ICT Spring 2019: FinTech Summit
Luxembourg, May 27th, 2019 - On May 21st & 22nd, a new edition of ICT Spring brought together more than 150 experts who shared their knowledge and discussed the latest FinTech and Digital trends. ICT Spring, a two-day event created in 2007 aims at facilitating the meeting of minds, encouraging emulation and networking with industry leaders, took place at the European Convention Center Luxembourg, at the very heart of Europe. More than 5,000 professionals attended this two-day conference, during which the latest FinTech topics were discussed. FinTech experts discussed trendy topics such as sustainable finance, the future of FinTech, collaboration between startups and incumbents, and much more.
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!"
From "new banking generation" to the Fintech hubs from across Europe
On the first afternoon of ICT Spring, hundreds of international experts met at the European Convention Center Luxembourg to attend the second part of the Fintech Summit, which focused on the "New banking generation", the transformation of the payment industry and on European Fintech Opportunities.
New banking generation
Roxane Haas (Partner, Banking Leader, PwC) acted as the moderator of the "New banking generation" part and started by saying that new entrants and new concepts are redefining the banking industry. "Moreover, customer behavior is also changing and banks need to leverage on data and AI to understand these needs," she added. In this respect tech has become central and strategic, but are raising many questions.
Collaborating with FinTechs to stay relevant towards your customers
She invited Sanders Daniels (Senior Director & Financial Services EMEA, Salesforce) to take the stage. The expert advocated collaboration, which is to increase once open-banking hits the road, with more partners involved. After sharing a video retracing the digital journey of BBVA, Sanders Daniels explained that the 4th revolution was about having better connections with customers, in a context where the following trends are leading the way: Voice and AI bots, IoT, contextual dialogues, etc. "Today, convenience drives customer loyalty. Customer expectations have changed: 77% of all consumers say that the experience a company provides is as important as its products and services," he highlighted, before adding: "At Salesforce, we believe in convenience: we operate the infrastructure, provide security, etc. it's a fully hosted experience. We are the last mile to the customer". The solution actually provides banks with a backbone to unify their language, in a period of open-banking. According to the expert, brands – and banks – do not necessarily have to own the customer experience: a groundbreaking revolution to trust the partners to represent their brands. "Business models have changed: leading banks have switched from customer analytics from customer behavior, where proper open-banking services are crucial and collaboration is key," concluded Sanders Daniels who then shared the digital period table of Salesforce, dealing with data integration, customer insights and continuous innovation.
It's all about people not the technology
Then, the organizers welcomed Duena Blomstrom (Author, Keynote Speaker, Creator of Emotional BankingTM, Forbes Writer, Co-Founder & CEO PeopleNotTech). "We can agree on one thing: we can't be like the big guys in the Silicon Valley. Today, many banks still have small discussion in their board rooms, even if disruption is coming. They know they have challenges. What do they need? People, not tech!" she highlighted. Duena Blomstrom added: "The three main components are knowledge, courage and passion. These allow companies to perform. But financial services generally do not rank very well in wellbeing surveys…". After several years working for a management consulting firm, she focused on organizational change and notably on the concept of psychological safety. Her solution uses AI to build team that will perform, after answering to around 200 questions: "team members need to trust each other".
Leveraging on Fintechs to become the go-to platform
The next guest speaker, Benoit Legrand (CEO, ING Ventures & Chief Innovation Officer, ING), shared his experience in partnering with Fintechs. According to him, the challenge of innovation is to lead the organization to the unknown while delivering on the short term. Benoit Legrand then explained ING's 3C strategy, which focuses on Customers, Culture and Connection, aiming at delivering impactful value rather than gadgets. "There is still a big danger in the innovation process: panicking and stopping things. Patience is crucial and so is keeping in mind that what you do is for the customer, and only the customer. Everything you do needs to be relevant form him/her," he explained. The expert also highlighted that it is essential to set clear goals, with the support of top management and decision-makers. Benoit Legrand then shared the process used to turn ING into a platform, built on the verge of the organization and allowing the development of other business models. Benoit Legrand then insisted on the necessity to be pragmatic and to solve customers' problems, by developing your own solution, investing, partnering or acquiring, depending on where financial institutions want to go. He concluded: "the main challenge of the digital revolution is actually not digital: it's both human and cultural. A lot of work and of training are needed, and mistakes will happen. Be patient… but start running!"
