The ongoing trend of concentration within the Luxembourg’s financial sector professionals (PSF), driven by post-merger financial improvements, and the outsourcing of services to jurisdictions outside Luxembourg were identified as significant factors during a panel discussion on PSF sector on Tuesday.
Evolution
Marco Paterno Castello, board member and managing director of Luxembourg Fund services, highlighted consolidation within the industry, citing improved financial key performance indicators (KPIs) and the use of outsourcing to address skill and talent shortages. Paterno Castello said: “There has been a trend which has been ongoing for a while of concentration in the specialised PSF sector. This is largely due to enhanced post merger financial KPIs, such as earnings, turnover and the number of clients. And this is a trend that allows to offset increased costs due to regulation and compliance. I foresee this trend will continue. And the second element which has been ongoing, again for a while, and I believe will continue in the future, is the outsourcing from services to other jurisdictions which are not Luxembourg.”
, co-founder and CEO of Finologee, said that PSF trends were “driven by two factors. One is the necessity, and one is the opportunity.” Regulatory pressure, particularly for support PSFs, serves as a necessary impetus, but it also serves as an opportunity for players, and an opportunity driven by digitisation, offering optimisation and increased efficiency within companies.
Challenges
The panel discussion delved into challenges and potential improvements within the industry. Stéphane Argyropoulos, chairman of the board of AMFIE, emphasised two key points. Firstly, he acknowledged the importance of regulation but advocated for a more flexible approach, tailored to the diverse components of the financial sector. He believes regulation should be an investment in compliance, not just a cost. Secondly, Argyropoulos highlighted the significance of education, for young generation and job seekers, for Luxembourg’s ambitions. Investing in education aligns with the industry’s need for skilled manpower in technology and client-facing roles. By nurturing the next generation, Luxembourg aims to ensure a qualified workforce, ultimately benefiting the industry and the country.
Luxembourg opportunities
The main opportunities identified revolve around adopting a flexible and business-driven mindset, returning to strengths and embracing innovation. Castello emphasised the historical role of regulation in shaping key financial products and suggested that instead of fearing future changes, the industry should welcome them and build something new. The call is for a positive outlook, urging players in the financial industry, particularly in Luxembourg, to see upcoming developments as opportunities for growth and innovation rather than challenges to be endured.
During the session’s conclusion, moderator Raphaël Charlier, a partner at Deloitte Luxembourg, asked panelists their top ‘ask’ of the new government. Paterno Castello replied, “what I’m asking as one of the players in Luxembourg is to make sure that this place stays competitive in two ways. First, ensuring a right balance between regulation and competitiveness. And secondly, by letting people come to Luxembourg and love this place, making it an attractive place for human resources.” He highlighted factors like affordable housing and the cost of living as important to maintain competitiveness.
This article was updated at 18:15 to correct a quote that was misattributed.