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Open Banking

Open Finance

Luxembourg is a small European landlocked country. Over 200 Fintechs operate there.

99% of Luxembourgians had access to the internet in 2021. Of all Luxembourgians using the internet, 73% used the internet for online banking in 2019, which was 7% above the EU average. Luxembourg ranks 18th in the integration of digital technologies and 7th for digital public services among EU countries. 

Luxembourg falls under the PSD2 legislation and has adopted Berlin Group’s NextGenPSD2 standard. PSD2 is a European Directive that regulates electronic payment services and was implemented in all EEA countries in 2016 and went live in September 2019.

In their European Open Banking league, Yapily ranked Luxembourg 3 out of 10 due to Open Banking being a very low priority for regulators, and there is no guidance around implementation. Moving forward, Yapily suggests setting up an independent implementation body, such as OBIE (The Open Banking Implementation Entity) in the UK, to standardise technical requirements and consumer journeys. This would ensure that all industry participants are aware of the direction of the ecosystem. Any other approach would be too slow to deliver considerable benefits in a reasonable timeframe.

The EU Commission has announced its intention to adopt an Open Finance regulatory framework.

According to ABBL, which is The Luxembourg Bankers’ Association, the interoperability of payment solutions is particularly important for Luxembourg due to its geographical location and proportion of cross-border workers.

64% of banking customers in Luxembourg said they would be willing to share personal data in exchange for protection against fraudulent transactions. In addition, two out of three respondents to the Market Pulse Survey in Luxembourg indicate an openness to allow banks to analyze their personal data in detail in order to proactively propose assistance with travel choices, buying a car and a house or even starting their own business. Luxembourgian consumers are also interested in services adapted to their needs (53%), such as targeted offers or customised messages. Services should also be personalized (48%) to anticipate individual needs, for example, helping customers to analyze their spending habits in order to save money.

According to Yapily, Open Banking is a very low priority for regulators in Luxembourg, and there is no guidance around implementation.

In 2021, over 200 Fintechs operated in Luxembourg. Luxembourg has a complete financial ecosystem with the whole range of services and skills necessary to develop the industry, making it a globally recognised international financial hub.

Luxembourg ranks 6th in the human capital among EU countries in the Digital Economy and Society Index (DESI) 2022. The human capital measures digital skills, the proportion of employed people working as ICT specialists, female ICT specialists, and enterprises offering ICT training. Luxembourg has a multilingual, highly skilled and educated workforce, with 47% of the population not having Luxembourgish nationality.

The LHoFT is Luxembourg’s dedicated Fintech centre, which offers Fintech incubation, co-working and a soft-landing platform; the LHoFT also connects, engages with and creates value for the broader Fintech ecosystem, such as financial institutions, the IT industry, investors, research and academia as well as regulatory and public authorities.

Luxembourg has adopted STET and Berlin Group’s NextGenPSD2 technical standard.