Fintech seems to be the new buzzword the world over, and
Malta is no different. Accenture reports that Global investment
in Fintech in the first three months of 2016 reached $5.3 billion,
a 67 percent increase over the same period last year
Fintech is not new. Startups like Oscar or Metromile in
insurance, Transferwise, Venmo or Square in payments, Kickstarter
and Indiegogo in funding, are just a few of the thousands already
in existence - anything from accounting software to brokerage to
currencies is up for disruption.
Fintech startups all come with the promise to increase speed,
improve quality and, more importantly, reduce costs to the
consumers or businesses they serve. The T-shirt-wearing disruptors
hope to take on the financial establishment in the same way that
TripAdvisor or Airbnb severely dented the travel agent model.The
prospect of flabby incumbents being forced to improve their service
already has Maltese customers and businesses who tried to open a
bank account or raise financing, beaming with delight.
Thinking that Fintech in Malta will flourish in the same way
that semiconductors, pharma, gaming, or
financial services did over the years, without a cohesive body
of legislation, is just wishful thinking. To top it all, Fintech is
already significantly burdened with a 'one-size fits all'
regulation which leaves much to interpretation and makes innovation
a risky business.
Old laws and new models of business often do not go hand in
hand. For Malta to compete it needs to provide an innovative
legislative infrastructure which supports the agile methodologies
The "sandbox" regulatory approach to up-and-coming
technology has been implemented within a number of advanced
economies, such as Australia, Abu Dhabi, Singapore, and the UK, and
Malta stands to gain from implementing such an approach.
This approach gives start-ups the freedom to develop and test
innovative solutions to a limited consumer base and for a limited
time period without fear of enforcement action and regulatory
This approach needs to be subsequently supported by a framework
of ad hoc licences to compress the time-to-market process, improve
the prospects for additional funding and more importantly give
these companies the ability to passport licences into the EU.
HR at the Regulator
It would be foolish to think that this level of regulatory
innovation will happen without a strong HR strategy for the
regulator. The recent alignment of salaries has been a step in the
right direction; however, better retention mechanisms need to be
enforced to avoid the brain drain of valid employees moving from
the regulator to industry. Our understanding is that a number of
clients would be very happy to see an improvement in the
regulator's service levels to secure the speed required by
The development of Fintech is critically important for
Malta's diversification strategy - the best paid IT jobs are
found mostly within the Gaming industry. While Fintech has brought
about more options for IT professionals, it is also facilitating
the introduction of a diversification of candidate profiles working
within this new industry - candidates coming from a finance
background, are required to be proficient in the use of SQL and
advanced database manipulation and those coming from an IT
background required knowledge of financial instruments. Of course,
this new requirement represents a challenge in order to support a
fully-fledged sector, and attracting foreign talent is
We still feel that the work permit process can be improved; it
is disrespectful for people to queue for hours and wait for months
to get the necessary employment paperwork. Setting up a specialised
desk or even a simple appointment system would go a long way toward
introducing a much needed level of professionalism.
Furthermore, work needs to be done on the taxation of
pension schemes, share options, as well as access to funding
via the MSE Prospects. More tax efficient solutions would give
Fintech in Malta a competitive advantage. The implementation of
Article 6 for people working in funds and insurance (although
clearly favouring expats) is a clear example of positive regulatory
intervention in this regard.
Whether Fintech could represent the next 'gaming' or
'financial services' for Malta remains to be seen. What is
certain is that this will not happen on its own. We cannot
passively rely on the usual attractions (people, infrastructure,
strategic location) to entice the best players in this space. But
with a well thought out plan to ease the pain points typically
endured by these innovators, the prospects are very promising.
Disruptors are rarely patient though, so we need to act fast or
risk missing out to other more agile jurisdictions.
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guide to the subject matter. Specialist advice should be sought
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Exchange-traded funds (ETFs) have solidified their position as one of the successful financial innovations of recent years, having become a strong alternative to mutual funds and other financial products.
I am a strong believer in technology. Very deeply, I am convinced that innovations and new technologies will bring about an era of abundance.
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