Collaboration between banks and FinTechs: Experts views
Jonathan Prince (Co-founder, Finologee) then moderated a round table featuring Benoit Legrand, Duena Blomstrom, Corentin Dubucq (Marketing & Strategy Director, BGL BNP Paribas) and David Marongiu (Chief Operating Officer, CA Indosuez Wealth (Europe)). "Start with humility, first explained Benoit Legrand, and be aware of the fact that you don't know the future. Then, ask yourself "what can make my life better", take a step back and act". The ING expert also explained that taking risks was the key, which cannot be done in traditional banks: it's all about creating new environments, where there's no limit. "The game is open to anyone!" David Marongiu admitted that the digital revolution has not completely happened in Private Banking, but added that change will be driven by generational change. "Clients are more demanding about tools and regulation adds external pressure. Yet, it is pushing us to open-up and accelerate the process," he said. According to Corentin Dubucq, there's no other way to succeed than partnering with Fintechs, but most people are still afraid to speak their minds: banks can therefore be stuck in their traditional processes. "The creation of structures to handle innovation and bring new solutions to the clients has a cost, but it is necessary to invest in the future," he highlighted. Then, Duena Blomstrom, added: "I don't see banks buying innovation to become better and change the way their work. I only see them buying pieces and not focusing enough on fundamentals". Corentin Dubucq reacted: "It's changing, but it takes time for a traditional industry to transform itself".
How to define the bank of the future?
Fireside Chat was then organized, with the participation of Toshihiko Otsuka (CEO, Rakuten Europe Bank & Rakuten Europe) and Ghela Boskovich (Head of Fintech & Regtech Partnerships, Rainmaking Innovation & Advisory Board Member, Merchant Payments Ecosystem). The CEO of Rakuten Europe Bank first went over the history of the Japanese e-commerce turned bank, with the transformation of business models and the creation of an entire ecosystem of financial services: "we acquired insurance companies, fintechs, messaging apps, etc. it's what's best for our customers as we provide them with a unique customer experience. And not only when it comes to financial products and services, but in their entire daily life. Our services are customer-centric".
The organizers then had the pleasure of welcoming Bob Moritz (Global Chairman, PwC) who started his presentation by sharing figures on the impact of new tech: 66% of CEOs surveyed think that AI will have a bigger impact that the internet itself…yet, less than 10% have done something about it. "85% of them believe AI and tech will have a positive impact on society, but on the other hand, CEOs struggle to achieve their strategic objectives because they don't have the right talent and change agents to go from A to Z," he added. According to him, every sign of innovation, no matter where it comes from, has to be thought about from a customer experience perspective: the cost value equation will go down and value will rise. Bob Moritz than explained how scalability was important: many organizations and countries come up with great innovation and use of tech, but they are not able to scale. "All stakeholders need to be involved in innovation projects, they will appreciate and understand the value it could bring. Also, digital skills are key; education systems are ill equipped to provide the right skills, and businesses are not using enough lifelong learning processes. Together, they all need to invest more time and integrity to reskill the workforce," highlighted Bob Moritz. The CEO of PwC then explained that within his company, the sharing of knowledge drives things forward, favoring citizen-lead innovation. According to him, top-down push and approaches cannot survive on the long term. He concluded: "Let's empower the organization to change the way they work, notably by fulfilling the concept of skillset enhancement. Apply citizen-lead innovation and then scale".
The second part of the session, focusing on the transformation of the payment industry, started with a fireside chat between Douglas Feagin (President of International Business, Ant Financial Services Group) and Chris Skinner (Author, Speaker and Troublemaker). The experts first went over the origins of Ant Financial/Alipay, which started as a mechanism of trust in China, between consumers and digital merchants and then transformed years later to become a mobile payment platform. "Mobile payments are ubiquitous. They are everywhere, from small street merchants to big players. We have an ecosystem approach which allows to connect all sources of funds, borrow money, get credit, etc," underlined Douglas Feagin. They then discussed financial inclusion, allowing small businesses to develop, and then explained that Ant Financial is extending its services for Chinese tourists travelling around the world. "We are more of a tech company and are not competing with traditional banks. We are providing the full stack of finance to people who didn't have access to it in the past," concluded Douglas Feagin.
