Technology is pivotal for the financial services industry, Prime Minister Joseph Muscat said today.

Addressing the Finance Malta annual conference with the theme  ‘Malta: A platform for innovation’, Muscat said that an element of risk can be contained in the environment that the government is creating, by putting regulation at the heart of new emerging technology.

The growth in the digital economy, new technology, and the ability to capture and analyse large amounts of data spurred a new wave of innovation. He said that this industry will look different over the coming decade.

Financial services and related technology will not only change how business is done, but will change the composition of the actors involved,” Muscat said.

“New technology will allow new players and business models to enter the market, creating more competition.”

Muscat said that the outlook is positive,  but that the government and industry must remain proactive, changing where needed while adapting to new circumstances. 

“Malta has several advantages to work in its favour.  Firstly is the efficient and highly enabling information technology sector.  We also have a  robust financial regulatory framework. Our ability to renovate ourselves is another such advantage.”

He spoke of the need to develop local talent by upping educational institutions focus on these developments. “Malta must also look outwards, not just to Europe but to whole world, to attract the right talent and skills to compete internationally.  This applies to all econ sectors, but is of paramount importance for this one.”

He stressed that the government’s role is to act as a facilitator, through strengthening regulatory frameworks and institutions. He said that the MFSA looks at Fintech as a regulator working to create the best environment in Europe, and that by this he means attreacting only the serious businesses in the industry. “We are after quality not quantity.”

He spoke about certain problems for growth, and the need to further develop the banking ecosystem.

 

Also addressing the event, Parliamentary Secretary Silvio Schembri said Malta’s agility and fast-moving advantage within the innovation sphere has enabled the country to reinvent the economy.

“Malta’s economic development strategies are crucial traits which propel and support the country to constantly innovate and diversify its foreign investment landscape. This was partially thanks to Malta’s nimble business environment, the embracing of cutting-edge technology and the setting up of a strong and robust ICT infrastructure, competitive labour costs, a highly educated workforce as well asan enviable quality of life,” he said.  

The financial services sector has now become a key contributor to Malta’s economic growth, the livelihood of more than 10,000 families and contributes to 12% of the Gross Domestic product.

“By virtue of an ever-changing global landscape, we are now looking at a more diverse financial services industry that is introducing new financial clusters which are casting away from the usual traditional methods. The myriad of technological advancements which materialise on a regular basis are destined to change the landscape of the industry we know today.”

Schembri said the robustness of this sector is underpinned by a resilient regulatory framework based on strong, prudential consumer protection and money laundering prevention mechanisms together with healthy capital, liquidity levels of banks and increased capital market opportunities.

“On these solid foundations, we’re committed to take this industry to the next level in order to stay ahead of the curve in such a way, that we position the financial services industry ahead of its time; a reflection of what this sector will look like in the coming years. It is to this end that we have adopted a vigorous proactive stance in embracing new technology, in strengthening further our institutions and invigorating our human capital.”

The launch of the MFSA Vision 2021 and Fintech Strategy earmarks the necessity to reform an Authority that is required to serve us perfectly well in the digital age and to enhance the Authority’s efficiency and transparency in its day-to-day functions, he said.

Schembri said the government will set up a Consultative Body which will serve as a Forum for discussions between the Government, the Regulator and the practitioners, aiming to understand better the difficulties, anticipate any developments on the international scenario and to formulate a 10 year strategy for the financial services sector in Malta.