FinTalks: Tokenisation, AI and the Future of Finance: Insights from Luxembourg with Nasir Zubairi, CEO of the LHoFT

Nasir Zubairi, CEO of the Luxembourg House of Financial Technology, joins IT Insights to talk about what makes Luxembourg a standout hub for fintech innovation. He explains how collaboration, regulation, and talent come together to create one of Europe’s most trusted environments for financial technology growth.

Anna Samborowska: Hello and welcome to the next episode of IT Insights. Today we are in Luxembourg, which is especially close to my heart since the headquarter of Future Processing Group is located here. But Luxembourg, first and foremost, is a global capital for investment funds. That’s why today our guest is Nasir Zubairi, the CEO of Luxembourg House of Financial Technology. Hello Nasir. 

Nasir Zubairi: Hi, how are you? 

Anna Samborowska: What is your perspective on the current state of finance in Luxembourg? How do you perceive the way it’s going, taking into account LHoFT perspective? 

Nasir Zubairi: Okay, well, finance as a whole continues to grow and expand. It is the core industry of Luxembourg. Um, as you mentioned, it is the second largest fund center in the world after the US, with around 7 trillion in assets under management, which is really quite amazing when you consider this is a country of 650,000 people. 

Now, you know, there are always rumors that circulate as to what goes on here, but the simple fact is we have a dedicated and strong regulator, um, that is, you know, incredibly consultative and open and works very closely with the industry to ensure that all rules and regulations are followed. 

We have around 80,000 people that work in the finance sector in Luxembourg. And we need to also remember that a lot of the support industries around that are fueled by financial services: the lawyers, the advisory firms, arguably a lot of the restaurants and bakeries and shops as well. This often plays out in some of the figures that you see about Luxembourg that are slightly obscured by the fact that so many people commute into Luxembourg every day for work. 200,000 people commute into Luxembourg from France, from Belgium, and from Germany every day. And that drives the fact that, you know, it shows that we have the highest income per capita in the world. It also plays out that we have the highest, um, alcohol levels or drinking levels in the world and most number of cars per person in the world. But we need to factor in that the population swells by a third every single day. 

You know, finance… this country built a financial industry sort of from the 1960s, 1970s onwards, and it just continues to grow. And the latest adaptations and the evolutions of that are obviously coming predominantly from the… in the world of financial technology and the adoption of technology. And 10 years ago, the government here, in particular the Finance Minister, felt that something much more, I guess, actionable needed to [be] put in place to help develop that system of Fintech and that industry of Fintech within Luxembourg to support the traditional industry. And that’s where the Luxembourg House of Financial Technology was born. 

I think at that time you could probably count on two hands the number of Fintech companies that resided in Luxembourg. I think today we have close to 280 firms that call Luxembourg either their European headquarters or their full headquarters. We have huge companies. This is the home to PayPal for Europe, for Amazon Payments, for Alipay, for Rakuten, for Airbnb Payments, eBay Payments. We have the likes of fantastic tokenization firms, and the sector just continues to grow. 

But it is… what’s interesting about the sector, it plays to the strengths of the competitive advantage Luxembourg has. Because Luxembourg is a small country, the accessibility to institutions, to key decision makers is relatively straightforward compared to other financial centers. So what that has enabled is a large and highly competitive and strong B2B sector to develop here—outside of payments which kind of sits on its own. And you see a lot of firms here that focus on the challenges that institutions are facing all across Europe, in particular saving money around compliance and costs. So a lot of RegTech firms, a lot of FundTech firms. 

And increasingly now we’re seeing a huge drive in tokenization. Luxembourg has been very agile in implementing a number of legislation that have essentially made it the capital in Europe for tokenization of securities. So a lot of the large security tokenizations by the World Bank, by the IMF, by the European Investment Bank have been conducted in Luxembourg for their bond issuances. Luxembourg also itself just recently issued the first digital certificate fully distributed on the blockchain as well. So there’s a lot of progress. And now obviously with the development of AI, Luxembourg is putting a big push into creating the framework to help AI develop openly in the way that it can assist the financial center even more going forward. 

Anna Samborowska: Nasir, you mentioned regulations. So, um, I perceive LHoFT as a knowledge exchange hub, the ecosystem in which all these companies can work together. My experience is that all in finance in Europe regarding regulations, especially in regard to security and payments… last year those DORA, SOC 2, now banks are all talking about the implementation of the cross-border payments regulation. What do you see as a major trend for 2026 and 7? Which regulation will be the one that will rule them all? 