Another fireside chat brought together Jan-Willem Roest (General Manager Benelux & Ireland, Paypal) and Pascal Bouvier (Finech Venture Capital Investor). They started their conversation by highlighted the fact that Paypal was 20 years old and that it started with a p2p payment solution, which then adapted to commerce and later to mobile. "Trust is the most important aspect in our industry. There is no winner-takes-all, we believe in partnerships and have concluded over 40 strategic partnerships in the last 2 years, 20 being with financial institutions. We are also partnering with Facebook: they have some of the most engaged users, and on the other side we deliver trust," also added Jan-Willem Roest, who concluded by stating that Paypal believes that the customer experience should be at the center.
Innovation imposes collaboration
Jacques Pütz (CEO, LUXHUB) took the stage to present his LUXHUB concept: "times are challenging and things move at a fast pace. Agility is the keyword. And so is collaboration. How to innovate and keep the pace with regulatory changes? It requires many IT developments and getting rid of legacy systems. Banks clearly need to reinvent themselves". According to him, PSD2 is just the first step of open-banking. How is collaboration working so far? Fintechs are not keen on working with only one financial entity, while banks are often still thinking in silos. Therefore, collaboration takes time. LUXHUB aims at facilitating collaboration and at connecting financial entities and Fintechs via its marketplace, and therefore participate in the new banking world. "The new environment imposes change management. Fintechs can publish their services in a highly secure marketplace while banks can do a POC in their own environment. My personal opinion? We all need to participate in open-banking, by sharing the knowledge with Fintechs," concluded Jacques Pütz.
KYT, an essential game-changer for payments
Frank Roessig (FinTech Lead, Proximus) moderated a round table on KYT – Know your Transaction – which brought together Jacques Pütz, Michael Pechner (COO, Payconiq International/ CEO, Digicash), Tobias Seidl (Co-founder, STOCKR) and Nadia Manzari (Partner, SCHILTZ & SCHILTZ). "Metadatas are now attached to payments, analyzing the context by using AI and ML means developing the KYT concept," started the moderator. According to Nadia Manzari, companies need to protect their business, and therefore their clients, by creating trust: "checking unusual transactions and behaviors are essential elements for AML". Michael Pechner, explained that KYT was the natural evolution from KYC, by analyzing transactions to add an additional layer of trust and security. "The transaction map is much more complex now and KYT is a must. It will help reduce false positives and reduce the friction," he added. Jacques Pütz underlined to need to mutualize efforts: "all the players need to do the same thing. Why not create a huge data lake and create solutions on top of it, for instance, adding AI to find the fraud. We will get better together". On the other hand, Tobias Seidl explained that tokens could add a layer of transparency, allowing the history of transactions, and enhancing the customer experience.
The Great European Fintech Opportunity: Discover the best Fintech hubs across Europe
The last session of the day was entitled "The Great European Fintech Opportunity" and was moderated by Manon Loison (Head of Marketing, LHoFT) and Alex Panican (Head of Partnerships and Ecosystem Development, LHoFT). They first welcomed Mads Tingsgràd (Head of Fintech Intelligence, Copenhagen Fintech) who presented his accelerator: it was created in 2016 and has more than 200 partners, sponsors and members taking part in its ecosystem. Its purpose? Accelerate the growth in Fintech jobs, investments and companies, but also building and branding a thriving Fintech Hub. "Our Fintech Lab is the first and biggest Nordic dedicated Fintech co-working space. More than 55% of the startups have received funding the last year and 70% collaborate with incumbents," added Mads Tingsgràd.
