like a parent-child relationship," he added. Chris Skinner then shared the example of Ant Financial, which is developing all over the globe, and is now ranked as one of the top financial institutions in the world. The Chinese company puts tech first and is able to build and deliver innovative services to rapidly scale and develop globally. The expert also pointed out the fact that the company is adding green aspects to its ecosystem and that it is creating financial literacy in order to include everybody.
The Supervisory Priorities of Tomorrow
The organizers also welcomed Claude Marx (General Director, CSSF) who shared his perspective on Fintech and the role of the regulators. "Supervisors are also interested in the subject. We also make use of technology ourselves to be more efficient," he explained, before highlighting that is was necessary to understand and control tech. Claude Marx also reminded the audience that AI is more than 50 years old, and that its advent, combined with other technologies are creating new opportunities, markets and players. "It touches several points of the value chain and our role will evolve from supervising entities to supervising activities. In the current environment, innovation is all about trust. And regulation depends on politics, economy, ethics, social, etc." The CSSF already addressed the cloud computing topic through a specific circular, and published a white paper an Artificial Intelligence. Soon, it will publish guidelines on the topics of DLT and Blockchain.
The General Director then explained the current strategy of the CSSF, called CSSF 4.0, with the objectives of improving process efficiency, optimizing external engagement, enhancing the risk based approach, improving market transparency and investing in advanced digital capabilities. He also addressed the topic of sustainable finance, with the common objective to achieve the goals set by the United Nations. "We need a strong political will but also private and public partnerships, with multidisciplinary teams to solve these numerous challenges. Luxembourg has the ability to become leader in sustainable finance," added Claude Marx. Finally, he advocated batter financial education. The CSSF is notably working on education at primary and secondary school, and aims at tackling over indebtedness. It launched several initiatives and apps to do so. "When it comes to tech, we shouldn't be afraid of digital and robots. As the regulator, we do not believe in the death of bank. Incumbents, fintechs and regulators can coexist and collaborate well to disrupt and reinvent financial services. Also, do not forget to add humans in the mix. We are on a fantastic journey," concluded Claude Marx.
Robotic technologies for digital transformation in financial industry
James Chou (Managing Director & CEO, Microsoft for Startups for Greater China, Japan & Korea, Chair of Technology and Innovation Committee of American Chamber of Commerce) started his presentation by sharing examples of how credit rates are now given and adapted to people who turn their smartphones off during the night. "The Microsoft point of view is as followed: every company will become a software company. They are all facing some kind of digital transformation and need to work on how to prevent cybersecurity attacks and financial crimes," underlined James Chou. He also explained that banks were facing several innovation challenges, from customer experience and new business models to compliance and cybersecurity. "Moreover, budget, culture and skills are needed to create space for innovation. Which is not easy. In this respect, AI can help. Customer experience can be addressed by telemetry and digital agents, business models by targeted offers and marketplaces, compliance by process automation, and finally cybersecurity by financial crime prevention," added James Chou. He concluded his presentation by sharing his best practices in picking the right use case for AI: set KPIs, don't build everything yourself, allow time to show value and democratize to take production.
NadiFin Accelerator Program
Erica Leclercq (Head of Operations and Strategy, Farvest Group) then welcomed the 11 startups that have been selected to participate to the first ever Fintech Accelerator Program organized this week in Luxembourg. The experts all shared their innovative solutions with the audience. Apla is a full-service blockchain technology company that enables governments and businesses to work faster, safer, and with greater impact. Blocks Investment aims at connecting investors to real estate opportunities around the world. Corlytics consists in a smart regulatory compliance tool for financial institutions and regulators globally. Gardenia Technologies improves profitability through data-driven advanced analytics and ML-driven working capital finance and risk management. GECKO Governance is a blockchain-enabled RegTech platform for the asset management, banking & digital asset sectors. Governance.com enables regulated companies to meet the requirements of an ever-changing regulated marketplace by unlocking data from across organizational silos. LogSentinel is helping companies achieve regulatory and security compliance by providing information security and data protection solutions (such as blockchain-protected event logging and per-record encrypted secure database). Mattereum creates decentralized digital twins for physical assets to automate, helping enforce contracts and manage all kinds of assets. Minna Technologies developed a subscription management platform for retail banks that enables customers to get an overview, cancel, and improve their subscriptions. Nivaura is a digital investment banking platform to automate the primary issuance. Scanovate is an all-in-one, cyber Identity platform that makes compliance and KYC simple and secure by automating and customizing front and back-end processes.
A convergence session with…
Carlo Thelen (Director General, Chamber of Commerce of Luxembourg) who took the stage and discussed the impact of the ICT sector on the economy of Luxembourg: "our country is a great place for ICT and innovation. And it has nothing to do with luck. It is the results of policies and ideas that have been implemented but it is also due to collaboration between the private and public sectors. We welcome startup and innovation". He then explained that Luxembourg was located at the heart of Europe and that the country was secure and politically stable, and also mentioned its multicultural aspect. Luxembourg also recently launched its space agency (LSA), is host of the first e-embassy for Estonia, is working on HPC, and just signed a partnership with NVIDA to allow for more AI development. Carlo Thelen added: "The Chamber of Commerce also launched several initiatives, from the House of Startups to the House of Training. In a world defined by speed, we must move quickly and maximize the first-mover advantages to stay one step ahead. We also need to further attract talent, create synergies and boost the startup ecosystem. There are a lot of opportunities for growth and room for improvement".
A country where ideas grow and where people work together
Then, the organizers had the great honor of welcoming, again, Xavier Bettel, Prime Minister of Luxembourg, who delivered an inspiring keynote speech on the advantages of Luxembourg and its attractiveness for startups all over the world. He also listed some of the latest initiatives that have been taken by his government, showing once again how his country aims at becoming a digital leader. "Year after year I see familiar faces and new ones in attendance. You are all welcome in Luxembourg and I'm delighted to meet with innovative international startups. For centuries, our country was a fortress which later took down it walls to open to others. It is also the birth place of Robert Schuman, the father of Europe," explained Xavier Bettel, highlighting that common problems require common solutions. He added: "We are stronger together. In Luxembourg, we are different yet we still respect each other. Moreover, being different is not a weakness, it's actually a strength". [READ MORE]
Following the speech of Xavier Bettel and the presentation of Luc Julia, entitled "AI does not exist", Ahmed Shabana (Managing Partner, Parkpine Capital) took the stage to explain how the Silicon Valley is investing outside America. "We focus on companies that can scale beyond borders and see a lot of potential in Europe and notably in Luxembourg. We are also the organizers of GVS Summit, which tours all over the world from Bali to Dubai, with a first stop in Luxembourg next November," highlighted Ahmed Shabana, before adding that the goal of the summit was to invest on the day of the event, and not just to talk. "A great opportunity for startups!"
Photos: Marion Dessard