Danish Dynamite

For small countries like Denmark and Luxembourg it is only natural to look beyond their national borders. By promoting highly sophisticated financial products and their underlying ICT solutions, Denmark and Luxembourg have been able to attract many internationally operating companies. During a conference at the Public Research Centre Henri Tudor in Luxembourg, experts from both countries expressed their desire to help this trend continue. Louise Bang Jespersen, the Danish Ambassador to the Grand Duchy of Luxembourg was enthusiastic about this cooperation. She looked forward to developing business contacts between the two countries.

Nowadays, money moves from one end of the globe to the other at the click of a button. Banks’ clients and investors are located all over the world. The financial sector would not exist without information and communication technologies. Just imagine a globalised world, where in order to settle a trade, parties would still have to physically move paper instruments or certificates across the globe.

Ernst-Wilhelm Contzen is CEO of Deutsche Bank Luxembourg and chairman of the ABBL, Luxembourg’s Bankers’ Association. In his speech he emphasised that financial innovation has reduced costs for banks and their clients, particularly the cost of credit and transactions.

“Nevertheless, there is room for improvement, particularly when it comes to collaborating with other sectors to innovate.Besides the fact that the financial sector does not have a real innovation culture compared to other sectors, it also has little experience when it comes to cross-industry projects and cooperation. This needs to change”, he said.

Mr Contzen confirms both the European Commission and the European Central Bank’s view that the financial sector is not being innovative enough.He recommends that his criticism be taken as motivation to spur innovation within the sector. In a way, financial institutions have little choice with regard to trends that are observed. “Banks need to defend their market share in an increasingly crowded sector, they need to gain new market shares and, above all, they must find new revenue sources. In both cases, banks will find that they need to cooperate with non-banks to succeed”. 

Very similar but not the same

Copenhagen and Luxembourg follow similar objectives. Both Denmark and Luxembourg want to turn their respective capitals into competitive hubs on a global scale. In Denmark, 25% of IT workers are employed in the financial sector; in the finance and business services, IT accounted for 28% of the economic growth in Denmark.

A similar economic pattern is true for Luxembourg. But Ernst-Wilhelm Contzen makes a distinction in terms of innovation. “Although Luxembourg has not yet created a Luxembourg Finance IT Region initiative like Denmark, things are moving in the right direction. A good example is the Luxembourg ICT Cluster, a network that supports the various actors in the field of information and communication technologies in Luxembourg”. The goal is to create and develop new sustainable business opportunities through collaborative R&D and innovation projects.

During the Denmark-Luxembourg conference, several business specialists and academics spoke about opportunities both countries have seized to increase business. Carsten Mahler is CEO of the Copenhagen-based company FundConnect, which distributes fund data to the markets and customers. 

Big players from small countries

Seven years ago, FundConnect started working with Finesti, a subsidiary of the Luxembourg Stock Exchange. This cooperation makes sense: Luxembourg, as the second largest fund centre in the world, relies heavily on sophisticated IT services for the daily management and distribution of an enormous amount of investment fund data the country distributes across the globe.

Carsten Mahler explains the reasons his company works with Finesti: “We have to receive data, make sure that it is published on the Stock Exchange within split seconds, making sure data is flowing. It is pretty challenging to reach the critical mass. How to promote and market yourself, these are two of our main challenges, which is why we have decided to cooperate with Finesti”.

Data availability is a central concern of the mutual fund industry and its customers. This is increasingly relevant as fund groups face more stringent disclosure requirements from regulators, fund supermarkets, and multi-distribution sales channels. What’s more, increasing cross-border sales have greatly increased the importance of having complete and accessible information on the Internet.

There are 6000 funds in Europe. It is very difficult for consumers to choose a fund. That is why it is important to use a classification system. FundConnect, in collaboration with Finesti, serves as Classification Partner for the European Fund Classification Forum (EFCF) fund classification scheme. The partnership is responsible for collecting portfolio data, processing and generating the results of the classification. CW

Source : Luxembourg for finance http://www.lff.lu/