France Embraces Digital Revolution
Benoit Peligry, local managing director at Lombard Odier’s Paris office, and Coralie Jaxel, private banker in charge of the initiative, discuss our partnership with France Digitale, and the opportunities and challenges facing start-ups and entrepreneurs in France.
What do you think are the major trends that currently characterise the digital revolution in France? As global competition intensifies, are there any unique characteristics of the French digital market?
The French digital industry has grown rapidly over the last three to five years. The French government has improved the operating environment and supported innovation in the fast-changing digital era. In particular, regulation and tax for the industry is moving in the right direction. In terms of innovation, France offers well-trained technical specialists and engineers needed for the industry. More recently, the country has provided high quality education to nurture technical talent. The recent election of Emmanuel Macron as our new president is probably good news for this industry, which has mainly supported him.
Spotting an opportunity, the industry in France is becoming increasingly dynamic. Total revenues of French start-ups grew by 39% between 2014 and 2015 . There have been encouraging signs of change. Interestingly, Paris is not the only tech hub in the country. There is a rapidly growing number of start-ups and entrepreneurs based in Southern France and Montours (in Brittany, in north-western France). These cities offer a lower cost of living and a great environment to foster innovation. Among the 66 holders of the French Tech pass , more than 60% of them are based out of Paris, mainly in the South of France, including Aix-en-Provence, Bordeaux, Montpellier and Toulouse. More importantly, digitalisation in France is not just led by the financial technology (‘fin-tech’) sector. There is diversified interest across the country, including companies in the ‘food tech’ and ‘health-tech’ sectors.
What are the challenges and opportunities when nurturing innovation in France? How welcoming is the country to start-ups?
France offers talent and a strong digital infrastructure. The increasing investment in France shows that it is relatively easy to find investors to fund new business. There is so much that can be done in France. Entrepreneurs and start-ups do not necessarily have to go abroad to find solutions. The problem is just a matter of communication. More specifically, I mean that innovation needs to become part of French culture. But once you build your reputation as a company, it is likely to remain solid.
Of course, the country still needs to overcome certain issues with taxes and bureaucracy. It also needs to simplify the administrative burden, in order to foster innovation and fuel economic growth in the digital age. Comparatively high taxation makes France an expensive country in which to establish a steady long-term business. The French government has progressively introduced new tax breaks and a streamlined company registration process. There is still much that could be improved to ease the path for new business. For example, French employment laws make it difficult to hire and fire employees. On one hand, this inflexibility gives protection to employees but, on the other hand, it makes it difficult for early-stage entrepreneurs and start-ups to manage their resources and talent.
Entrepreneurs and start-ups also have particular challenges when it comes to wealth structuring. They tend to focus on making their companies successful but they may lack experience in managing their wealth and establishing their long-term legacy. For example, they are often busy focusing on growing their business and may not have enough resources to expand their time horizon and think about exit strategies. As entrepreneurs build up wealth, it is important that they organise and structure it correctly.
Why did Lombard Odier sign a strategic partnership with France Digitale?
France Digitale brings together the French champions of digital entrepreneurship: startups with high growth potential, investors, and many other strategic partners. Its mission is to transform France into a region conducive to the development of startups, and with this in mind, they have created a proper ecosystem, including building a community, a sense of belonging, networking, knowledge transfer and exchange of best practices all over France. We aim to be part of this ecosystem and to be seen as the natural partner of digital entrepreneurs.
In your view, how is technology and innovation changing the traditional model of private banking? How do we need to embrace the impact of digitalisation when looking at new avenues of innovation?
One key aspect of private banking is what we call “emotional intelligence.” This is the ability of the relationship manager to understand the client and his or her unique requirements, to create a team of specialists to serve them, and to ensure positive interaction among the team. From this point of view, private banking remains a ‘traditional’ industry, enhanced and improved through digitalisation. For instance, our client-facing platform offers seductive functionalities, and our new advisory offering is an excellent example of how technology can augment expertise.
Of course, innovation is not only about technology. The behaviour of our clients and prospects is changing: they are more and more informed, more and more reactive and mobile. Social networks have an increasing role in their information and communication organisation. In this context, our partnership with France Digitale is a tremendous accelerator.
“Augmented banking” vision takes centre stage in Paris
Our partnership with France Digitale gave Lombard Odier the opportunity to present our bank’s unique vision and technological leadership to entrepreneurs and investors at a workshop in Paris.
Nearly 200 people attended the Artificial Intelligence (AI) workshop at the newly opened WeWork co-working space on 15 May.
Our Chief Branding Officer, Fabio Mancone, and Head of Wealth Management Solutions Development, Arash Sorouchyari talked about our philosophy of innovating in the interest of our clients.
They emphasised that AI is technology to power humans up. In France, there are currently about 250 AI startups, and nearly 1.5 billion euros of investment are expected in the sector in the coming years. In the fields of finance, recruiting and Big Data, AI is already a reality.
Fabio Mancone said: “At Lombard Odier, we believe in technology that enables our bankers to do an ever better job at servicing our clients, but we maintain that the human emotional relationship and intuition are essential to what we offer to our clients.”
An alliance of French entrepreneurs and investors, France Digitale is seeking to make France a global leader in the digital sector. Its flagship event is France Digital Day, which is held annually.
1 Social and economic performance of French digital start-ups, Barometer 2016, by Ernst & Young for France Digitale
2 A national programme for high-growth technology companies launched in 2014. These companies are given extra support and visibility in order to encourage their growth and raise their international profile.
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