We have captured in this year’s report the potential of GenAI to drive efficiency, enhance customer experience, and bolster security measures. As the banking sector grows more complex, we believe GenAI will stand out as a critical tool for optimising operations and meeting the evolving expectations of customers through personalised and predictive services. Additionally, its sophisticated algorithms can strengthen security by detecting and responding to cyber threats in real time, providing robust protection against fraud and other security breaches.
However, realising the full potential of GenAI in Luxembourg’s banking sector requires navigating a complex array of challenges. In addition to a fragmented regulatory landscape, evolving employee expectations, and the transition from legacy systems, banks must also prioritise addressing critical concerns around data protection, security, and the growing risk of malicious use by increasingly sophisticated cybercriminals. The need for upskilling employees to effectively work with GenAI also cannot be underestimated. These factors not only create opportunities for GenAI integration but also highlight the importance of robust governance frameworks to ensure that these risks are proactively managed.
To navigate these challenges, we recommend some key steps that are necessary for the GenAI adoption journey for banks in Luxembourg.
With 119 authorised banks at the end of the financial year 2023, the number of banks decreased by two.
In terms of geographical representation in the Luxembourg financial centre, German banks still make up the largest group at 12.6% despite a slight decrease, followed by Chinese banks with an 11.8% share. Luxembourg banks, Swiss banks and North American banks both register a 10.1% share.
In 2023, the balance sheet total marginally increased by EUR 5.9 billion (+0.6%). The upward trend was primarily due to the increases in loans and advances to credit institutions (EUR +31.2 billion; +9.2%) and fixed-income and variable-yield transferable securities (EUR +6.0 billion; +4.8%).
Julie Batsch
Audit Partner, Banking and Capital Markets Leader, PwC Luxembourg
Tel: +352 62133 24 67
Patrice Witz
Advisory Partner, Technology Partner and Digital Leader, PwC Luxembourg
Tel: +352 62133 35 33