The rocky relationship between FinTechs and Banks – what are the challenges?


The world of FinTechs in Luxembourg has seen robust development over the last few years. Since the discovery of the “FinTech” concept by the public at large and the first inventory of the market carried out by Luxembourg for Finance (LFF) in 2015, Luxembourg has gradually become home to more than 200 FinTechs (including RegTechs, InsureTechs, firms adopting distributed ledger technology – DLT, and the ones related to crypto assets), which now form what can be called an ecosystem.

Initially, FinTechs and banks often tended to be seen as rivals in the banking sector. Today, the financial sector in Luxembourg has a growing interest in FinTechs. Initiatives have been launched ranging from displays of interest, to structured project analyses, to first collaborations. Some such initiatives have become successful. Building on these initial experiences, banking and FinTech players have begun to realise the mutual benefits of cooperation.

However, we observe that the level of engagement maturity is well below what it could be. Experiences are sometimes difficult, or unsuccessful. For both banks and FinTechs, the collaboration potential looks great in theory, but seems to be largely under-exploited in reality.

Arendt Business Advisory, with the collaboration and support of the ABBL, has therefore decided to carry out a study to analyse the bottlenecks to this development on the part of both FinTechs and banks, the quick wins and the difficulties encountered based on their first experiences, as well as the major success factors that could be leveraged in future cooperation. The goal is to shed new light on the dynamics of bank-FinTech interaction, which will help to unleash the untapped potential for the benefit of the whole marketplace: banks and FinTechs alike.

After giving an introduction on how innovation and relationships are organised between the two sides, our study traces the relationship cycle of banks and FinTechs, exposing their views from first contact to project delivery. Next, the recommendations made by banks and FinTechs for Luxembourg, the banking sector and the FinTech sector are presented, before we proceed to our final conclusions. In light of current events, we have also added a section on the perceived impact of COVID-19 on this area.

The report is available below.

Our expertise

Arendt’s professionals (both on business advisory and law firm side) have extensive experience in assisting banks and financial institutions in dealing with innovation, emerging models and fintechs and can handle many aspects of such complex projects, including:

  • Development of strategic visions and defining the role of FinTechs in the strategy execution for banks (or conversely the role of banks in the strategy execution for FinTechs)
  • Transformation programs, clients management or internal process, with the use of FinTech solutions
  • Workshops on the organization for collaboration with banks / FinTechs (governance, innovation function, relationships and decision-making)
  • Identification and selection of FinTechs for specific needs
  • Assessment and due diligence on banks / FinTechs, incl. business, financials, legal, technology, data security, etc.
  • Privacy and data protection arrangements, as well as professional secrecy aspects
  • Cloud solutions and outsourcing filings and agreements
  • Collaboration agreements and beyond (taking of participations / investments / joint ventures)
  • Other regulatory aspects  

For any questions, please contact our experts listed below.


Denis Costermans

Lead Advisor

Business Advisory, Strategy, Innovation & Sustainability, Planning, Operations & Performance

Marc Mouton


Banking & Financial Services


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