The future of finance – Luxhub interview

This interview was originally published inside the Open Banking Report 2021. Click here to download the report.

LUXHUB has recently been granted the AISP and PISP licences by the CSSF (the public institution which supervises the professionals and products of the Luxembourg financial sector). How important is this step in the development of LUXHUB?

In the fast-emerging era of Open Banking, financial institutions are confronted by both an increased number of European regulations and an ever-expanding plethora of digital-led opportunities. To navigate and succeed in such an environment, they are required to deeply transform to stay relevant. This transformation is crucial for retaining existing customers and attracting new ones, by satisfying their rapidly changing needs and providing unique, innovative, flexible, and easy-to-use services.

This revolution truly began with PSD2, with banks having to open to others - and share account data as well as allow payment initiation, with the consent of the end-user. This immediately created an unlimited array of opportunities for all the players active in the financial sectors, whether regulated entities - financial institutions - or non-regulated - fintechs, TPPs, etc.

Nowadays, two years after the entry into force of the obligation for banks to publish PSD2 APIs, we are rapidly evolving towards embedded finance. Here, ecommerce merchants, car sellers, software companies, travel agencies, and many others, are directly integrating finance solutions – or Banking-as-a-Service – within their applications and/or processes. This enables them to provide their clients with a single and seamless experience throughout their entire journey - from searching to purchasing add-ons and paying.

Therefore, by securing these licences in what is still the early stages of Open Banking and soon-to-become Embedded Finance, LUXHUB reinforces its role as the missing and trusted link between banks and their customers, corporates, and individuals.

More concretely, what do these two licences enable LUXHUB to offer to its clients and partners?

The acquisition of the two licences, combined with our PFS (Professional of the Financial Services) status, positions LUXHUB as the only 360-degree Open Banking/Finance enabler in Luxembourg, placing us uniquely at the intersection of legacy and digital innovation within the financial services industry.

AIS (Account Information Services), is perceived as one of the initial steps of Open Banking. Such services enable end-users to check real-time account balances, access enriched and segmented transaction data, and reference historical and consolidated data from multiple banks within a single app or interface. On the other hand, non-regulated entities that will use this solution will have the opportunity to build unique added-value services, responding to the new needs of their end clients.

PIS (Payment Initiation Services), on the other hand, is all about enabling more seamless digital payments - without the use of a credit card and even without having to open a banking app or other online payment interface. In other words, customers can now easily and rapidly process payments directly through the service they are currently using. Again, the PIS enables frictionless experiences and will increase the conversion rates of those providing such services to its clients.

Can you tell us more about the concept of embedded finance and what it brings to the customers?

For instance, when booking your next winter holiday, your travel company should already be able to leverage specific APIs to enable you to pay directly without having to use an e-banking app or to allow you to purchase additional insurance, for example.

The same example could very well be extended to a client visiting a car dealership to purchase a new vehicle.

As the name indicates, embedded finance is all about integrating finance/banking solutions directly within the app or website of the merchant or seller. Most of the time, those solutions will be white labelled and therefore invisible to the clients to avoid confusion. The main benefit is that it turns their booking or buying experience into a smooth and rapid process. In other words, it makes the life of the end customer easier. 

Authentication and security remain the key aspects of embedded finance, and LUXHUB - thanks to its expertise developed from the very beginning of the Open Banking era - has become an internationally recognised partner for traditional financial institutions as well as innovative fintechs, by promoting transparency and collaboration at the highest level possible. 

How would you convince financial institutions to dive into the world of Open Banking, embrace data, and collaborate with fintechs?

All these aspects are interlinked. Open Banking is fuelled by data and thrives through collaboration between legacy players and innovative startups.

Nowadays, investing in Open Banking, Open Finance - or embedded finance - has become mandatory for financial institutions who want to have a bright future in the fast-paced and instant world we live in.

By acquiring the AISP and PISP licences, LUXHUB now aims to enable non-regulated entities to benefit from Open Banking and therefore participate in the creation of a stronger and broader sector.

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

Open Banking Pioneer LUXHUB takes an active part in the transformation of the financial services industry, responding to customer’s needs while providing banks with new revenue streams. It has recently been granted AISP and PISP licences and aims at helping all companies to take full advantage of Open Banking opportunities.