Adina Grigoriu (CEO & Co-founder, Active Asset Allocation, Lady of FinTech 2017) and Vincent Lapadu Hargues (Responsible for asset management and R&D follow up, FINANCE INNOVATION) then took the stage to present the French Fintech scene. The latter presented his French cluster for finance which was created 12 years ago in order to support the growth of startups within the financial industry. Adina Grigoriu's company joined this program 7 years ago. Active Asset Allocation is a fully independent financial engineering company (FinSurTech), specialized in the management of portfolio risks and the optimization of investment strategies for institutional investor and asset managers all around the world.
The "Italy: The payment gateway" session was presented by Antonio La Mura (Business development Manager, Fintech District). He presented his hub, which organized events focusing on education and workshops, but also holds pitch sessions and welcomes international delegations. He added: "Fintech District is an open ecosystem that seeds, fosters and drives innovation within the Italian fintech community, serving as its flagship brand in Italy and abroad". He shared the microphone with Samuele Pinta (Founder & COO, Satispay) who presented his app which allows in-store payments, p2p payments, in-app purchase and much more. "Satispay is a platform built to become the leading payment and financial service provider. The app gives a unique user experience and has become the leading mobile payment app in Italy", concluded Samuele Pinta.
"Innsomnia is an Open Innovation Hub specialized in accelerating startups through agreements with corporates that want to digitize their businesses in the areas of fintech, insurtech, industry 4.0, agrotech and naval-logistic-port," then explained Francesc Pons, Project Director, Innsomnia, presenting the vibrant Spanish Fintech scene. The hub advocates collaboration and co-creation and has more than 500 startups participating in its ecosystem. Finally, he presented the Logic Value chatbot.
The LHoFT session ended with Demet Zubeyiroglu (Co-Founder, KOOPHub) and a presentation entitled "Turkey: The Fintech bridge". She started by describing the current Turkish financial scene, its Fintech landscape and the work done by KOOPHub: "KOOPHub is a diverse and independent community enabler with high value-added services for startups, scale-ups, financial institutions, corporates, merchants, operators and others. It offers a wide array of deliverables in 3 main pillars: knowledge exchange, lab and platforms".
Sustainable Finance discussed at #ICTSpring
On the second morning of ICT Spring, and more specifically at the Fintech Summit, Manon Loison, Head of Marketing at the LHoFT (Luxembourg House of Financial Technology) welcomed international and local experts who shared their knowledge, best practices and views on the topic of "Sustainable Finance".
Bank 4.0: the bank of tomorrow
The first speaker of the day was none other than Brett King (Bestselling Author, Speaker, Founder, Radio Host, TV Commentator), who created Moven, a mobile bank, back in 2010 and wrote several books on the disruption happening in the banking industry. His latest book focuses on Bank 4.0. "Bank have been around since 1472 but first changed in the 1950s. Later, we saw the emergence of self-service banking to, in a way, extend the opening hours of the bank. Internet and later the smartphone redefined the entire industry," explained Brett King who then shared more Ant Financial/Alipay examples with apps allowing deposits and savings in a click. "In China, these tech companies are also working on VR, AI and voice recognition. Therefore, how can those technologies be added to the mix? And how would one start in bank in today's digital environment?" he asked. Brett King advocated the first principle thinking method and the need to start from scratch. Most banks are actually just updating their legacy systems: it's called design by analogy, but seems wrong as integrating tech in banks represents massive constraints. "Moreover, AI will change the rules further. It codifies human behavior to mimic their behavior. Patent recognition is at the heart of the tech. Fed with data, it can make a decision in seconds while humans can't even process and absorb the information," highlighted Brett King. After sharing a couple of examples, the Fintech guru shared his views on the future of banking: people won't see bank accounts as something they got from a bank, there will be more AI advice with tech being integrated in our lives, etc. "Therefore, how would you structure the bank of the future? Who will be your competitors?" concluded Brett King.
Voice of the Future Generation
The organizers then welcomed Séréna Boukelmoun (Youth Leader) who stated: "we are at a crossroads and need to take actions to make the future a better place for the next generation. We already have the digital tools to do so". She then advocated the use of tech to improve the environment: "we need to rethink societies. Those are not linear anymore, we need to embrace the circular economy".
Is sustainability profitable?
