How digital technologies are driving the financial centre

The changes brought about by digital innovation are also affecting the Luxembourg financial centre. The centre is the backbone of the national economy, managing nearly €7,770 billion through investment funds domiciled in Luxembourg, while the banking sector holds approximately €1,000 billion of assets. The financial centre represents nearly a third of Luxembourg's GDP and contributes over 20% of tax revenues. It employs more than 26,000 people and is home to more than 120 banks.

In short, Luxembourg owes its wealth to a strong, dynamic financial sector, as confirmed by the Chamber of Commerce in its Economic Barometer survey for the second half of 2025. According to the survey, 89% of companies in the financial centre are confident for the future of the sector.

But this positive outlook does not mean that the sector can rest on its laurels, as significant challenges lie ahead. Digital innovations like bitcoin, the digital euro and digital-only banks are new realities that the financial centre has to grapple with.

In an interview, Jerry Grbic, CEO of the Luxembourg Bankers' Association (ABBL), tells us how Luxembourg is strengthening its position in this rapidly developing sector. 

1. Do you see cryptocurrencies as an opportunity, a risk or both for the Luxembourg financial centre?

At the ABBL, we don't take a "pro-" or "anti-"cryptocurrency view, as the reality is that cryptocurrencies are here to stay. The main challenge is to channel innovation so that it serves the real economy, businesses and citizens, while protecting the stability and reputation of the Luxembourg financial centre.

Cryptocurrencies clearly represent both an opportunity and a risk. The underlying technologies like blockchain and tokenisation offer new possibilities, especially when it comes to streamlining payments, facilitating new financial activities and boosting Luxembourg's international attractiveness in a harmonised European framework. Yet these innovations come with very real risks, especially for investors but also in terms of financial crime and reputation – and the latter two points are extremely sensitive for an open, international financial centre like ours.

That is why a clear, proportionate regulatory framework, like MiCA [Markets in Crypto-Assets, a European Union regulation that creates a framework for digital assets like cryptocurrencies within the EU], is crucial. In this context, we expect to see a growing number of stablecoin issuers applying for authorisation in Luxembourg.

In general, the future of digital currency will require a complementary approach between central bank digital currencies, regulated payment solutions and regulated uses of cryptocurrencies, with banks as guarantors of confidence and stability.

2. What opportunities does the introduction of the digital euro offer for Luxembourg's banks?

The digital euro represents a major step forward for the European financial ecosystem. The aim is to offer a secure, accessible public payment method that is suited to an increasingly digital economy. This goal is largely shared by the banking industry, as long as the digital euro offers real added value for customers and the economy, and as long as it is devised in close cooperation with private stakeholders.

For Luxembourg's banks, there are multiple challenges in terms of adapting payment infrastructures, implementation costs, and also maintaining their central role as financial intermediaries, especially with regard to deposits, financing the economy and building a relationship of trust with customers.

That is why the ABBL is calling for a pragmatic, proportionate and collaborative approach to ensure that the digital euro complements existing services, especially private payment solutions in Europe, while also supporting innovation and strengthening Luxembourg's competitiveness without weakening its banking model.

3. Are digital banks like Revolut, Wise and N26 competing with traditional banks?

We are keeping a pragmatic eye on the growth of these digital players. Digital banks meet very specific customer needs in terms of simplicity, speed and user experience, and they are helping to drive innovation in the financial sector. In that respect, they can promote healthy, stimulating competition.

But we need to make sure that any comparisons are made on the same terms. Traditional banks play a much broader role, especially in financing the economy, managing risks, protecting deposits and providing financial stability. So the principle of "same activity, same risks, same rules" is crucial, especially when it comes to compliance.

Banks in Luxembourg are investing heavily in the ongoing digital transition and are developing partnerships with fintechs. The future of the sector will not be based on opposing models but on co-existence rooted in innovation, confidence and a balanced regulatory framework. The gap between the two models is becoming smaller.

4. How important is fintech for the Luxembourg financial sector?

Fintech is a major strategic driver for the competitiveness and attractiveness of the Luxembourg financial sector. It is helping us to modernise and improve the efficiency of financial services and better meet the needs of clients by implementing new technologies across the entire value chain. Luxembourg has a dynamic fintech ecosystem, supported by a clear regulatory framework and international openness.

In this context, the ABBL has an essential role to play as an intermediary between traditional banks, fintechs and authorities. The aim is not to pit different models against each other but to encourage synergies, partnerships and the emergence of effective solutions that serve the real economy. By fostering dialogue and creating an environment conducive to sharing expertise and controlled experimentation, we will continue to build an innovative, responsible and sustainable financial sector in which technology boosts confidence rather than replacing it.

The success of initiatives like our "Bank CEOs & Fintechs Speed Meeting" demonstrates that there is a real thirst for cooperation between the two sectors.

5. How is artificial intelligence transforming the financial sector in Luxembourg?

Artificial intelligence is gradually transforming the Luxembourg financial sector by improving operational efficiency, quality of service, risk management and profitability. It already offers specific applications in areas such as automation, tackling fraud and money laundering, optimising compliance and personalising client relations. If used responsibly, AI can be an effective driver of competitiveness for the financial centre.

The ABBL believes that this transition must take place within a clear, ethical and secure framework. The association is supporting its members with the adoption of AI by encouraging them to share best practices, promoting dialogue with authorities and anticipating EU regulatory frameworks, especially the AI Act. Our role is to make sure technological innovation strengthens confidence, protects customers and supports the financing of the real economy.