From the advent of Blockchain to the added value of RegTech
On May 9th and 10th, more than 5,000 of professionals gathered at the European Convention Center Luxembourg to discuss the latest digital, tech, space and FinTech, and notably the rise of RegTech, the use of Blockchain, but also the future of digital finance, with experts from all over the world sharing their knowledge and vision.
Blockchain for finance
« It’s an honor to welcome you to the Fintech Summit. During these two-day event, we will talk about Fintech, with strong uses cases, tackling topics such as Blockchain, Digital Finance, Insurtech, Regtech and even more promising startups » said Jonathan Prince, co-founder and Partner of Digicash Payments & Jeelis in his opening address.
Jean Hilger, President of the ICT Spring advisory board added a few words: « We launched ICT Spring seven years ago. It was a tough challenge, but today, it’s an undeniable success, we cover a lot of innovative topics from space to fintech. Innovation and entrepreneurship are the key words ».
Nicolas Mackel, CEO of Luxembourg for Finance, started the morning session with the evolution of Fintech: « If we compare with last year, Fintech has affined and matured. It’s more concrete, a lot of models were developed. Luxembourg matured in the area of Fintech too. Now the question is « What about the Brexit? This politic choice will affect Fintechs ».
The Master of Ceremony, Said Fihri, Associate Partner, KPMG, stated: « I’m not a technologist, I come from the financial world. But Fintechs or blockchain show all the disruptive sides of technology, and I believe that technology makes the financial area more accessible to all ». He then introduced the first speaker of the morning session, David Mazieres, professor of CS at Standford. He is also the creator of the Stellar blockchain: « Let’s suppose that you want to send 1$ to Nigeria over the internet. It will require multiple banks or currency trends. The Stellar payment network uses the FBA protocol and guarantees safety if every two quorums shares honest node ».
Then, Said Fihri lead a Q&A session with Paolo Sironi, Global Thought Leader, IBM Watson Financial Services. The Associate Partner at KPMG started the discussion with a simple question: « Why is Fintech important? ». « Fintech allows us to make transaction easier to facilitate banking regulation. Fintech is capable of generating a lot of services. It puts all services together in one service which is intelligent. Fintech serves all parts of the financial area: the customers, the clients and the financial professions » explained Paolo Sironi. But is blockchain a disruptive or a sustainable tech for banks? The Global Thought Leader of IBM Watson Financial Services said: « Blockchain is a fundamental innovation, it changes the way to work, it transforms industry, it offers new services, it creates new companies. I think we can compare blockchain with the development of internet. We can also talk about the Artifical Intelligence which is growing faster and faster. The digital banking transformation will help people but it is also here to help banking » concluded Paolo Sironi.
Bernard Simon, CIO, Luxembourg Stock Exchange, Olivier Portenseigne, Managing Director, Fundsquare and Fabrice Croiseaux, CEO, InTech then talked about FundsDLT, a practical application of the blockchain technology in fund distribution. « We all worked together. The fund distribution is a business which is intermediated. The chain of actors is multiplied (CSD, TA, KYC…). FundsDLT is a concept which is viable, we use blockchain to make it all easier and more secure, it incorporates two concepts: the data and a KYC HUB » said Olivier Portenseigne. « The customer interacts with blockchain, it’s easier to move funds or to make transactions » added Fabrice Croiseaux. Bernard Simon thinks that « it provides an alternative and complementary distribution model to asset managers, it contributes to make investment fund more accessible, effective and transparent for all actors ».
Said Fihri then welcomed Daniel Drummer, VP, JP Morgan, for a speech about « In-Residence », a new model of Bank-Fintech partnerships in capital markets. « It is a massive market for tech, which also needs to be disruptive. But stock exchange didn’t evolve much. How can it change in the future? The blockchain is relevant and efficient for a large panel of institution, we work with a lot of partners like IBM. If we want to change the game, we need a global effort. We launched a program called « In-Residence », which is an internal platform allowing to work with startups. JP Morgan and the bank area are moving in the right direction and blockchain is a long term solution ».
Naser Hakimi, Director General, IT (Central Bank of I.R.Iran-CBI) spoke about Banking and Payments in Iran, Regulator’s challenges toward FinTech. « Iran made a lot of advancements in technology and regulation is now essential. Our challenges and innovation are based on open-banking, peer-to-peer solutions and a strategy towards blockchain ». Soumitra Dutta, Dean, Cornell SC Johnson College of Business shared his expertise on how to shape the digital future of the banking area: « Leaders need to innovate continuously and create vibrant digital ecosystems. The digital divide is also growing across nations. But firms and governments are also failing to keep up with technology progress ».
