Malta’s financial services industry has grown significantly in recent years, attracting foreign financial services operators across various sectors such as asset management, insurance, banking and more recently electronic money institutions
“The financial services industry globally has evolved embracing technology at a fast pace,” says Chris Casapinta, noting that digitalisation – a key driver of this shift – has transformed traditional financial practices. “Technology has simplified various areas such as payments, evident in online payments and foreign exchange. Technology is also changing the way operators interact with their customers with more online platforms supporting the use of Artificial Intelligence (AI). The use of AI in customer interactions has become a transformative force, enhancing customer experience, personalisation, and service efficiency. Businesses leverage AI to better understand customer needs, automate interactions, and provide more tailored customer experiences. Malta has contributed to this evolution, by supporting and enabling established operators to develop their business in this direction. Malta has also been successful at attracting a significant number of new operators such as Electronic Money Institutions (EMIs).
While Malta remains attractive from an operative and geographical perspective, rising costs and the significant competition for talent are growing concerns – yet the country stays competitive as rising costs and competition for talent are issues also faced by other financial services jurisdictions. “ Malta offers advantages not only to investors but also to highly qualified employees in financial services,” he continues. “Some individuals can benefit from favourable fiscal arrangements, which is a major plus. With such pressures on human resources it may be worth widening the eligibility of such arrangements and possibly having arrangements to make it more attractive for young families to settle here in Malta.
Operating in Malta is still relatively easy, with access to good talent and professional firms, a robust regulated infrastructure as well as good connections to key financial centres .” Despite its strengths, Malta’s financial services industry faces ongoing challenges. “The main issue can be Malta’s size, which limits the scope of its financial services ecosystem. “As a small island, we have fewer operators such as banks and asset managers compared to larger financial centres in Europe like Luxembourg and Ireland,” he explains
In financial services, a strong reputation is essential, and we’ve suffered in this regard in the recent past,” says Casapinta, referring to Malta’s greylisting by the Financial Action Task Force (FATF). “Things are improving, but reputation needs to remain a priority to ensure Malta is viewed as a reliable financial services jurisdiction.”
The industry has responded positively, with both the Malta Financial Services Authority (MFSA) and the Financial Intelligence Analysis Unit (FIAU) working to increase transparency and improve responsiveness. “We’ve all adapted. The MFSA and FIAU have worked close the operators to reduce the impact of greylisting ” Casapinta adds.
Improving anti-money laundering compliance has been a key focus for Malta, “Regulators have strengthened their teams, infrastructure and raised standards. Casapinta affirms, adding that while some operators initially found compliance measures intrusive and unfair, the sector is now in a much stronger position from a compliance and governance perspective.”
On a regular basis, the financial services industry is faced with new and/or revised regulations. EU directives such as the Digital Operational Resilience Act (DORA) and Payment Services Directive 3 (PSD3). Service providers and operators need to continuously embrace new regulations to be ahead of the game, investing in the right resources and technologies to ensure one can satisfy regulators and, most importantly, clients.”
Like in any other business , Malta’s strategy for financial services needs to be future proof and appealing to both existing, as well as future operators who may be interested to set up in Malta. The industry together with Government have been working closely together to improve Malta’s strategy for financial services. In 2021, the Malta Financial Services Advisory Council (MFSAC) has been set up to provide the Maltese government and regulatory bodies with expert recommendations on how to shape policies that foster innovation, attract investment, and strengthen the financial services sector. This includes aligning Malta’s policies with EU standards while considering the country’s unique market characteristics. The Council has come up with around 175 initiatives, a number of which have already been initiated. Such efforts are crucial and need to be ongoing. This being said, with the existing pressures on resources it may be advisable to focus on a limited number of core winning strategies and niches rather than implementing a large number of initiatives which may create further pressure on the various resources.
In 2025 and beyond, Casapinta expects that the island will continue to be successful in attracting new investment.
“For various reasons Malta remains attractive for people to come here as residents. In fact we see a continued increase in demand for the various residence programs available”. He continued to explain that new residents in Malta present a number of new opportunities. Some of the residents may be qualified professionals whilst others may be entrepreneurs or successful retired professionals. In all cases these present good opportunities to Malta at various levels such as improving our talent pool, possible new investments through Malta holding companies and, in some cases, fully fledged operational businesses as well as financial services’ regulated entities.
Casapinta added that the growth in the fintech and related industries is expected to continue, which should result in a larger demand for MFSA licenced activity in Malta. “This will result in more operators setting up in Malta requiring human resources and all other services related to running a regulated financial services business.”
“The aviation sector is another sector where we continue to see significant growth. The Island’s strategic location, fiscal advantages, professional environment and the effective regulator make Malta a prime destination for the aviation business for both corporate and private clients.”
One of the priority sectors established by MFSAC is Family Offices. This is an area that Chris has been involved in for the past 15 years and will be one of the expected growth areas for Finco with them already servicing a number of clients in the sector. The 360-degree approach of assisting clients with their corporate, fiscal and administrative affairs, coupled with wealth management services allows Finco Trust to offer a robust platform for family offices.
Malta can definitely continue to be attractive in various other sectors such as investment funds. The recent introduction of the Notified Professional Investor Fund is a good addition to the existing local fund offering and one notes that there is an encouraging level of interest in the new regime.
“Investors are often pleasantly surprised by how well the various stakeholders collaborate and how accessible they are. This boosts their confidence to build in Malta,” he says. However, he cautions that investors should manage their expectations regarding Malta’s size, resources and status as an onshore jurisdiction which therefore requires a certain level of activity on the Island.
Supporting Malta’s foreign investment appeal, Finco Trust assists foreign investors in establishing themselves both locally and internationally. Finco’s corporate, trust and wealth management services have already led to success stories with clients growing significant operations and investments in Malta. Finco Trust will continue to collaborate closely with the various stakeholders, professional firms and peers to showcase Malta’s attractiveness
“As part of the global financial landscape, Malta’s adaptability, regulatory strengths and commitment to innovation will be key to its ongoing success as a leading EU financial hub, providing exciting opportunities for both local and foreign investors,” Casapinta concludes.