29 Oct Interview with Urs Monstein, CEO, VP Bank, Liechtenstein
What factors have allowed Liechtenstein to develop such a robust financial services sector?
Liechtenstein’s financial sector has its roots in fiduciary law, initially designed to help high-net-worth individuals structure their wealth for succession planning. This foundation has attracted many fiduciary companies, all of which require banking support. Over the years, Liechtenstein has evolved through various stages and now prides itself on being a stable financial center with a triple-A rating. A key success factor for the country is its focus on transparency and compliance. Liechtenstein’s unique geographic position is also a strength; the country is part of the Swiss economic zone with the Swiss franc and the European Economic Area. This dual alignment offers a competitive advantage and access to European markets. As a small nation, Liechtenstein is agile and can quickly adapt to changing environments, a benefit highly leveraged by the financial sector. For example, when blockchain technology emerged, Liechtenstein became the first country to establish a regulatory framework for tokenizing assets and providing a compliant structure for managing tokens. Unlike other countries that faced or are still facing lengthy parliamentary discussions, Liechtenstein was able to quickly implement regulations.
What targets has the local financial sector achieved in its digital transformation?
Digitization has long been essential in banking, initially used to boost transactional efficiency. Today, digital transformation is about enhancing the client experience, with a focus on seamless and client-centered journeys across all systems. For example, mobile banking is a vital channel, but just one of many touchpoints in a comprehensive digital strategy. Liechtenstein is pioneering tokenization thanks to progressive regulation. Through different initiatives supported by the Liechtenstein Bankers Association with Simon Tribelhorn, the financial sector in Liechtenstein aims to use advanced technology to remain competitive and forward-looking.
How is Liechtenstein a frontrunner in sustainable finance?
Liechtenstein has deep agricultural roots; sustainability is integral to our identity. The country embraced sustainable finance well before supranational regulations mandated it, with initiatives that genuinely promote green practices rather than just talking about them. Today, strict regulations make this path essential. With strong public support, sustainability is now a fundamental expectation for any bank wishing to thrive.
How open are Liechtenstein’s banks to furthering global participation?
Liechtenstein relies on partnerships with foreign entities in areas where it excels while avoiding ventures that do not align with its strengths. As a small country, it cannot engage in all markets. For example, most Liechtenstein banks, including VP Bank, do not hold a US banking license and do not generally service US-domiciled clients due to the complexity of the market. However, the financial sector has established strong partnerships in Asia over the past 20-30 years that are evolving alongside regulatory developments. We see valuable potential for future international collaborations in this area.
What steps does the local financial services sector need to take to stay relevant?
If Liechtenstein’s financial sector does not thrive, neither will we. However, I am confident that the sector will continue to play a key role thanks to unique laws that provide both flexibility and certainty. The financial sector must become more client-oriented. We are a service business committed to benefiting our clients. As a systemically relevant bank, my vision is to remain integral to Liechtenstein’s economy by being truly client-focused — not looking inward but always aligning with our clients’ needs and goals. In a fast-changing world with shifting regulations, geopolitical factors and evolving client mindsets, we must recognize that what worked yesterday may not tomorrow.