Nasir Zubairi: Oh, which one alone? That’s a difficult one because there’s so many, right? There are so many. I mean, if we break it down, continuing on the theme of payments, we have the Instant Payment Directive, we have the discussions that are ongoing around PSD3 and PSR. You have the implementation of FIDA coming up as well, Open Banking, which I hope will further strengthen the sector as a whole. Then you have ISO 20022 in terms of data exchange and messaging between institutions. So, I mean, there’s a lot there. There’s a lot there. 

Continuing still on the sort of technology and cybersecurity side, DORA will continue to be a key focus area. Uh, then you have the Cyber Resilience Act, then you have NIS2 as well. Um, all of which will, you know, present challenges but also opportunities for institutions and for Fintechs as well. 

Obviously in AI, you have the EU AI Act, which is going to gradually come into force, which we need to understand the framework within which Europe as a whole can continue to innovate in a world which is clearly going to make huge strides forwards and create significant change and disruption to every industry. 

And, uh, what other things are… I mean, there’s so much M&A and adaptations to M&A, stablecoin regulation, CBDC coming. I mean, there’s so much going on. It makes… it’s a challenge for traditional finance, but that in itself offers opportunities for service providers and Fintech firms. So I mean everyone has to work together to continue to ensure that we have a robust financial services sector. 

The problem that we’re facing now across Europe—and we’re seeing this in the UK, Luxembourg, and other jurisdictions—is the viability of banking, right? I mean, banks, we can’t forget, are commercial businesses and they need to act as commercial businesses. They’re not there as state-run enterprises. But when these costs keep spiraling upwards and upwards, you know, they’re getting to breaking point. The only solution is technology. The only solution. So we are going to see continued transformation of the finance sector. I think AI fundamentally is going to, you know, really spur huge change in the course of the next three to five years, but all within the scope of these regulations. 

Anna Samborowska: Didn’t used to be like this. 

Nasir Zubairi: It did… Oh, it didn’t used to be like this. I mean, I’ve worked in finance and specifically within the banking sector for 30 years now. And pre-financial crisis, okay, things weren’t perfect, but, um, you know, business was driven by business, not by compliance. And now, you know, business strategy is all about conforming to compliance and regulation. And it shouldn’t really be like that. I fully appreciate and understand that we need to protect consumers, we need to protect customers, institutions, corporates. But there’s a level to which it makes sense. You know, that there has to be a level of proportionality that makes sense. 

It’s just gone a little overboard. And I think, as a lot of the talk at the EU is going on, we need to start looking at: have we gone a bit too far? And be much more conscious of the competitiveness of the sector and the realities of what could go wrong. You know, no matter what rules and regulations are in place, history has shown that there will always be something that could happen. But we can’t then, for an outlier or particular case, change all the rules that constrain and restrict and add burden to not just institutions but also to customers. I mean, opening a bank account anywhere in the EU today is a pain. It’s overboard, right? We all want to ensure against, you know, terrorist financing, anti-money laundering procedures, but there’s a level to which it makes sense and there’s things which could be done to make it better, not just from a rules perspective but from a technology perspective. 

Anna Samborowska: What you just said reminds me of the conversation that I had, you know, a few months back with Gartner. And I remember the researcher that I had the discussion with said that when it comes to investing and budgeting within the banking sector in general, all the money goes to compliance and regulations and there is only [a] small chunk left for research and development projects. So yes, this is actually what we also observe in general. And regarding banking, Fintechs companies and startups, you do have in LHoFT this network of all these companies working together, from small ones to very big ones. How do you navigate, how do you combine them together so that they can thrive here in Luxembourg? 

Nasir Zubairi: I think one key element first and foremost is that, you know, we do act as a central hub. Even if firms are not resident in our incubator here—I mean, right now we have around 80, 85 firms that reside in our facility—um, you know, we act as a central meeting point for the entire ecosystem. So even those firms that are larger have their own offices, inadvertently end up at some point in the LHoFT. And be it to attend events, for training sessions, for networking, to use our facilities to meet with their customers, institutions, or for partnerships. So a key element of what we focused on over the past nine years since the inception of the LHoFT is this curation of an ecosystem. 

