Established in 1893, Societe Generale Bank & Trust Luxembourg (SGBT) has experienced several industrial revolutions in the Grand Duchy, and is now preparing for the next one through the implementation of new technologies. Véronique de la Bachelerie, CEO of SGBT, tells us how the bank is adapting to changing expectations within the next generation of banking customers.
How would you rate the dynamism of Luxembourg’s financial climate?
The financial sector in Luxembourg has been very resilient over the previous years with a global profit of 4 billion euros. This occurred despite the low interest rates environment, regulation costs increase, a growing competition – including competition with FinTech and other new players – and in spite of higher customers’ requirements, especially in customer experience and range of services. Luxembourg benefits from a healthy financial landscape with an average solvency ratio above twenty percent, which comforts our customers, either institutional investors or especially HNWIs or UHNWIs. This element is also crucial for international corporate clients who need a long term and reliable banking offer.
How have these new regulations impacted Luxembourg’s banking industry in your opinion?
The issue for financial players remains the rhythm of implementation. We are facing a fast-paced evolution which implies to adapt our information systems very rapidly and often on a tactical way, which is not efficient whereas we have to keep on meeting our customers requirements . The way resides in a proper regulation requirements prioritization and an open and transparent discussion with peers and regulators. In our case, we dedicate about 60% of our information system projects to our regulatory requirements, which is substantial. 40% remain and are fortunately spent either for efficiency or for customer experience and offer. In comparison, new players, such as FinTech, have the main part of their expenses and their developments dedicated to customer experience. Hence it is quite difficult for banks, especially the largest ones to meet these requirements. In this relentlessly evolving landscape, time is a key element in order to implement properly new regulations.
How do you view Luxembourg’s current state of financial innovation?
Innovation and new technologies provide us with an answer to the challenges we face and are opportunities to satisfy our new requirements and enhance the client journey. Through digital transformation, we can enhance the customer experience, gain efficiency and reduce our costs. Also we can better exploit our data, because we have a lot of information. Some of our clients have been in our bank for thirty or forty years, so we have an in-depth knowledge of their profile. Companies like GAFAs, only started collecting data ten years ago. In this perspective, banks have stronger and better assets since we have information about our clients on a much longer period, and even on different generations of the same family.
To what extent do you think Luxembourg’s could take the lead in Europe in the FinTech industry?
Luxembourg is a marketplace where FinTech companies can find a broad range of clients as well as a complete ecosystem – 140 banks, lawyers, tax advisers, and financial professionnals, – they need for their further development and expansion. For instance, the Luxembourg House of Financial Technology (LHoFT) for example aims at making a bridge between banks, security services, financial services providers, Fintech and RegTech. Fintech usually focus on one topic, which is great for us as we need to have some very specialised companies nowadays in order to keep up with the complexity of banking activities. Banks cannot do everything, but they have to be able to provide their clients a large range of services to remain the trustworthy partner. Therefore banks need to build partnerships with FinTech and eventually other providers – such as other banks or fiduciaries – in order to make a difference thanks to wide range of products, and offer the best to their clients. We are not always able to be the best in every kind of product, and that is why it is very important to have such partnerships. Furthermore, FinTech have a different culture, they are much more agile, and therefore it is really useful for us to work with FinTech in order to instil part of their culture to our employees.
How do you view the rise of green tech that is meaning from Luxembourg?
Greentech is not only about climate finance, but in my opinion it is much larger and encompasses also new society trends such as social, environmental trends and the circular economy. All of these trends will emerge, so we have to adapt, just as other banks. Politics and governments have a role to play, alongside with the European Investment Bank and the European Investment Fund. Commercial banks share this responsibility to accompany both corporate and retail clients in these new models and to connect investors to relevant projects. We have to create a relevant ecosystem for this. I believe it is easier to create it in a small and engaged country, and that’s why I am convinced that Luxembourg could be the pilot of this new positive impact from climate finance. Societe Generale in Luxembourg is the proper place to build a laboratory in order to accompany our clients in these trends. This laboratory will include ALD Automotive, a subsidiary of the Group. It represents 30% of the market share in Luxembourg and they are deeply involved in these new society subjects of mobility and reduction of CO2 emissions.
What are your personal ambitions and key challenges you wish to tackle as the head of SGBT?
Involving SGBT’s top management, we have defined a renewed vision for the bank, to accompany the society’s transformation and new CSR trends, especially in Luxembourg. We take advantage of all our business lines in order to do so. This is a deep-rooted characteristic of SGBT: we have accompanied Luxembourg all along its history. At first when we were created, we accompanied the development of the steel industry. After World War II, we were part of the development of the financial place. Now we are supporting the next Industrial Revolution in Luxembourg.