FinTech, the use of disruptive business models and technology to provide financial services in innovative ways, is significantly changing the global financial services industry landscape. The sector drew €20 billion in global investment in 2015, with that figure expected to exceed €40 billion in 2020.

Although the sector is growing rapidly, it is far from mature. Countries are actively competing for FinTech investment by creating best-in-class FinTech ecosystems. Policy is widely recognised as a key lever that sways investment decisions.

Malta already has a small number of emerging FinTech players. However, there is scope to do more and policymakers must move quickly and take a number of actions to boost Malta’s appeal in this area.

Probably the biggest challenge is to ensure that the advantages delivered by a flexible and pragmatic approach to regulation adopted over the years is brought to bear on FinTech.

Secondly, we need to ensure that the right resources are attracted to the island, both in the regulatory space, as well as to the industry itself.

With these objectives, EY is keen to propose a number of concrete actions that will drive more FinTech investment to Malta.

On the regulatory front, Malta should move fast to implement a regulatory sandbox as the UK have done – a ‘safe space’ in which businesses can test innovative products, services, business models and delivery mechanisms in a live environment without immediately incurring all the normal regulatory consequences of en­gaging in the activity at hand.

We should also have a framework in place to enable the regulator to develop ad hoc licences in new areas of opportunity, so that once these are identified we can move quickly to provide companies with the stability they and their investors need.

We urgently need to develop policy measures to drive foreign tech talent to Malta. In this respect, we propose the adoption of simplified, fast-track visa schemes for third-country nationals. This would include special classes of visas for entrepreneurs, skill sets for where there are local talent shortages, and employees transferring from other international branches.

We urgently need to develop policy measures to drive foreign tech talent to Malta

The taxation of stock options, a key remuneration element for start-up companies, needs to be made much more attractive.

Malta also needs to build a pipeline of local talent through the introduction of new classroom subjects such as coding and artificial intelligence, specialist modules at university and sponsored work placements and apprenticeships with FinTech firms.

Funding and promotion are also crucial for a thriving eco-system. The government could offer support by sponsoring events for vice-chairmen to meet early-stage FinTechs. It could also consider co-financing start-up and growth capital funds, potentially tapping EIB/EFSI funding.

The government should also ensure that FinTech companies, where feasible, are not excluded from seed and SME-based funding initiatives such as the Seed Investment Programme.

The visibility of the sector can be improved by developing an industry body to promote the Maltese FinTech sector internationally. The government can assist with funding to ensure a presence at all key international FinTech related events

Other jurisdictions have moved swiftly to capitalise on the FinTech opportunity. If Malta doesn’t act fast, the opportunity might very well pass us by. For FinTech to make headway in Malta we must first and foremost review and apply all the required changes needed to the regulatory framework, with a clear and enforceable timeline. Concurrently, talent and funding shortage issues should be addressed as soon as possible – this is vital as they are also hampering the growth of other tech-based industries.

Theo Dix is senior consultant, transaction advisory services at EY.

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