“Private banks face the challenge of adapting to the needs of new clients with increasingly complex and global financial needs,” says Nicolas Demarest, director and head of Belgium and Luxembourg at Utmost Wealth Solutions. “In a multi-banked environment, collaboration with other financial providers is essential to delivering a seamless and effective client experience.” Clients in Luxembourg typically engage multiple financial institutions to tap into a broader range of services and products. A single client might have private banking services with one institution, investment portfolios managed by different asset managers, and tax or fiduciary advice from separate entities. This fragmentation makes it difficult to maintain a consistent and holistic financial strategy. One of the biggest hurdles is data fragmentation. Financial information is often scattered across various institutions, complicating consolidation, reconciliation and accurate reporting.
Regulatory compliance adds another layer of complexity. Luxembourg’s financial institutions operate under stringent anti-money laundering (AML) and know-your-customer (KYC) regulations, alongside broader EU directives like Mifid II. Each institution follows its own compliance protocols, making it challenging to align strategies across different providers. Cash and liquidity management is also more complicated in a multi-banking environment. Without real-time visibility across institutions, clients may struggle to optimise working capital, reduce idle cash and allocate funds efficiently. As a result, operational costs may increase and financial goals could be missed.
To manage these challenges, financial professionals need to prioritise communication, alignment and centralised oversight. Steve Hauman, partner in technology advisory at KPMG Luxembourg, emphasises the importance of creating a detailed financial plan with the client at the outset, defining their goals, risk tolerance and investment horizons. This serves as a framework, ensuring that all financial providers are working toward the same strategic objectives. “Next, centralised communication is key,” Hauman explains. “Advisors should maintain regular contact with all financial institutions involved, ensuring that each one understands the client’s overall strategy.” This helps align investment decisions and prevent conflicting advice.
The client’s risk profile and asset allocation should remain consistent across all financial institutions.
Data consolidation tools are becoming increasingly valuable in this environment. Platforms that aggregate financial data from multiple institutions give advisors a unified view of the client’s entire financial landscape. This not only helps identify gaps or redundancies but also makes it easier to adjust strategies as market conditions change. Alignment across different institutions is essential to avoid conflicting strategies. “The client’s risk profile and asset allocation should remain consistent across all financial institutions,” Hauman says. Regular reviews and adjustments ensure that the financial strategy remains on track and responsive to market developments.
Luxembourg’s regulatory framework actively supports collaboration between financial providers. The country’s clear and consistent regulations foster trust and stability, making it easier for financial institutions to partner and share data securely. Open banking regulations under the EU’s PSD2 have been instrumental in encouraging this collaboration. By requiring banks to share customer data through standardised APIs, PSD2 has enabled greater integration among banks, fintechs and third-party providers. PSD3 is expected to build on this foundation, further enhancing data security and consumer protection in digital payments.
Managing conflicts of interest
When multiple financial providers are involved, conflicts of interest are almost inevitable. To prevent these from disrupting client relationships, financial professionals need to establish clear roles and responsibilities among different providers. “Transparency regarding fee structures and service scopes is essential to maintaining trust,” says Demarest. Independent advisory mechanisms and open dialogue about strategies can help prevent bias and ensure that investment decisions remain client-focussed. Unit-linked life insurance is a good example of successful interprofessional collaboration. These products often involve multiple stakeholders, such as the insurer, a private bank and asset managers, working together to deliver a seamless wealth management solution. For financial professionals, the key to navigating multi-banking complexities is becoming the client’s primary advisor. Offering comprehensive services that cover wealth structuring, estate planning and tax optimisation positions the advisor as the central figure in the client’s financial strategy.
As private banks become more accessible, more digital and more sustainable, collaboration with other financial providers will be essential.
Intergenerational wealth transfer is a growing area of focus. Many HNWIs are preparing to pass on their wealth, making early engagement essential. By helping families establish governance structures and succession plans that accommodate multiple banking relationships, advisors can secure long-term client loyalty. “Many clients are preparing to pass on their wealth, so establishing a long-term value proposition is essential,” says Hauman. “Positioning the bank as the central hub for wealth structuring across generations is a strategic advantage.”
The path forward
Luxembourg’s financial sector will continue to evolve, shaped by digitalisation, regulatory developments and shifting client expectations. Financial professionals who embrace collaboration, leverage technology and align strategies across institutions will be well-positioned to deliver consistent, integrated and forward-looking financial solutions. “As private banks become more accessible, more digital and more sustainable, collaboration with other financial providers will be essential,” concludes Demarest. “A centralised approach to investment management, administration and reporting can improve efficiency and transparency across multiple banking relationships.” Luxembourg’s future as a leading financial hub will depend on this spirit of collaboration, ensuring that clients benefit from a seamless, integrated wealth management experience.
Real-time data sharing
The Financial Data Access (Fida) Regulation, currently under discussion, represents a pivotal step towards creating a standardised and secure framework for sharing data between banks and fintech companies. If implemented, Fida would enhance Luxembourg’s position as a global leader in open finance and data security.
Luxembourg’s banking ecosystem has already experienced significant progress in adopting API-based solutions and forging fintech partnerships. This shift has enabled real-time data sharing and improved financial management through AI-powered tools. According to Steve Hauman from KPMG, AI-driven predictive analytics and automated portfolio monitoring are transforming how financial professionals manage multi-bank relationships. By leveraging real-time insights, financial institutions can anticipate client needs and offer tailored investment strategies, enhancing both customer satisfaction and business performance.
AI’s role in managing multi-bank relationships is particularly impactful. Predictive analytics can identify market trends and client behaviours, allowing banks to proactively adjust strategies and offer personalised advice. AI-driven client segmentation further enhances this capability by categorising clients based on their goals and risk profiles, enabling hyper-personalised engagement. This level of customisation strengthens client relationships and increases client retention.
The introduction of Fida would provide a secure and standardised foundation for this technological evolution, encouraging broader adoption of AI and data-sharing practices across Luxembourg’s financial sector. By facilitating seamless and secure data exchange, Fida could unlock new opportunities for innovation and efficiency.
This article was written for the Wealth Management supplement to the April 2025 issue of Paperjam magazine, published on 26 March. The content is produced exclusively for the magazine. It is published on the site to contribute to the full Paperjam archive. Click on this link to subscribe to the magazine.
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