The question asked by Nasir Zubairi (CEO, Luxembourg House of Financial Technology Foundation) to Robert Scharfe (CEO, Luxembourg Stock Exchange) was simple: is sustainability profitable? "Sustainability is not about doing good or being a good citizen. It's about business and brings big opportunities, first explained the CEO of LuxSE, sustainable finance is not just fashion. It is here to stay". Luxembourg launched the first green exchange in the world in 2016, dedicated entirely to green financial products. Today, the platform is host of more than 50% of sustainable products issued in the world. "To be clear, investing in responsible ways doesn't mean giving up on return. It guarantees capital overtime. In order for LGX to succeed we needed to make sure investors understand what the products are, what the risks are, etc. They can now have a look at the whole story. And decide", added Robert Scharfe. The experts then discussed the integration of AI and blockchain in future platforms, which will also force distribution to change.
"Scaling Up": a sustainable finance pitching session
Nicolas Payen (CEO, Positive Energy Limited) first took the stage to present his solution which aims at simplifying renewable energy finance, with the mission to reimagine the funding process to accelerate the deployment of renewable energy. "In order to do so, we mobilized green finance and digital technologies. These types of energies are very attractive on an economic point of view as it is seeing strong development in Asia and soon in Africa," he added. The solution is a digital platform which supports deal execution and due diligence, facilitating the workflow for all players. It also reduces costs and time-to-finance by up to 50%.
He then passed the microphone to Ian Choo (Founder & Managing Partner, Ekofolio), who described his company as a "mission-driven Fintech company", which helps invest profitably in forests. "Despite significant natural advantages, Forest Investments remain largely inaccessible or inappropriate to a large majority of investor groups. Our solution is to create a dynamic, transparent and liquid marketplace for global forest assets, where institutional and retail investors can participate on comparable terms," he explained. Thanks to his solution, forest asset ownership is transformed into tokens, Blockchain settlement radically lowers transaction costs and tradable on a secure platform before maturity.
The session ended with Apricot Wilson (Deputy CEO, IforD (Luxembourg Microfinance and Development Fund)) who discussed financial inclusion, because "it is still difficult for millions of people to access to finance in some parts of the world. For instance, 1,7 billion do not have a bank account. There's also an important gender gap. Financial inclusion can stimulate entrepreneurship in these geographies". Apricot Wilson also shared examples of projects that have been funded all over the world, notably Komida in Indonesia for female empowerment, ACEP in Burkina Faso, etc… She concluded: "it is possible to promote social change and be profitable at the same time".
Responsible AI within Finance
Dr Anand Rao (Global AI Lead, PwC) then took the stage and started by stating that "AI will contribute to substantial gains in productivity and consumption. It will lead to better customer experience and improve productivity". He then shared his definition of Artificial Intelligence: the theory and development of systems that sense the environment, make decisions, and act that would normally require human intelligence. The expert also explained that AI is being applied in four distinct ways progressing from automated to assisted to augmented to autonomous intelligence. "Financial Services firms carry out a huge number of activities and make countless decisions across the value chain that are being optimized or disrupted by AI," added Dr. Rao before sharing several examples from robo-advisory to sales call analysis to suspicious behavior and fraud detection. On the risk side, he added: "AI risks that need to be assessed, mitigated and managed can be categorized into six categories that impact consumers, businesses, societies and nations: security, control, societal, economic, ethical and performance". Dr Rao then presented the PwC framework and toolkit and concluded: "AI is not a silver bullet but rather a collection of tools. It's about governance, people, processes and tools. Moreover, it is crucial to design fairness, interpretability and security right from the start".
What's the future of Finance?
A round table about the Future of Finance moderated by Douwe Miedema (Editor-in-Chief, Luxembourg Times) came next and brought together Brett King, Séréna Boukelmoun, Nicolas Payen, Emilie Allaert (Head of Operations and Projects, LHoFT) and Saurabh Sharma (Investment Director, FIL). According to Brett King, "we are moving in an era with more data sharing. AI can change the foundation of bank: an AI based-economy or company means higher stakeholder shares per employee". Saurabh Sharma then explained that investors now want their money to be deployed responsibly: there is a focus on social value. Nicolas Payen agreed: family offices are also putting sustainable projects and infrastructures in their investment alternatives. "It is time to educate people around sustainable finance. Moreover, norms and certifications, rather than regulations, can favor the development of green finance," highlighted Emilie Allaert. Serena Boukelmoun concluded: "we need to work together if we want to have an impact".
