The 2017 Banking Day hosted by PWC on Thursday 2 February addressed how the Luxembourg banking industry is continuing to evolve in the face of a fast-changing world. 

According to PWC the sector is faced with paradigm shifts over which it has little control, from regulations to technology, politics and changing customer expectations. And while in Luxembourg the industry continues to grow — at the end of 2016, the balance sheets of the 140 banks in the Grand Duchy totalled almost €770 billion, an increase of 2%, according to the Banque Centrale du Luxembourg — questions still remain as to whether events such as Brexit hold the promise of further salvation in a sector that has seen increased competition over the last years. 

Technology is proving to be one of the key drivers. 

"The advance of Fintech is pushing the banking sector to transform itself," said Olivier Carré, Banking Leader with PWC Luxembourg. 

"Banks are working with Fintech because they can save money and innovate digitally. They also do so because the people of Generation Y are demanding it," he said. “If the disruptive environment prevails for the time being, we must not be blind to the opportunities and positive spin-offs it can create.”

At a time of disruption and opportunity, banks in Luxembourg are setting the standard for the embrace of new technology that is changing the relationship between the sector and its clients, said PWC. And as technology is changing client expectations, so the sector’s role is expanding to include new skills and knowledge bases in areas such as tax and estate planning. In the midst of that, it was said that the need for trust and transparency is paramount. 

Finally, the issue is not so much about having a digital strategy but a strategy for the digital era, while integrating new models that emerge.

The meeting also took a look at Brexit and Luxembourg’s approach to the United Kingdom’s decision to withdraw form the European Union. In response, it was said that Luxembourg played the friendship and complementarity card and so far one Japanese and two Chinese banks have responded.

"The banks that come to settle in Europe need a stable country within which to operate in the Single Market. In this case, Luxembourg is well placed to offer pragmatic answers in an accessible, open and multicultural environment,” said Mr Carré.

Questions still remain nonetheless over whether the United Kingdom will drastically lower its tax rate to be more competitive.