Charting Malta’s course in the evolving FinTech landscape

As we continue to navigate an age of digital disruption, Europe’s financial landscape has found itself at an exciting crossroads – and it is not the traditional banking sector that is leading the way. Rather, it is the FinTech sector, where innovative business models and technology intersect to bring innovation in financial services. This sector has evolved from a challenger to a champion and is gradually attracting more venture capital in Europe than any other sector.

From 2017 to 2019, a fifth of all European venture capital found its way into FinTech, surpassing Asia and the US as a percentage of total allocation. The trend strengthened in 2020, when European FinTechs raised €10.4 billion by mid-year, surpassing the entire previous year’s total. This upward trajectory continued into 2021 and 2022, with European FinTech funding reaching €23.7 billion and €20.5 billion respectively.

This infusion of capital has acted as a springboard for a number of European FinTech firms, with 31 of them achieving ‘unicorn’ status, and many commentators believe the sector remains on an upward trajectory with plenty of room for growth across Europe of financing, employment and valuation.

Based on this and an increasingly adapted European financial regulatory structure, Malta is recalibrating its focus on FinTech. The new MFSAC Financial Services Strategy sees the country shift towards value propositions for FinTech, underpinned by innovation, access and the scalability of digital financial services, going beyond regulatory and fiscal measures.

The focus on what FinTech brings to local consumers and businesses is important for a number of reasons. Fintech promotes competition, challenges traditional financial institutions and offers alternative, often more efficient, solutions. This increased competition can lead to better services and products, more choice and lower costs for consumers.

Furthermore, FinTech’s innovative tools can help fight financial crime by improving detection and prevention methods. Algorithms and machine learning can identify suspicious patterns faster and more accurately than traditional methods. FinTech also plays an important role in supporting financial inclusion, as it does in Malta today for both businesses and consumers, thereby helping to ensure economic growth and equality.

Malta envisions itself as a pilot site for testing and scaling innovative financial services. This ambition goes hand in hand with nurturing a vibrant startup ecosystem where FinTech can thrive. The benchmarks for success are shifting – from the number of foreign companies attracted and licensed, to the concrete impacts on financial services for citizens and businesses, Malta’s role in shaping the next generation of European digital finance and payments infrastructure, and the global success of innovations pioneered on our shores .

This involves aligning different stakeholders – authorities, regulators, incumbents, start-ups and service providers – around a common vision. The focus will be on ecosystem development, improving regulations, improving the technical infrastructure and effective marketing once the basic elements are in place.

Europe’s FinTech sector is not only growing; it catalyzes change. In this dynamic context, Malta seeks to create a place for itself. The way forward involves navigating the developing landscape with a focus on innovation and scalability. The journey has only just begun and Malta is ready to learn, adapt and contribute to the wider FinTech narrative.