Small but mighty: The secret to Luxembourg’s fintech success

Luxembourg’s fintech ecosystem has evolved “fantastically well” over the last decade, says Nasir Zubairi, former CEO of the Luxembourg House of Financial Technology (LHoFT). “Over the past 10 years, we’ve created a new industry for Luxembourg.”

The country’s fintech map today is dominated by B2B activities, with regtech, fundtech and tokenisation companies in Luxembourg providing a bevy of innovative solutions to financial institutions. Fintech firms address challenges related to back-office, regulatory compliance, onboarding, and anti-money laundering and know-your-client (AML/KYC) requirements.

These problems are not limited to Luxembourg. “The cost of compliance for financial institutions in Europe has risen significantly since the financial crisis,” Mr Zubairi points out. A survey conducted by EY and the Luxembourg Bankers’ Association (ABBL) among Luxembourg’s banking sector and published last December found that regulatory investment costs accounted for a staggering 41% of total investment expenditures, making regtechs increasingly important.

We set forth to build a sector where you combine the advantages you get with technology companies with the challenges that financial institutions have. And that’s what happened.
Nasir Zubari

But Luxembourg is also the “clear market leader” in the EU when it comes to the payments vertical. PayPal set up its European headquarters in Luxembourg in 2007, and the Grand Duchy continues to attract players in the sector. One of the most recent is the Indian payments solution provider Paytm, which in January 2026 set up a subsidiary in Luxembourg. Mr Zubairi stepped down from the LHoFT this year to take up the position of CEO of Paytm Europe Luxembourg.

Luxembourg has focused on its comparative advantages, how it wanted to position fintech and the opportunities in the Grand Duchy, explains Mr Zubairi. “We set forth to build a sector where you combine the advantages you get with technology companies with the challenges that financial institutions have to create an overarching, strong and robust finance sector that is ready for the future. And that’s what happened.”

Proximity, language, cooperation

“One of the core strengths of Luxembourg is the proximity of the ecosystem and the access to decision-makers in the traditional finance sector,” says Mr Zubairi. “Added to that is our fluency in English across all sectors and the entire value chain of financial services.”

Being able to interact with the regulator in English, he adds, as well as the international competencies of financial sector support services like lawyers, are key. The possibility to discuss legal texts and submit contracts in English is a major draw for international businesses looking to expand into Europe.

One of the core strengths of Luxembourg is the proximity of the ecosystem and the access to decision-makers in the traditional finance sector.
Nasir Zubari

An “element of cooperation” has also been critical for Luxembourg’s success, says Mr Zubairi. “We can put people around a table, who may be competitors in some ways, but who can work together to come up with ideas, solutions and overcome challenges.”

What Luxembourg offers

The LHoFT itself is another key argument to bring fintechs to Luxembourg. Its physical facility, which provides a “home away from home” for fintech companies that are getting started, also offers people the opportunity to meet a community with similar interests. It facilitates access to customers, connectivity to capital, links to the media and its networks in other countries.

We’re the best place in the EU, I believe, and I’ve lived in and seen plenty of places.
Nasir Zubari

Finally, Luxembourg’s financial regulator, the Financial Sector Supervisory Commission, is what Mr Zubairi describes as the “cherry on the cake.” The CSSF’s “consultative” nature is viewed positively by financial firms, with the regulator maintaining high standards and commanding respect on the global stage. To promote dialogue with the market, its Innovation Hub allows anybody who wants to present an innovative project or discuss challenges related to financial innovation in Luxembourg to get in touch. 

Looking ahead, Mr Zubairi expects Luxembourg’s fintech ecosystem to “continue to thrive and grow. We’re the best place in the EU, I believe, and I’ve lived in and seen plenty of places. We’re nurturing, we’re supportive and the opportunities here are huge. I can only imagine it’s going to go from strength to strength.”

Photo credits: LHoFT

This article was originally published in Crossroads Magazine no. 9. Read the full edition below: