Financial Services: The silent revolution

International regulation, shifting investor expectations, and digital acceleration have forced Malta to rethink the foundations of its financial services sector through a quiet, coordinated reform process that prioritises credibility over opportunistic growth.

“We are not chasing volume but focusing on depth, credibility, and sustainability,” says Bernice Buttigieg, FinanceMalta’s Chief Strategy Officer.

Central to this effort is the Malta Financial Services Advisory Council, established to drive strategic, coordinated, and long-term collaboration across the financial sector. Bringing together 16 working groups focused on key areas such as banking, insurance, fintech, and AI, the Council works closely with FinanceMalta – the public-private foundation responsible for promoting Malta as a financial services jurisdiction.

During FinanceMalta’s recent launch of its 2024 Annual Report, Dr Buttigieg who also sits on the Program Management Office of the MFSAC, outlined how, at the heart of the MFSAC’s efforts, is a cross-sectoral, collaborative approach that is already yielding very interesting results.

“Malta’s value proposition is not only built on speed-to-market but also on robust frameworks, aligned incentives, and long-term relevance. The country wants to become a European leader in specialised finance, and to achieve this, the MFSAC has enabled alignment across government, regulators, and industry in ways we haven’t seen before.”

In the past 12 months alone, 59 projects were initiated under MFSAC’s mandate, with 17 fully completed and substantial progress was registered across key verticals such as funds and asset management (95% completion), insurance (80%), pensions (75%) and digital payments (70%).

A key 2024 milestone was the drafting of Malta’s legislative framework for aircraft leasing, which was integrated into Malta’s 2025 budget. A similar strategic lens guided amendments to Malta’s Companies Act and a review of the financial institutions rulebook, with further updates expected to come into force later on this year.

Efforts have also intensified to modernise Malta’s tax framework. The MFSAC’s Tax Working Group has advised on treaty renegotiation priorities, developed model treaty clauses for the aviation sector, and considered proposals ranging from the taxation of REITs to Special Limited Partnerships (SLPFs).

“The tax system remains a key lever of competitiveness,” explains Dr Buttigieg. “But equally important is ensuring our frameworks are aligned with global transparency standards and OECD principles.”

A hallmark of MFSAC’s 2024 agenda has been its commitment to digital transformation. One of this year’s major digital milestones was the Malta Business Registry’s rollout of a Centralised Data Repository (CDR), a secure, mobile-accessible e-wallet enabling individuals and businesses to store and share identity credentials and documents digitally.

“This CDR leverages AI to eliminate repetitive processes streamlining compliance, reducing bureaucracy and enhancing data privacy. It is positioning Malta as a leader in digital transformation.”

In parallel, work is underway on a Harmonised Regulatory Reporting Framework (HRRF) led by the MFSA to drastically reduce the complexity and duplication in regulatory reporting.

Launched earlier this year and aimed at Financial Institutions, this initiative will make it easier for regulated entities to meet their obligations while enabling authorities to gather data more efficiently and meaningfully. It’s a key part of the broader agenda to reduce administrative overhead and enhance transparency.

“There is a lot of activity in this space. A new integrated tax and customs administration system has entered the tender phase where AI is being embedded into profiling mechanisms to support assessments at individual, company, and sectoral levels. Several TSI (Technical Support Instrument) projects are in motion, including the implementation of real-time reporting, driving Malta closer to real-time governance and oversight.”

Significant progress has been made in establishing a centralised payments infrastructure. This initiative is aimed at improving access for financial institutions and strengthening Malta’s digital payments ecosystem – an infrastructural leap expected to position the country at the forefront of digital payments innovation within the EU.

“These are not cosmetic upgrades,” Dr Buttigieg adds. “The Payments Hub will radically simplify the payments landscape for both incumbents and new market entrants. It’s a foundational move for future competitiveness.”

MFSAC has also played an active role in shaping growth strategies for niche areas. A legislative framework for Family Offices was completed, the pension sector saw concrete steps toward the implementation of auto-enrolment via the 2025 budget, and the insurance sector benefited from a raft of new regulations covering cell transfers, insolvency, and simplified IFRS 17 alternatives for smaller operators.

Internationalisation efforts also gained traction in 2024. Malta increased its capabilities and visibility in the Insurance-Linked Securities (ILS) and Reinsurance Special Purpose Vehicles (RSPV) spaces, holding roadshows and participating in international fora in the UK and US.

“We’re laying the groundwork for sustained growth,” says Dr Buttigieg. “It’s about matching jurisdictional strengths to global opportunity.”

Another area of significant momentum is Malta’s capital markets. A comprehensive roadmap to attract international listings was finalised, and a study on strategic competitiveness is underway. New rules for Limited Partnerships, Notified Professional Investor Funds (PIFs), and Self-Managed NPIFs were also introduced.

Sustainable finance, meanwhile, gained its dedicated strategy team, and a national website was launched to showcase developments in ESG regulation and market trends. Malta’s transposition of the EU’s CSRD directive is in its final stages, and the MFSAC is in dialogue with institutions like the European Investment Bank and the UK’s Green Finance Institute.

Malta is also investing in the people who will shape its future. In 2024, a national Financial Literacy Forum brought together over 69 initiatives under one platform to coordinate a cohesive national response to education reform. Joint efforts with Identità, the National Skills Council, the Malta Institute of Accountants, the University of Malta and MCAST are ensuring a steady pipeline of finance professionals.

Fintech and AI also remain high on the strategic agenda, with plans for a dedicated Fintech Incubator and broadening of Malta Enterprise’s incentives to support licensed fintechs and start-ups are ongoing.

“We’ve always punched above our weight in talent and innovation,” notes Dr Buttigieg. “Our challenge now is to scale that in a responsible, coordinated manner.”

While the pace of reform has been considerable, Dr Buttigieg assures that the MFSAC is under no illusion that its work is complete and that the MFSAC program management office is already planning an update of its strategy.

“Much of the Council’s work happens quietly, but the results are there. 2024 proved what is possible when there’s focus and alignment, and now we are building on real progress,” concluded Dr Buttigieg.

This article was first published in The Corporate Times.