Now the ecosystem has many, many parts to it. Um, obviously there are the technology companies, but we also put a huge emphasis on their potential customers. Which, as I say in Luxembourg’s case, we’ve looked to strategically focus on this B2B and this combination of traditional finance and Fintech. So as we have today, for example, downstairs we have the CEO and his executive team of Franklin Templeton Investment Managers, um, who are here talking to a group of financial technology companies. And afterwards over coffees, teas, they’ll chat with each other and maybe something interesting will happen. So it’s about facilitating connections. 

We have [a] variety of events where, you know, be it also with venture capitalists, with advisory firms, with legal firms, with government, really trying to bring everyone together so that discussions and dialogues can happen, people get to know each other, and hopefully drive some value creation out of that. Um, we get very much involved with not just doing that in Luxembourg but also internationally. We take large delegations with us to, you know, big conferences and events around the world. 

So our job is about curation and introductions, facilitation, making sure people are engaging with the right stakeholders to create value. We can’t do it for them. They are their businesses. Where we tell them very clearly, for the Fintech in particular, we’re not your sales team, but we can amplify your message. We can amplify your access. We can amplify your press, your marketing, so that, you know, people are aware and you get in front of the right people. But at the same time, we’re helping those other people because, as I say, by nurturing and working closely with the traditional finance sector, we know what their problems, challenges and opportunities are so that we can facilitate the right introductions to the right set of solution providers from the Fintech community. 

So this is all about people at the end of the day. The network, it’s still all about people. I mean, people run businesses. Um, people run traditional finance and they’re still the decision makers. So it’s still about introductions B2B, where the B is B-to-Bank or B-to-Financial Institution. Um, it’s not something that you, you know, go browsing on the internet and click to buy, right? Given also because of the regulatory framework around that, DORA etc., there’s procurement processes that need to occur. So you’re always dealing with people. So we’re always trying to help facilitate and simplify those connections as much as possible so that everyone can thrive. Uh, people [in] traditional finance can find the solutions they need and the Fintech firms can find the customers that they’re trying to access. 

Anna Samborowska: That’s true. Um, in regard to artificial intelligence… oh yes, you mentioned that while discussing trends for the next two years. Um, two weeks ago there was a World Finance Forum in London and my biggest output from this event was that after three years of listening to all the technology companies that AI will reduce operational costs, AI will accelerate their business, that AI will do this and that, um, I have the impression that finance is ready to put real money on the table, at least in London. What is your view on this matter? 

Nasir Zubairi: I hope that’s the case. They need to. Um, the question is whether they’ll do it in the right way. Um, we’re generally not seeing, um, massive traction yet with AI tools in finance, be it in Luxembourg or elsewhere. Those projects that have been attempted have not really been fantastically successful thus far on a large scale. 

The irony I find is… and the question is, is timing right now? So, you know, I… my last, I guess, proper job in finance, I ran the… I was a Director of High Frequency Trading at a bank in London. I ran a huge trading desk, um, all trading in the markets with machine learning models. There was… I worked in a world of, you know, high-level quants experts, or in today’s terms that they would be called data scientists. At that time we’d call them quants. Um, and you know, high frequency trading and algorithmic trading have existed in finance now for 20-plus years. You know, most of the liquidity on the key exchanges in the world is fueled by quantitative models which rely on machine learning and AI algorithms. So AI is not something new to financial services. 

The problem is a lot of that talent’s been sucked out of finance. Right? You know, 20, 30 years ago when I left university, every single person that I knew at university—I’d say actually predominantly the guys, maybe some of the, uh, ladies and women that were our friends probably did other things—but the guys 100% went into finance, right? It was the sexy sector. It was the sector to be employed in. That’s no longer the case. Finance does not get the best talent in the world anymore. The best talent goes to the Big Techs. 

And the problem is that’s on the business side, and very definitely so on the technology side. I mean, banks can’t even contemplate the scale of salaries and rewards that are firstly required by a… even a junior data scientist. A good quality junior data scientist will be picked up by, you know, Google, by OpenAI or whatever, and they’re getting paid nearly half a million dollars. Right? That’s far beyond anything that, you know, the banks are going to be willing to offer to anyone here. Um, but then again, the bigger question is, would a good data scientist want to work in a bank given all the rules, restrictions, you know, that compliance and regulation has put around it and the culture these days within the financial center? 

