WHY WE CHOSE LUXEMBOURG Toshihiko Otsuka, CEO, Rakuten Europe Bank

In January, Japan's Rakuten Europe Bank launched its new banking activities in Luxembourg. The e-commerce conglomerate and online financial services giant has joined the growing ranks of international groups that have chosen Luxembourg as the European hub for their banking operations.

"Our first footprint was back in 2008 when we incorporated our first company, Rakuten Europe in Luxembourg. Through this entity we started to acquire businesses in the area of e-commerce and decided that it would be more efficient to centralise our payment services," explains Toshihiko Otsuka, CEO, Rakuten Europe Bank.

Rakuten Europe was awarded a payment institution license in 2014, joining the likes of Amazon, PayPal, eBay, and many other international tech leaders accessing European markets via Luxembourg in the e-commerce and e-payments space. "Luxembourg has a very rich FinTech community which helps us a lot," Otsuka adds.

"The financial regulator, the CSSF was very supportive to us, very open minded and business friendly. The government also supported us a lot, so given FinTech is one of our main fields of business, it was a very natural move to upgrade our payments license to a full banking license so that we can provide our banking services to European nations as a whole."


Rakuten set about looking for larger premises in the city to accommodate its growing staff, many of whom travel across the border to work each day from Germany, France and Belgium. The company was also able to benefit from Luxembourg´s best-in-class ICT infrastructure, offering some of the most modern data centre parks in Europe.

"All the infrastructure in Luxembourg including the transportation is brilliant, and it makes it easy to manage a pan-European business here. We are renting two floors of office space, just in the middle of the centre of the city and that was not difficult to find " adds Otsuka who was an original member of Rakuten Bank, one of the first on-line Banks in Japan in 2001.

" Not only is Luxembourg in the heart of Europe but also what I like is the diversity within the community. We have 19 nationalities out of 50 staff, with a lot of expertise in their respective areas, so it's a fantastic place to recruit various professionals. So, when it comes to our business case in Germany, we can leverage our German resources for that, when it comes to Spain, we can use our Spanish resources, so the internationality makes us very flexible."


Setting up a bank in Luxembourg offers many advantages. The banking license application process is relatively straightforward, and regular interactions with the financial regulator are encouraged throughout the process. The license enables the bank to enter the EU single market centrally from Luxembourg thanks to the ‘passport' and the ‘free provision of services' regulations.

"The passporting of the license is relatively straightforward while having cross-border regulatory arrangements is not always easy. However the regulator is always open for discussion which is amazing to me. We have a very interactive dialogue - even when we propose something very new, they don't push it back. Rather, they look into it and start to discuss how to make things happen rather than rejecting it. The attitude is very positive, and that is helping us to expand our services."


Initially focusing on providing payment, deposit and loan services for merchants on the PriceMinister e-commerce platform in France, Rakuten Europe Bank plans to expand these services. It will act as the banking platform for the businesses that make up Rakuten's growing ecosystem in Europe, as well as offer banking services to new and high-growth FinTech businesses across the region.

"We are testing the waters with France right now, with what kinds of services would be accepted or welcomed. Right now we are limiting our offer and services to that market, but going forward it can be extended to other countries, and also non-Rakuten merchants or SMEs, FinTech companies, and retail customers, so we are gradually trying to push our strategies forward."


With its vibrant ecosystem of financial institutions, technology companies, R&D centres, and a highly diversified and specialised economy, Luxembourg is a key FinTech hub in Europe. Otsuka hopes Rakuten can benefit from this dynamic, viewing FinTech companies less as upstart rivals and more as innovative, disruptive businesses from which they can learn, and partner.

"I have met a lot of FinTech entrepreneurs since I moved here two and a half years ago, and identified a lot of FinTech companies who are struggling to get basic banking services, so I think they are underserved. We want to partner and collaborate with them and have several projects in the pipeline," says Otsuka who has now moved his family to make their home in Luxembourg.

"I love the challenge of setting up a new bank because I can leverage my experience here in Europe. I also enjoy the culture and European atmosphere here in Luxembourg. Everything is perfect", he concludes with a smile.


Mike Zenari

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