« Bringing digitalization to the next level »
The organizers then had to the pleasure to welcome Luxembourg Prime Minister Xavier Bettel on stage. He focused on the future and the opportunities of digital for the Luxembourgish society. « I don’t give many tech talks, but tech is linked to society. It represents a big challenge for us. We need to be active in the future, and as a country, we shouldn’t be afraid of tomorrow. Education offers new horizons for our children. Every child won’t necessarily be an IT expert; we have the objective to build a multicultural Luxembourg. We are working on developing the digital area and we know the importance of digital skills to prepare the future and to bring the digitalization to the next level. In all political decisions we made, we integrate a digital reflex. There is a maxim in Luxembourg saying « We want to say what we are », but we also want to stay what we are ».
In the afternoon, Master of Ceremony Jonathan Prince, Co-founder of Digicash Payments & Jeelis first welcomed Pascal Rogiest, CEO, Luxtrust who talked about the trusted augmented identities for EU-Compliant Authentication and Signature Services. « Behind this theme, there is a big trend: identities. There are a lot of key trends for increasing the need for efficient and effective ID Systems. Fraud and cybercrime, the increasing of mobile, collaborative and virtual economy, or the rate of innovation like AI, IoT… GDPR is a compliant platform for sharing personal data and blockchain traces and tracks all the information between entities. We have to create an ecosystem which facilitates the exchange of information and LuxTrust is enabling a digital world with a better identity creation and management for people, corporate and things ».
Then, Romain Mazeries, General Manager, Mangopay, showed how APIs enable to customize payments from end to end. « Our Fintech startup started from scratch in 2009 with just 1€, now in 2017 our objective is to reach 1 billion €. We want to simplify the payment platform. The goal is to handle – complex – transaction with multiple uses and multiples sellers. Our API is developers friendly ». Kim Fuglsang Kristoffersen, Head of MobilePay Operational Excellence, Danske Bank, the took the stage: « How can banks succeed and set the trend in mobile payments? Danske Bank launched Mobile Pay in 2013 which is the third app used in Denmark. Our ambition is to be the preferred wallet by both the consumer and the merchant. It is easy to transfer money for people, it is also accessible and very simple for everyone. MobilePay has to be easier than cash. With this innovation, we have proved that disruption is not only reserved to startups: we have taken many risks to disrupt ourselves ».
« The Diversity of Perspective: Rethinking The Movement of Money » was the next topic addressed by Ghela Boskovich, Head of Fintech and Regtech Partnerships, Startupbootcamp Fintech. She started with a question: « Why are we so attached to the payments systems that are currently in place? We have to innovate and to stand out of the legacy system. There are diverse perspectives like taking inspiration from emerging markets or e-commerce giants. Apps like AliPay combine perfect integration with commerce, social and… payments. Diversity matters and we challenge every institution to make a change and not to be only based on legacy ».
At the end of her speech, Jonathan Prince welcomed Jochen Siegert, COO, Traxpay, Ghela Boskovich, Romain Mazeries, Kim Fuglsang Kristoffersen and Nasir Zubairi, CEO, LHoFT, for a round table about new ways of payment. A lot of topics were studied during this discussion such as the benefits of mobile payments, the relevance and the future of credit cards, tokens, regulation and the opportunities offered by blockchain or Fintechs.
The CEO & co-founder of Railsbank, Nigel Verdon, started the start-ups insights session with the presentation of company. « It is a multi-product banking API which connects banks and companies in a simple and effective platform. We give access to global banking with 5 lines of code ». Then Hiro Taylor, Founder and CEO of HeroPay explaind his concept to the audience: » HeroPay is a credit card comparison website. We are helping merchants make the right decision when they choose their payment processing ». Finally, Olivier Berthelier, CTO & Co-Founder, Limonetik introduced his startup: « Our daily job is to help PSPs, Acquirers and merchants to tackle marketplace payment complexity which involves a lot of parameters, all of them are handled by Limonetik ».
To end the first day of the FinTech Summit, Jonathan Prince welcomed Nadia Manzari, Head of Innovation, Payments, Markets Infrastructures and Governance, CSSF, Olivier Debehogne, Head of Retail & Digital Banking and Member of the Management Board, BIL, Georges Berscheid, Co-founder, Digicash Payments & Jeelis, Patrice Fritsch, Executive Director, EY, Annemarie Jung, Secretary General, ABBL for the last round table. Prof. Jean-Louis Schiltz, former cabinet minister moderated the session about PSD2, a game changer in banking industry. The objective of PSD2 is to create a harmonized framework in the European Union. « it is a game changer in its potentialities because PSD2 includes data management. It is crucial for the bank of tomorrow » explained Olivier Debehogne. Georges Berscheid joined his analysis and added that « the challenge concerns the relationship with the customer ». Nadia Manzari said: « It will deregulate the sector. At the beginning, there will be a lot of challenges and a lot of opportunities ». According to Patrick Fristch, « PSD2 is strategic: it will revisit the business model of our banks and will change the customer experience ».
