Luxembourg’s retail banks respond to increasingly diverse customer expectations

Customers more connected, more demanding, and seeking trust

“Today’s customers are more digital, more demanding, but also more attached to proximity and security,” said Mehdi Mekhneche, Country Manager of SIA Luxembourg. “Their expectations of their banker are directly shaped by their experiences as customers in other sectors.”

Security, personalisation through AI, and simplified all-in-one journeys are among the main priorities. In Luxembourg’s multilingual and cross-border context, banks must combine compliance and seamless customer experience through trusted infrastructures such as LuxTrust.

Luxembourg ranks 9th worldwide in digital banking maturity, confirming its high level of adaptation to customers’ needs.

A unique banking model in Luxembourg

“The retail banking profession in Luxembourg is unlike that in neighbouring countries,” added Mehdi Mekhneche. “The Luxembourg market is distinguished by its cross-border, multilingual and fiscally complex context, which demands adapted customer journeys.” With over half of residents of foreign origin, the Luxembourg banker must understand diverse financial cultures and multi-jurisdictional situations.

“To meet expectations, the Luxembourg banker must combine the best of the banking experiences their clients have had elsewhere,” he said.

Account openings: balancing compliance and efficiency

“Luxembourg banks want to open accounts—and always have,” emphasised Laurent Zahles, Vice-Chair of the ABBL RBCL, countering misconceptions. Retail deposits and loans remain stable at EUR 84.1 billion.

The sector acknowledges certain challenges in opening corporate accounts, particularly linked to AML/CTF rules and complex structures. To help businesses and nonprofits, the ABBL, together with the CSSF, has published practical guides now available on the ABBL website.

Areas for progress include digitalisation, shared KYC services, and interoperability with public data.

Prevent, protect, cooperate: the pillars of cybersecurity

Facing a surge in cyberattacks and increasingly sophisticated fraud attempts, the ABBL is strengthening its cybersecurity and anti-fraud coordination through its Trust and Cybersecurity Expert Group, in collaboration with the CSSF, the Luxembourg House of Cybersecurity and ICT Luxembourg.

“Criminals generally fail to penetrate banks’ systems,” said Zahles. “They instead target the weakest link — humans — by tricking customers into revealing credentials or performing operations.”

Together with the ABBL Foundation and 14 institutional partners, the ABBL launched Luxembourg’s first national awareness campaign against online fraud.

“Combating online fraud cannot be the sole responsibility of banks. It requires a collective effort,” Zahles stressed.

From instant payments to a seamless customer experience

The rollout of instant payments and Verification of Payee (VoP) on 9 October marked another milestone for the sector.

“ABBL members were ready despite technical challenges and tight deadlines,” said Zahles. “Verification of Payee improves security, but it’s not foolproof. Users must remain vigilant and follow good practices.”

Meanwhile, Luxembourg maintains excellent coverage with 58 ATMs and 26 branches per 100,000 inhabitants. According to Claude Hirtzig, Chair of the RBCL, “Customers visit branches less often — 2.4 times a year in 2024 compared to 3.1 in 2019 — but for higher-value services.” 73% of residents now come for advice, while cash withdrawals continue to decline (-15% in 2024).

Housing market: banks reaffirm their role as part of the solution

“Banks have always wanted to lend—and they are certainly part of the solution to the housing crisis,” said Zahles.

Following the ECB rate hikes in 2022, lending slowed but has since recovered: 9,936 mortgage loans were granted for Luxembourg properties in the first half of 2025 (+39.9% year-on-year), for a total of EUR 4.75 billion (+34.1%).

Savings and investments: fuelling Europe’s transition

Savings remain at the heart of Europe’s financing capacity. “Around 80% of corporate financing in Europe comes from bank loans, but that won’t be enough to cover the EUR 1 trillion needed annually for the green, digital and security transitions,” explained Hirtzig.

“We need to guide citizens from passive savers to responsible investors,” he added, underlining the importance of financial education and the role of the ABBL Foundation for Financial Education.