In today’s landscape, business strategy and technology strategy are inseparable. Winning in the marketplace now requires investment in technology across all levels of an organization. KPMG Luxembourg, in cooperation with the Private Banking Cluster of the Luxembourg Bankers’ Association (ABBL), presents a study that examines the ongoing digitalization of Luxembourg’s banks. It focuses on organizational strategies, tools, client interactions and collaborations, particularly between universal, private banks and fintechs.
Insights on Luxembourg banks' digitalization
Our respondents in numbers
Key takeaways
- Strategy and organization
- Tools and systems
- Fintech and collaboration
- Universal vs private banks
Is digital transformation the priority for Luxembourg’s banks?
Digitalization: Progress has been made, but the work is not done
Luxembourg's banks show mixed progress in digital maturity, with more work needed to fully realize their digital potential. Only 57% of the banks surveyed prioritize digital transformation in their strategies.
Do banks have the necessary resources to achieve digital transformation?
A major gap between digital expectations and allocated resources
The digitalization of Luxembourg’s banking sector drives a growing need for specialized skills. 52% of respondents lack the right in-house skills to support their digital transformation projects. Nearly 60% of respondents allocate less than 10% of their training budget to digital and technical topics.
Limited investment in corporate digital governance and technical training, along with a shortage of skilled digital professionals in Luxembourg, may hinder the future health of concerned banks.
Only 30% of banks have a head of digital transformation or an equivalent role in their Luxembourg legal entity, while 70% do not.
If resources are limited, what about the tools and systems available?
In-house digital solutions continue to lead the way
There is a clear preference for in-house, custom-designed integrated risk management (IRM) and CRM systems tailored to specific needs, with major commercial solutions used less frequently.
To what extent is the Luxembourg banking sector interested in hyperautomation?
Adoption of hyperautomation – including robotic process automation (RPA), artificial intelligence (AI), machine learning (ML) and low-code platforms – is progressing but varies in maturity
In Luxembourg's banking sector, some banks are integrating hyperautomation technologies, while others remain in early testing phases or using them sparingly.
If investing internally isn’t the solution, are fintech collaborations always the best way forward?
Fintech is viewed as a tool for enhancing efficiency and compliance
Fintech is seen as more helpful for boosting efficiency and addressing banks’ increasingly complex compliance requirements. Banks are increasingly leveraging fintech solutions to drive digital transformation and meet the demands of tech-savvy clients. For instance, 64% of respondents see a use of Fintech collaboration for Regulatory topics. However, they still may hesitate to partner with fintechs due to several concerns.
Is there a significant gap in digital transformation between universal and private banks in Luxembourg?
A digital divide exists between universal and private banks
Generally, universal banks enjoy more decision-making power and in-house skills for major projects, while private banks face more challenges due to limited autonomy and resources.
There is an inverse correlation regarding in-house digitalization skills, with universal banks typically having enough (78%), while private banks are largely lacking (75%).
Do you have a clear understanding of your digital maturity level? Are you ahead or lagging in innovation? Do you possess the right resources and tools to drive impactful change?
If you’re looking for deeper insights into your bank's position in the Luxembourg market, our business and tech experts can offer tailored advice to support your digital transformation journey.