So my… my small check on this is: does financial services have access to the talent to help them build the AI tools that they really need to implement? Because it is going to change the game. I mean, AI will come into finance, but it might not necessarily come through traditional finance. It will probably come from the Fintech sector. Because you’re more likely to get a group of hardcore data scientists wanting to create something on their own in an environment and a culture that they enjoy, that they can mold and own, then go and work in a financial institution. Right? 

So we are going to have to rely on third-party, uh, solutions probably in financial services. And with that comes then procurement time frames, DORA regulations, compliance checks etc. So nothing can be done quickly. 

The other flip side of this is the full awareness of financial institutions, in particular executive level, the capabilities of AI and the… the sort of methodology to effectively implement AI tools. This isn’t a standardized waterfall methodology for a project timeline, you know, where you start with, uh, you know, um, an NPAP in a bank—a New Product Approval Process—a document, a business case: “Here’s my return on investment. Okay, we’ll do it or we won’t do it.” Doesn’t work like that. Half of the value that could be created with AI is probably unknown. 

I think one sort of approach that needs to be considered by financial institutions is: look at a return on investment in a programmatic way. So rather than looking at individual projects with AI, you have to look at an AI program as a whole which has a number of project streams within it. And that… that whole group of that program in its entirety needs to deliver a return on investment. Now at that benchmark level, whatever that’s set at, you probably then start getting a bigger wiggle room where you can allow developers to play with AI and experiment, which is key so that they can figure out new things—like setting loose an AI on your email system to see what it can figure out, where it can extract value, what are some of the things it can get out of that, or on your databases, you know. So, you know, you got to allow AI to… people to play with it a little. 

The other thing I see often in conversations is that the case studies or use cases that, um, a lot of executives come up with are fairly rudimentary and obvious ones. “Oh, we’ll use AI in KYC, AML, we’ll use AI for fraud detection,” etc. Fantastic. But they’re not thinking in the broader scope of things. Um, you know, the banks, yes, uh, have their core, uh, business functions, but those business functions are supported by ancillary departments and services. You know, you can’t run a bank without a HR team, without a marketing team, without an operations team, without a IT support team, uh, set of developers. And the value add that, you know, AI can bring into those areas and reduce cost, simplify, create more efficiency is also very, very high. 

Um, I mean, my belief is fundamental that… you know, I’ve been asked over the years many times: where do you see financial services in 5 years time? And very often I give the answer: it will look exactly the same as it does today. And I think generally I’ve been actually quite right. It’s not that different from 10, 15 years ago. Yeah, financial institutions have slightly nicer apps, but even the apps aren’t that great anymore. And we have some new entrants, you know, the likes of Revolut and some of the neobanks, but overall it’s pretty much exactly the same. If anything it’s gotten worse. You know, customer onboarding for bank accounts or any financial service is horrendous. 

Um, engagement with financial institutions is not the easiest. Uh, the other day… last year I… it took me… I was dealing with the maturity of my son. My son turned 18. We had a set up a small trust fund for him from when he was born, which matured when he was 18 to help pay for his university fees. Now that was based with a very, very large fund manager in the UK. When that matured, the first thing we received was a bunch of papers and forms to fill in. I just find all of this just unbelievable in this day and age. You know, we live in 2025. You know, it’s like sometimes I think, you know, [the] banking system works like it’s in the 1980s. 

So there’s huge opportunities for improvement. And part of what we’re going to do ourselves here at the LHoFT to help spur that forward is that we are creating an AI Experience Center upstairs in our building here. So we’re dedicating about 250 square meters of space. Um, we’re sectioning it into various sections: a section focused on wealth, a section focused on ESG, etc. to demonstrate some of the applications and tools that are available to financial institutions that can really help push them forward. Um, but to try and do that also in an engaging way. Also looking at it from the perspective of the customer, but and also internally from the business perspective. It’s not just going to be a bunch of screens, um, with code flying backwards and forwards. Um, we’ll have some funky gizmos around, you know, uh, the… the… you know, how easy fraud is, you know, with facial recognition technology, be the ability to how easy create deep fakes, how to use, um, humanized chatbots to in customer support. So we hope that that will inspire a lot of financial institutions to do more with AI. 

Anna Samborowska: It sounds really heartwarming from the perspective of the technology company. Uh, we see that the change is real, at least from our perspective, but we do have, uh, a close contact with data scientists who are in the center of the whole, uh, thing. Nasir, thank you very much for this conversation, for the insights. And thank you very much for everyone watching us. Stay tuned, stay curious, and see you next time.