What is the story of LUXHUB and how would you describe the company’s journey to Open Banking?
LUXHUB was founded by 4 leading Luxembourgish banks to act as an Open Banking accelerator, providing mutualised solutions that enable institutions to thrive within the evolving financial landscape.
Compliance is the cornerstone of Open Banking and where the LUXHUB journey began, with the EU’s Revised Payment Services Directive (PSD2) providing both an opportunity and a stern compliance challenge for European banks.
Having successfully supported a large number of financial institutions throughout this initial compliance journey, LUXHUB began to look to the future and evolve our product offerings to help advance Open Banking connectivity and collaboration, with the ultimate aim of championing innovation and value addition within the sector.
In 2019, LUXHUB was recognised as the EU’s second largest Open Banking Platform at EBA Day and we have twice been named Luxembourg’s Startup of the Year.
What problems does LUXHUB solve? Could you please provide more details about your products, offerings, and solutions?
The main challenges of Open Banking fall into three main areas – compliance, connectivity, and collaboration. As mentioned above, the first major compliance challenge was PSD2; more recently, we have developed a turnkey solution for Central Electronic Data Retrieval System compliance in relation to AML5.
By providing an expert mutualised solution for such issues, we enable financial institutions to securely and efficiently achieve compliance – and, in doing so, smooth the path to Open Banking adoption.
In order to address the second challenge and provide accelerated connectivity to the opportunities that lay beyond Open Banking compliance, we developed LUXHUB One – a single integration layer that provides secure access to multiple PSD2 APIs (regardless of their implementation standard).
This provides the basis for enhanced Open Banking-related customer services and has already been adopted by Luxembourg’s biggest bank, Spuerkeess – a move that has enabled them to become the first Luxembourgish bank to offer account aggregation (AIS) and payment initiation services (PIS).
The final challenge in our framework relates to the necessity of all actors to collaborate in the ideation, development, and adoption of value-added Open Banking products and services. Traditional banks, financial institutions, and fintechs must all work together in order to extract optimal value from the sector.
Our ambition to facilitate and promote such collaboration has led to the development of LUXHUB’s Marketplace, which will act as a community for the development, promotion, and exchange of Open Banking and Open Finance API products.
What is Open Finance and what are the benefits for Luxembourg? What are the challenges and how is LUXHUB responding to these?
Open Finance will have a much broader impact on the financial services industry than Open Banking, bringing greater opportunity but also greater challenges. A new creative environment will be established in order to keep up with the rapid pace of digital innovation.
Whereas Open Banking applies to payment accounts, Open Finance could mean that savings banks, insurers, investment managers, consumer credit companies, business lenders, mortgage lenders, and others would all have the opportunity to implement similar interfaces and provide enhanced user experience.
LUXHUB is uniquely positioned within the Open Banking landscape to address the full spectrum of challenges that the sector presents. We have the firm foundations of the Luxembourgish banking ecosystem, alongside the resource and desire to champion innovation.
What is foreseen for Open Finance and for LUXHUB’s evolution over the next couple of years? What developments are in store?
Open Finance will usher in an increasingly competitive financial services sector, which inevitably leads to greater haste in the development of new products and services. The creation of a clear vision for the role of open data and the delivery of enhanced customer experience will become a crucial factor for financial institutions when it comes to attracting new customers and retaining existing ones.
LUXHUB is the connective tissue that empowers financial institutions with the foundations to thrive within the new Open Finance ecosystem. We not only provide all the necessary tools to comply and connect, but also act as a catalyst for future collaboration and innovation.
Our lofty ambitions to create an impact beyond Luxembourg’s financial ecosystem has been evidenced through our recently announced collaboration with SIX, which sees leading players from two of the continent’s strongest financial centres connect to accelerate pan- European Open Banking innovation.
There are many other exciting new developments on the horizon for LUXHUB too, which you’ll need to keep a look out for. But certainly, the future of Open Finance will be about innovation, collaboration, and expansion.
LUXHUB has grown from just four individuals back in 2018 to a diverse team of close to 40. Our growth is testament to our initial vision, and we continue to stay true to the philosophy of ‘built on compliance, driven by innovation’.
The editorial was originally published in Global Open Banking Report 2020, which follows the journey from Open Banking to Open Finance and Open Data Economy, and provides key insights about the benefits of Open Finance for different areas of financial service.
About Jacques Pütz
Jacques has, for more than two decades, been at the forefront of tech innovation in Luxembourg. Firstly, as the founder of the country’s first social media platform, then as an award-winning ICT professional within the banking sector and, more recently, as the CEO of leading fintech LUXHUB.
About LUXHUB
LUXHUB emerged from the combined vision of four major Luxembourgish banks - Banque Raiffeisen, BGL BNP Paribas, POST Luxembourg, and SPUERKEESS to become a key catalyst of financial industry’s evolution towards Open Banking. LUXHUB is built on compliance and driven by innovation.
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