Founded in 1926, Raiffeisen is the largest cooperative bank in Luxembourg. Guy Hoffmann, CEO of Raiffeisen Bank Luxembourg, explains the company’s development of private sector banking and how the bank is distinguishing its services.
How would you describe the fundamentals that best characterize Luxembourg’s financial climate?
As a small country you have to be very flexible and adaptive to what happens across the border, and this cross-cultural mindset we developed in the past decades is something that marks the financial centre today. Because of its size, Luxembourg was always able to adapt quickly. We were able to be quite innovative on a couple of issues, including the green bonds and Fintech. Today, due to increased political and economic uncertainty, Luxembourg has attracted a lot of HNWI from across the world. However, the EU’s automatic exchange of information law led to a loss of a lot of mid-sized affluent customers from abroad, and as Raiffeisen is not necessarily the first name on the list for HNWI customers, we had to refill this with new customers from the domestic side.
Can you tell us the core competitive advantages of Raiffeisen Bank?
With more than 30% of our customers being members, we are the largest cooperative bank in the country. In terms of market, we are number three or four depending on which metric is used. Among the larger banks in Luxembourg, Raiffeisen is the only one that neither is state-owned nor belongs to a large international group, meaning that we are totally independent to make all decisions and strategies. During the crisis in 2008-2009 we proved that the cooperative structure is an extremely robust model. It does not encourage management to take excessive risks because profit maximization is not our first priority. Instead, we focus on delivering a high-quality service to our members and clients. As we do not pay dividends to our members, the realized profits remain within the bank where they can be used to further develop its ecosystem.
How has the bank distinguished itself in private banking?
We have established a very strong partnership with Vontobel, a large private bank in Switzerland, which works also together with Raiffeisen Switzerland. Selling Luxembourg private banking with the additional expertise of a Swiss private banking partner has worked fairly well since we started doing it 10 years ago. We focus today on offering three solutions: R-Invest, R-Gestion and R-Conseil. R-Invest is the basic product for investors that are occasionally in the market. The more high-end products are R-Gestion, a discretionary Portfolio Management service, and R-Conseil, which provides the customer with proactive advice at a frequency that he/she defines. The growing popularity of this Mifid 2 compliant private banking package is a major reason why we are experiencing more than double-digit growth over the past eight months.
What is your strategy to improve the Raiffeisen brand?
Training remains key. We have created the Raiffeisen Academy to train our people, especially in how to talk with customers, how to ask the right, sometimes more delicate questions, and finally how to give appropriate advice. Our challenge today will be to deliver both a personalized service in our branches and an online user experience expected of a solely digital bank. That’s why we have invested in a new integrated IT platform, and we were the first to switch from the classical host systems to one integrated platform. Overall, Europe needs reasonably sized regional banks like ours to provide these services to all classes of the economy, and Raiffeisen is perfectly equipped and positioned to do so.