From The World Of Luxembourg Banking: Five Ways To Improve Your Efficiency

We've recently been around the banking industry in Luxembourg collecting and compiling the latest edition of Banking Insights ( available here). In the process we gleaned five ways to improve efficiency—here's what Luxembourg's bankers have been talking about:

1. Straight-through processing

   Three decades ago, sales traders had to fill in colour-coded tickets (blue for buy, red for sell) and pass them to runners who had to decipher the quickly-scribbled orders and put them into the system. Imagine how straight-through processing, the digitalisation of that error-prone system, changed the way capital market and payment transactions happened.

   Believe it or not, companies nowadays are still trolling their service processes and looking for places where automation could save time and human effort. It's been estimated that more than 50% of a bank's costs relate to staffing, and a significant part of that goes to people-processed customer transactions. Using a digital bridge to connect customer to result, or information from point A to point B, is one of the main places to gain space over your competition. It's not a nice-to-have... it's a need-to-survive.

2. Simplify... or outsource

   Many financial institutions today are the younger incarnations of companies who, at one time or another, opted for a one-stop-shop model. Over time, some have built up large and complicated structures, and we're witnessing many of them now trying to simplify things in order to remain agile. Products and services, legal and operating structures, operating platforms and systems, booking models—they can all become extremely complex, which can bog down a company.

   We're furthermore seeing a general shift towards hyper-specialisation, especially with FinTech on the rise and the pace of change having to be quick. Why waste time and effort on an internal solution when there's a small company out there who does that one particular job to perfection? Many banks are still stepping gingerly around FinTechs, a little wary as to whether they're friends or foes. "[Banks] don't realise that most FinTech solutions are going to help them by making their jobs easier, not make them obsolete," says Bert Boerman of Governance.io, recent winner of FinTech Startup of the Year in Luxembourg.

   Mr Boerman says that even his company realised that another FinTech called FundRecs was providing a great solution for high-frequency reconciliation so he decided to team up with them. "It becomes like an...