Future of Digital Finance
« For this second day of ICT Spring, we will explore the innovation related to the banking sector, the new Fintechs capital, the insurance sector and the digital transformation in the financial area » started the Master of Ceremony: Jonathan Prince, Co-founder, Digicash Payments & Jeelis.
Robert Scharfe, CEO, Luxembourg Stock Exchange introduced the series of conferences with a few words on digital transformation: « The digital world is exciting, it is transforming our business. Finance is made for change, Finance and banking still don’t use all the potential of tech today. Luxembourg has managed to create an interesting environment with new applications of ideas ».
Harrie Vollaard, Head of Innovation and Fintech, Rabobank started with a metaphor. « Looking at innovation in the bank industry is like looking at stars in the sky, like a constellation. We try to improve the everyday experience with our products and services with our customers. The next challenge for Rabobank is related to Fintegration which is a new business model for the bank. In the world there are 12,000 Fintechs and we have to bring fragmented solutions together » concluded Harrie Vollaard. Then, Marc P. Bernegger, Serial Web Entrepreneur and Fintech Investor shared his vision about the new Fintech capital and gave an analysis of Fintech hubs post-Brexit. « There are a dozen of studies about global Fintech hubs and the results are different depending on the parameters and the area of Fintechs. To become a leading Fintech hub you have be in the right ecosystem with a good entrepreneurial mindset, and have an access to talent and capital ».
Then, Michael Allen, Founder, allen international (Accenture) shared his opinion about innovation in Customer Experience. « Our business changes so fast, the brand too. In our process we use three categories: personalities, interactions and behaviors. The objective is to create a customer connected experience. The future of our area is phygital, the bank of the future will combine physical and digital transformation ». After this speech, Matteo CarboneFounder and Director, Connected Insurance Observatory discussed the future of insurance. « I believe all the players in the insurance area will be InsurTech. They can help the insurance sector grow stronger and to achieve its strategic goal which is to protect the way people live. We are also thinking about the neosurance, a Virtual Insurance Agent based on AI ».
After the coffee break, the Master of Ceremony Jonathan Prince moderated a fireside chat with Marie-Hélène Massard, CEO, AXA Assurances Luxembourg. He started with the following question: how and how much has digitalization impacted business companies in insurance? « Today, the digitalization offers new opportunities. New risks are emerging. It also impacts the behaviors and the expectations of the customers. People want to be covered with less process. Digital brings new capabilities in the uses, notably through big data » answered Marie-Hélène Massard. The second chat brought together Laurent Nizri, Founder & General Manager, Paris Fintech Forum and Hugues Le Bret, CEO, Compte-Nickel. « Compte-Nickel was at first just an idea, we started from scratch with the objective to be fully online. Our project was to not to be a bank, we don’t provide credits ».
Gregory Weber, Fintech leader, PwC Luxembourg talked about FinTech’s growing influence on Financial Services. « Where there is disruption, there are opportunities. At PwC, these opportunities are about collaboration signed with Fintech companies or startups. Fintech and Financial Services are coming together and key emerging technologies are enabling convergence ». According to him, the only way to get returns is to invest, to learn and develop the business through partnerships or an IT culture.
Then, Jonathan Prince invited Olivier Goy, Founder & CEO, Lendix and Tamaz Georgadze, CEO and Co-Founder, Raisin for another Startups insights session. « Lendix is a French startup of the Fintech area. It was launched two years ago and we provide crowdfunding services for companies » explained Olivier Goy. The other startup, Raisin was born in Georgia and it is the only pan-European deposit marketplace. « Our challenge is to create a marketplace for saving investisment products such as SME solutions, private investors or financial brokers » stated Tamaz Georgadze.
The rise of Regtech
The Master of Ceremony, François-Kim Hugé, Partner, Deloitte started the afternoon session: « We are going to explore an emerging trend in the Finance ecosystem: Regtech. First, RegTech is a reality, much more than just a new buzzword but a real topic that we need to carefully look at and integrate into our business models. Regtech improves the way of regulation for the business. We can see 5 categories of Regtech : reporting solutions, transaction monitoring, risk management, identity management and controls and compliance solutions ».