Confessions and outlooks of a Fintech veteran
The Fintech session ended with Laurent Nizri (Founder & CEO, Paris Fintech Forum) welcoming Matthias Kroner (Thought leader, a multi-award winning inspirational keynote speaker and blogger) to the stage to share his experience and Fintech expertise. "I created an online bank when the word Fintech did not even exist. Even if I sold my startup to an incumbent, we are living in an exciting period with many new concepts being developed, from sustainable finance to cryptocurrencies," first underlined Matthias Kroner. He also discussed the collaboration between banks and Fintechs which can sometimes be tough due to different cultures. "Banks are risk-adverse, but Fintechs need to take risks and fail fast. Corporate culture needs to allow innovation. And when it comes to mergers and acquisitions, CEOs need to focus on culture and change management. Culture needs to be a CEO topic," concluded the Fintech entrepreneur.
The Next Era Of Blockchain
The last session of this year's Fintech Summit took place on May 22nd and focused on the latest development and use-cases of the Blockchain technology, in the US, Asia and Europe. During this session moderated by Paul Brody (Principal & Global Innovation Leader, BlockChain Technology, EY), several international experts took the stage to present their innovative solutions and share their views on the development of this technology.
Blockchains As Universal Business Infrastructure
Before actually acting as Master of Ceremony, Paul Brody (Principal & Global Innovation Leader, BlockChain Technology, EY) gave an overview of the blockchain industry and opened by stating that EY shared last year its strategic vision for blockchain. He reminded the audience that "the reality is that we often forget the purpose of Fintech: it needs to create useful business infrastructures. Blockchains will do for networks of enterprises and business ecosystems what ERP did for the single company. They will integrate information and process within and across enterprise boundaries". The expert also explained that using tokens and contracts will be the standard way in which companies transact with each other. "Here are the four big transitions in how we use the tech and which need to happen: a shift from notarization to tokenization, the fact that the future is around fiat currency transactions rather than crypto, the integration into the regulatory environment, and the move from private to public blockchains", highlighted Paul Brody. And from a market model perspective, the transition to general purpose infrastructure has just started: we have seen PoCs in the past, and are currently in the era of specialized applications, which are using private blockchains and do not scale well. According to him, with the public blockchain, the network effect is going to be irresistible. "Simplifying radically, we, at EY, see the future of business transaction as the exchange of tokens governed by business logic," added the Global Innovation Leader, before presenting some of EY's blockchain projects, notably with Microsoft, Carrefour, MERCK, etc.
How a communication platform and AI nurture Fintech innovation
He then welcomed Shinichiro Isago (Platform Evangelist, Manager, Developer Relations, Leader of LINE BRAIN, LINE Corporation) on stage. "In Japan, the messaging application market is booming: we have around 80 million monthly active users, which equals to 62% of the population," he started, before presenting LINE: "LINE is a messaging application like WhatsApp and Facebook messenger with voice and video call functions, of course, basically free to use. The most distinctive feature is “Sticker”. Generally, western people tend to think that stickers in messaging app is just for sending image or information easily but we’re using stickers to express our feeling and emotion". Messaging has become an important part of people's lives in Japan and LINE aims at bringing people, information and services closer together. Its corporate mission? Closing the distance. He added: "Our FinTech services are using same concept as messaging and advertisement, changing the right-side entity from people or brand to money. We’re providing our FinTech services to realize the concept of CLOSING THE DISTANCE between people and money. Moreover, we own a payment service called LINE Pay and have lately introduced the LINE Wallet Tab". On the use of blockchain, he explained that LINE's token economy project consists of 2 parts: "LINK" is its original blockchain platform like Ethereum, and "BITBOX" is a crypt currency exchange in Singapore.
