29 Oct Interview with Simon Tribelhorn, CEO, Liechtenstein Banking Association
Why has Liechtenstein been able to grow such a substantial financial services sector?
Liechtenstein is strategically positioned. It is closely linked to Switzerland through customs and currency unions while also being a member of the European Economic Area (EEA). This dual membership allows service providers in Liechtenstein — including banks, investment funds, insurance companies and asset managers — to access both the Swiss and broader European markets. For financial institutions, the EU passport associated with the single market is of the utmost importance. It enables institutions to provide financial services and products authorized in Liechtenstein to all other EEA countries without further requirements. Concurrently, Liechtenstein is required to transpose and apply all EU legal acts with EEA relevance into domestic law. This means local financial service providers are subject to the same regulatory framework as financial service providers from other EU and EEA countries.
Despite Liechtenstein’s size — home to about 40,000 inhabitants — Liechtenstein hosts 11 banks that focus primarily on cross-border private banking. The country lacks natural resources; its strength lies in its skilled workforce. Quality of service and attracting the right talent is crucially important to maintaining our competitive advantage. Our economic stability is bolstered by the Swiss franc as the local currency, which further enhances the appeal of our financial institutions. The financial sector alone contributes around 24% of our gross domestic product, making it the second-largest sector behind industry, which accounts for 42% of our gross domestic product. Liechtenstein’s financial center is as diversified as its economy; it encompasses banks, insurance firms, independent asset managers, blockchain-related services providers and fintech players.
How is Liechtenstein approaching the rapid development of new digital technologies in financial services?
We are currently undergoing a significant transformation, with sustainability and digitalization as key drivers. Our ambition is to actively embrace these changes and treat them as opportunities. Digitalization, particularly blockchain technology, is reshaping value chains. Additionally, artificial intelligence (AI) is changing the way we work. We do not fear AI, but rather see it as an enabler to focus on what truly matters. However, challenges related to operational resilience and the need for balance in AI governance remain. Liechtenstein has played a pioneering role in blockchain law, being the first country to introduce a holistic framework. The blockchain law has been a significant enabler, providing clarity and legal certainty without stifling innovation.
How important is sustainable finance to Liechtenstein’s financial services community?
Sustainable investment has always been vital to our financial sector. We have developed several roadmaps over the years, with sustainability remaining a key pillar of our 2025 strategy. We believe the financial services sector plays a crucial role in directing capital towards sustainable businesses. We see this as both a responsibility and a significant opportunity. We are privileged that our three major banks have committed to net-zero emissions and are members of the Net-Zero Banking Alliance convened by the United Nations. However, many European banks find current sustainability laws overly complex and a hindrance to their focus on business growth. Our goal is to finance the Sustainable Development Goals (SDGs), but we face an implementation and funding gap. As a banking association, we see a substantial opportunity to develop new financial instruments such as blended finance, which we believe is crucial for funding sustainable projects in the future.
What factors have allowed for the country to draw such high levels of talent to its financial services sector?
Attracting the right talent to Liechtenstein is a challenge since we lack natural resources and rely heavily on skilled individuals. Education is crucial, with institutions like the Liechtenstein Institute and the University of Liechtenstein playing vital roles. Our strategic location between Switzerland, Austria and Germany provides access to a diverse talent pool. The Rhine Valley is home to a collaborative ecosystem of innovative companies such as Hilti, Hoval and Ivoclar Vivadent. Furthermore, nearby universities such as ETH Zurich, the University of St. Gallen and the Technical University of Munich further enhance our talent network. Although attracting talent can be challenging, our location offers significant advantages. For example, LGT has a strong employment branding that it leverages successfully; this is essential for attracting skilled professionals from outside the country.
Why is Liechtenstein an attractive place for investment and businesses looking to set up headquarters?
Being a member of the EEA positions Liechtenstein as an ideal location for investors to establish businesses and access the European market. These players benefit from the passporting regime across the European single market. The Markets in Crypto-Assets Regulation further facilitates access for fintechs and service providers in the digital asset space. Liechtenstein offers a robust ecosystem, including custodians, insurance companies, trust services providers, investment funds and over 1,300 nonprofit organizations. Besides that, as a small but very integrated and stable financial center with an entrepreneurial mindset and framework, Liechtenstein is ideally suited as a testbed for innovative ideas and products. This stable environment enhances its attractiveness as a gateway to Europe.
Liechtenstein is perceived as a safe haven, which has become even more important in these times of political and economic uncertainty. We must do everything to ensure that this remains the case in the future because stability is one of our most crucial framework conditions outside of our access to the Swiss and European Union markets. We recently received three important assessment results that highlight our stability from three independent bodies. The first is from the Organisation for Economic Co-operation and Development in terms of tax compliance and tax information exchange. The second is from Moneyval or the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism in terms of upholding standards in fighting money laundering, terrorist financing and corruption. And last, but not least, is our triple-A Country rating from S&P Global. All these assessments confirm our exceptional stability and high standards of compliance in the country and its financial services sector.
How significant is the USA as an international partner for Liechtenstein and its financial services sector?
Bilateral relations between Liechtenstein and the USA are very important. While the USA may not be a target market for our members, every bank collaborates closely with major US banks. Liechtenstein is now officially a member of the International Monetary Fund. This milestone highlights Liechtenstein’s interconnectedness with the global financial industry and underscores the importance of being part of international organizations.
Can you outline Liechtenstein Banking Association’s Roadmap 2025 growth strategy?
Sustainability and digitization are the two main pillars of the Roadmap 2025 strategy. I view these two as interconnected; sustainability represents what our discerning clients want to invest in, while digitization is the tool for achieving it. Clients now expect more than high-quality services; they want us to help address environmental and social challenges. Younger clients especially want us to be part of the solution. As former member of the European Parliament Pat Cox stated, “We are the first generation inflicting irreversible harm on our environment, but potentially the last one who can prevent it.” This encapsulates society’s current expectations.
What are your top personal goals as CEO of Liechtenstein Banking Association?
My vision is to develop innovative financial tools that truly support sustainable finance and the United Nations’ SDGs. Despite our discussions on financing the SDGs, we are currently falling short and facing a significant funding gap. Financial services can play a crucial role as intermediaries by directing capital toward impactful initiatives. I aspire that our banking association will take an active stance and serve as a pioneering model in this effort. I want to return home to my kids and tell them that I am not just an administrator, but someone who helps shape the world they will live in for years to come.