• Industry: Financial Services, Banking
  • Date: 7/2/2013


Georges Bock

Managing Partner

Tel. +352 22 51 51 5522

Survival in a demanding environment: innovate, adapt, change mindset 

Luxembourg banking industry indicators (PDF, 150 KB)


Now the final results are in for 2012, it’s time to take a closer look at the figures. Banking income has shot up by 10%, a sprint finish surpassing 2009 levels. Even more positively, net profit has leapt up to €3.5 billion, a jump of 42% from a year ago. So with such healthy figures on the revenue side, are we seeing a full recovery? Hold the champagne. Rather than growth, the real ingredients behind this year’s profits were improved market conditions and a reversal of prior year provisions. The full story from Luxembourg’s banks is actually quite mixed as recurring revenues have decreased.


After years of unmitigated growth prior to the crisis, the banking industry has shown strong stability over recent years. However, we should not be complacent as the business environment is evolving rapidly and the industry as a whole has to adapt quickly. Later in this publication, we chat with Luxembourg’s banking elite and ask them to answer, for both themselves and on behalf of their clients, ‘Why Luxembourg? How to adapt?’ Time after time, Luxembourg’s financial stability topped the table as the greatest draw for clients and banks alike.


This straw poll was among those who have already understood what Luxembourg has to offer – but what of those yet to catch on to its charms? Banking secrecy was a stumbling block in establishing Luxembourg as a brand – so much time and energy was spent defending the policy internationally that Luxembourg had little chance to promote its other merits. With such a hurdle out of the way, we can finally start the very real and pressing task of branding Luxembourg.


Looking into the future, another key trend is set to turn the banking industry upside down: disintermediation or “cutting out the middle man”. The traditional customer-bank relationship will be increasingly disrupted by new technology. For banking, as for any industry, consumers are turning to their peers for advice, rather than relying on their banking advisor. With the rise of tech-driven super networks, information sharing is instantaneous and peer-to-peer interactions happen in a click and clients are more knowledgeable and demanding.


Banks could be bypassed in other ways as new technology sows the seeds for alternative business models. Platforms have already been launched allowing start-ups to get their funding from online communities, rather than from the bank.  Mobile phone companies have found cheaper and more convenient alternatives to the transfer of money via a bank. As the world gets online, new models will proliferate and only those who are able to tap into the vast mine of data now on offer will be able to survive. Big data is here and the banking industry can use it to better understand the trends of tomorrow and generate value for its clients.


When talking about future success, be it in terms of branding or adapting to alternative business models, one thing is for sure: this will only come when we manage to break down the so-called ‘silo mentality’ once and for all. Gone are the days when companies and even industries could journey alone without looking beyond their four walls. Gone too is the era of government departments acting in isolation, without looking to others for expertise, innovation or just plain old information and manpower. As people become more connected, these last bastions of solitude will find the walls crumbling down around them. Unless, of course, they choose to break out of their own silos, find ways to build lasting ecosystems and embrace an interconnected future.


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Bank Insights 2013

Bank Insights 2013
Now the final results are in for 2012, it’s time to take a closer look at the figures for Luxembourg’s banks.