Paul Brody (Principal & Global Innovation Leader, BlockChain Technology, EY) then brought together Michael Yeung (Founder, Chief Executive Officer & Chief Scientist, BlockContinent) and Emma Zhiyu Liao (Co-founder, Ultrain) for a fireside chat on the use of Blockchain, notably in Asia. The discussion started with the two experts presenting their solutions: Michael Yeung aims at bringing the blockchain tech to the regulators, while Emma Zhiyu Liao brings "a new way of computational power, through a user friendly app". She continued: "We are still early in the industry, where there are only limited companies joining the race with their business understanding". Michael Yeung agreed, stating that the regulators generally do not feel comfortable about tech and need to understand the industry. According to the co-founder of Ultrain, adoption is the key. She then shared a couple of use-cases, notably with leading brands in the fashion industry. When asked about the possible trade war between China and the US, Michael Yeung highlighted that his country was currently leading the way in the blockchain development market and that communication between China and Europe will eventually become more important. "Blockchain, by example, knows no border and is international," concluded Emma Zhiyu Liao
Crypto assets kick-off: the Luxembourg Regulatory perspective
To discuss the current Blockchain regulation in Luxembourg, the organizers welcomed Jean-Louis Schiltz (Attorney, partner at Schiltz & Schiltz). He started his presentation reminding the audience that Luxembourg was one of the first countries to ask itself if a specific regulation was needed, several years ago: "At that time, they decided that no national regulation was needed. But lately, we have seen three initiatives come up: regulated crypto exchanges, ICOs, and the circulation of securities and beyond". As a matter of fact, the CSSF released a statement on crypto exchange in March 2018 stating that any provision of financial sector services requires an authorization by the Minister of Finance. Jean-Louis Schiltz then explained that the ICOs market was relatively flat in Luxembourg, but that the CSSF still recommends to be prudent in acquisitions, as AML and terrorist financing procedures apply. Finally, he discussed the circulation of securities, adding that a new law was published in March 2019 – one of the first laws in Europe on this topic – which states that "the account keeper may maintain securities accounts and credit securities on securities accounts within or through secured electronic registration mechanisms, including distributed electronic ledgers or databases. Successive transfers registered within such a secured electronic registration mechanism shall be considered as book transfers between securities accounts". He concluded: "it's the turn of the industry now! The law is simple and builds on the existing system and regulations".
The after session ended with a round table discussion on cryptofunds, moderated by Marc P. Bernegger (Member of the Board, Crypto Finance) and with the participation of David Fauchier (CEO/CIO, Cambrial Capital), Bernadette Leuzinger (COO, Crypto Fund AG) and Alexander Tkachenko (Founder & CEO, VNX Exchange). The latter opened: "crypto assets used to be for techies and were not very user-friendly, it was hard to get hold of them. But since the bubble of 2017, we have seen a lot of activities to institutionalize the asset class and there's a clear change of attitude". He also highlighted that Luxembourg is a unique place and could play a big role in the development of blockchain, notably thanks to the LHoFT, the SnT, etc: "with the support of the government, the critical mass of support in innovation is what will allow the tech to develop. I foresee interesting projects coming out of Luxembourg in the next 2 years". According to David Fauchier, blockchain can solve fraud, help with privacy etc: "if we are right and if the tech is really valuable and useful for engineers, we will have liquid market". He also explained that Europeans were more conservative and are currently not addressing the question: they might miss on crytofunds. Bernadette Leuzinger did not agree as she said she witnesses a lot of interest in Europe: "people are educating themselves and have more knowledge than in previous years. There are many fruitful discussions around the use of cryptos. There's still work to be done, but we need to look at it from a business perspective. The current business models are today's challenges".
About ICT Spring
ICT Spring is a Global Tech Conference hosting an array of international professionals. This two-day yearly event is held in Luxembourg City, and offers the participants a unique opportunity to deepen their Digital Knowledge, capture the Value of the fast-growing FinTech Industry, and explore the impact of Space Technologies on Terrestrial Businesses, through exhibitions and demonstrations of the latest Tech Trends and Innovations. ICT Spring is also the perfect place to network with peers and future business partners.
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Text by Alexandre Keilmann
Photos by Marion Dessard