We are at the beginning of what many commentators have referred to as a decisive decade with significant choices to make about how we navigate a path forward. This applies to several sectors such as climate change, the environment, foreign policy and financial services.
Across the developed economies and, particularly, in the EU and the US, politicians, in collaboration with the private sector, are implementing modern versions of industrial strategies where the state is assuming a more active role.
Malta made significant achievements over the past decades in the financial services industry. The main four pillars that led to this success are still very relevant today. We should rethink. We need to reform. However, such rethinking and reform should take place by keeping in mind these main pillars:
1. The operating environment pillar focuses on ensuring the policy, culture and legislative conditions underpinning international financial services will support growth.
2. The technology and innovation pillar focuses on providing a collaborative approach to addressing emerging challenges and opportunities in technological development.
3. The talent pillar seeks to ensure we continue to have skilled people to meet the demands of the international financial services sector, including meeting new and changing skills.
4. The communications and promotion pillar focuses on ensuring that Malta’s international financial offering is communicated to all those who are or may be attracted to investing in Malta.
Three horizontal priorities apply across the four pillars: regionalisation, sustainable finance and diversity.
For financial services and fintech, as a regulated industry, the role of the state has been a constant, with the need to balance the promise that innovation heralds with the need to protect people’s money and secure financial stability.
That being said, the task of government is increasing both from active stakeholders in fintech and from the public in terms of the services they require from fintech and digital finance services.
Innovation is playing a critical role in the next stage of the growth of the financial services industry globally and is moving progressively towards becoming a core competence for firms that want to be able to thrive in a digital-first 21st century.
There are many factors that have contributed to Malta’s path to where we are today. I’d like to highlight three, considered to be the most influential and which continue to be of upmost importance today.
First: building and maintaining the trust factor. The government and the private sector need each other to build a successful digital society. That will only work if there is mutual trust. Transparency is a must. Maintaining this trust requires constant devotion, research and development as well as asking and answering serious questions.
Second: regulators must be willing and ready to understand novel business models. Legal requirements need to be understood by the general population and be effective but simple enough for government authorities and private sector companies to enact and follow.
Never settle for what you have. Digital society will never be static- Jerome Caruana Cilia
Our experience is that this will only work if there is constantly smooth cooperation. For developing a successful strategy, we need to work together with different stakeholders from the public and private sectors, leveraging our strong IT-sector and friendly business environment to overcome possible obstacles that prevent Maltese businesses to be scalable and successful here and abroad.
The third lesson from our experiences: never settle for what you have. Digital society will never be static. New risks will emerge on a daily basis. Developments are super quick in the tech world. The fintech sector is moving rapidly. If we want to keep up the pace, we need to be on the alert and take decisions constantly. There will always be plenty of room for improvement.
While the most exciting developments will come from the private sector, governments will play a crucial role in updating regulations and making tokenised claims and assets usable in the legacy world. Technical innovation such as artificial intelligence is also a new opportunity and provides solutions in applying regulations, especially in the fight against money laundering and terrorism financing.
In general, we must ensure that our business environment is transparent and works for everyone by establishing technology-neutral regulations that equally benefit the entrepreneurs, customers and the sector as a whole.
The environment for international financial services is increasingly competitive. Industry participants continually face pressures to optimise their businesses by delivering new and innovative products and by exploiting process and locational efficiencies. They must deliver these while continuing to serve the needs of their customers and ensuring the overall continued stability of the global financial system.
The industry is more technology-intensive than it has ever been and the use of artificial intelligence and automation present both opportunities and challenges for Malta. The country must continue to position itself as a location that is open to providing an innovative, supportive and dynamic environment for companies looking to leverage our expertise and long history in technology and financial services.
The opposition’s vision for Malta remains that of having a dynamic, high-value-added economy founded on competence, skills and excellence and capable of sustaining a high standard of living for its citizens.
The financial services industry is a tool to create better and quality jobs, raise standards, attract investments, create careers, generate income for the government and to better our standard of living.
Like other countries, we are also continuously being assailed by intense international competitive pressures and the economic and financial turmoil resulting from increasing commodity prices and the turbulence in the financial markets.
These uncertain times should not be looked at just as a risk or difficulty but, together, we should find ways to turn all this into an opportunity.
The task that Malta faces is to bridge the remaining income gap with the more advanced members of the euro area. The success of this endeavour will depend importantly on how effectively the public and private sectors work together, both in assimilating the lessons learnt during the past years and in implementing appropriate policies.
And, since in a resource-poor and open economy like Malta’s, growth must be predominantly export-led, the focus of policy must be on increasing the country’s international competitiveness.
Jerome Caruana Cilia is the Nationalist Party’s spokesperson on finance.