Luxembourg's minister of finance, Pierre Gramegna, tells Natasha Turak why he wants to create the ideal environment for financial technology firms to thrive in the country.

Luxembourg’s minister of finance, Pierre Gramegna, is confident of his country’s ability to stay ahead of the curve as a financial hub. Already a European and international finance and investment fund centre, Mr Gramegna hopes to establish Luxembourg’s position as an incubator of financial technology for not just large multinationals, but for start-ups and small and medium-sized enterprises as well. 

Speaking at Luxembourg’s FinTechStage conference, a gathering of local players and investors in financial technology, the minister explained why he views Luxembourg as an ideal environment for the sector to thrive in. “I see Luxembourg as a place where many important players come together, like a nursery where you can grow plants. That is why we are doing this fintech conference here, where all the right people get together and companies are already finding solutions as financial entities are teaming up and exchanging experiences. The players, banks and others, are already here and they are able to work together to upgrade their service,” he said.

Start-up culture

While traditionally a centre for financial services, the emergence of specifically fintech companies is a relatively new phenomenon for Luxembourg. Of all the fintech companies in Luxembourg, two-thirds have been founded in the past three years, according to Luxembourg for Finance, a public-private agency that promotes the development of the financial centre. The number of e-money and e-payment institutions in Luxembourg tripled between 2012 and 2015, and this community includes multinationals such as e-commerce giant Amazon, Japanese online marketplace Rakuten, and Yapital, a mobile payment service from the German retail giant Otto. 

“In terms of infrastructure, we have what we need,” says Mr Gramegna. “We have data centres with high capacity and low costs. We have a banking and technology community already here.” The tiny country of just over 500,000 people is home to more than 140 banks, 2000 information and communications technology firms and Europe’s largest hub for investment funds, offering a rich market for budding fintech companies.

“And financing in Luxembourg is not a problem; if you have a good idea you will find financing through existing future funds, innovation subsidies or co-operation with the European Investment Bank and local banks,” says Mr Gramegna. “There are very few countries where you can say funding is not a real problem.”

Virtual first

Luxembourg was also the first European country to issue a payment institution licence to a virtual currencies operator. In October 2015, Mr Gramegna granted the licence to SnapSwap, a San Francisco start-up, enabling it to begin its EU operations in Luxembourg under the regulatory supervision of the Commission de Surveillance du Secteur Financier, Luxembourg’s financial regulator.

“Over the years we have been the home of all the e-commerce companies that want to operate in Europe, big guys and small guys,” says Mr Gramegna. “We already have a good track record of attracting e-commerce companies, and virtual currency is an interesting new road.”

What remains to be done, Mr Gramegna says, is effectively market Luxembourg’s fintech environment and give the community a platform from which to amplify its voice globally and attract further talent. “We are a very major player in FDI and with fintech, we are going to become even more so in the future. We have the right legal structures in terms of company law and taxation to play that role and we are going to continue to focus on this,” he says.


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