Then, Marc Stevens, CEO of OneLife & Luc Maquil, Co-founder of KYCTech, talked about the collaboration between their two companies, which worked on integrating the Regtech dynamic in its digitalization process. « RegTech is the next logical step in order to continue with our digital development. RegTech is the perfect addition in the finalization of our onboarding process. And working with a new start-up like KYCTech has enabled us to realize just how much RegTech could help our Compliance & Risk and Customer Services teams » explained Marc Stevens. Luc Maquil added: « Regtech is a symbiotic approach based on efficient collaboration between Compliance & Risk teams and IT teams. With OneLife, we have found a visionary yet pragmatic partner, which works actively to implement its digital strategy by taking very practical steps » concluded Luc Maquil.
François-Kim Hugé then invited Nasir Zubairi, CEO, LHoFT and Pascal Eber, Partner, Deloitte for a round table around the topic of Identity Management – the most awaited RegTech building block. They talked about the mutualization of technology and information. « By information I mean identity, and sharing information on identity is difficult. In Luxembourg there are a few great trends such as transparency and compliance » said Pascal Eber.
After that, Mash Patel, CEO, Kurtosys focused on the intimate links between the new digital experience and RegTech. « The next twenty years will be based on data. For example, the data produced and copied in one year reached 21 zettabytes. Data redefines the entire sales, marketing and client servicing ecosystems. Data and content are currencies to firms. Digital is about to change the way we do things. And compliance is the guardian of the reputation of your firm because the reputation’s damage is incalculable and uncontrollable. The digital Regtech is an opportunity to transform how you think about compliance ». Then, Gilbert Schintgen, Managing Director and Member of the Board of Directors, UBS Fund Management (Luxembourg) mentioned Regtech in practice. « At first sight, Regtech is an activity which does not add value. But it’s false. Its services provide compliance and risk activities and Regtech can increase a business ».
« Why regulator should matter? » was the question asked by Nadia Manzari, Head of Innovation, Payments, Markets Infrastructures and Governance at CSSF. According to her, « financial industry have accelerated the development of Regtech and it is complementary with Fintech. For example, Regtech makes online payments solutions easier. It matters because Regtech changes the financial area and it monitors the risks ».
After the coffee break, Prof Dr Eric Dubois approached the topic of Regulatory Reporting Platform: Business Cases with ILR and CNPD. « The digital transformation is associated with compliance. The importance is to report interesting data to have a global view of a sector. In reality, there are multiple regulations and several regulators, and programs are multiplied by man regulations. In Luxembourg for example, we count the CSSF, CNPD, LER and the Commissriat des Assurances as regulators » added Dr. Dubois.
Gert Rautenberg, CEO, GFA, focused on Data Analytics applied to Risk Management and Compliance. « The observation is that margins are decreasing and regulatory requirements are increasing notably due to MIFID 2. Information and data needs in fund distribution are very similar to those in other industries. The problem is that in fund distribution there is lack of Data & System integration. We have to learn from other industries and prioritize the opportunities and the needs. Just start to ask the good questions, the problem you want to solve and then use data. After that, results are integrated into processes which deliver value to make insights understandable.
Then, Nima Amirshekari, Ph.D., Director of e-Banking, Monetary and Banking Research Institute of the Central Bank of Iran talked about Iran’s Fintech Progress and Opportunities. He started his speech with a short history of his country after being isolated for almost four decades. « In 2017, the majority of the population comes from the generation Y and Z. And Fintechs appeared with these generations, both represent a large market for investors and Fintech. Our weakness during the isolation period became strength. We managed to develop local tech with quality engineers. We don’t have any international cards; it contributes to less fraud in the domestic card system. And nowadays, we are changing the traditional banking system with Fintech solutions and disruption ».
To end the two-day event, four startups presented their activities. Lisette Irene Brackel, Strategy & Communication Manager, Who’s Good, stated: « Our startup was founded in 2014 and we believe that investors need company information. Investors use ESG data in their decision. Who’s Good provides reliable ESG data, particularly with robo-analytics ». Then, Mash Patel, CEO at Kurtosys and Paul Fawcett, Director of Sales presented Kurtosys, « a Fintech startup which develops digital marketing and data tools for financial services ». R&D Director at Qualycloud, Dr. Jorge Tellez and his startup enables ecosystem to offer enhanced services and creates new business. « We put our priorities on the customers. We also transform the relation in centralized, synchronized and secured platform thanks to the API, it includes KYC too. Finally, Bert Boerman, Co-founder & CEO, Governance.io, showed how to tech your reg burden into a competitive advantage with 2Gears. « People think that there is too much regulation, that regulation brings them nightmares. Our approach is to see the bigger picture but there are so many areas to control. The paradox? More data brings more controls. But the aim of regulation is the investor’s protection. And tech can turn Reg into an asset thanks to new insights into clients’ real-time collaboration, thanks to the access to structured data or documents or thanks to the reduction of the costs ».