The application of blockchain technology is set to revolutionise the financial services sector, FinanceMalta chairman Kenneth Farrugia tells the Times of Malta.
In recent years, especially following accession to full EU membership, Malta has increased its efforts in building and sustaining its financial services sector, to the extent that today, this contributes in excess of 11 per cent to the GDP and employs over 10,000 workers.
On what elements does this drive feed?
“The drive to ensure sustained innovation in the financial services industry is motivated by the importance of ensuring a sound and compelling proposition for the financial services industry, mindful of the strong competition in this sector within the European marketplace,” Kenneth Farrugia, FinanceMalta chairman and BOV chief business development officer, says.
“Malta may be considered as a late entrant in this space considering the first-mover advantages enjoyed by jurisdictions such as Ireland and Luxembourg,” he adds.
“Nonetheless, the internationalisation of Malta’s financial services sector started to take shape a few years after Malta became a member of the EU in 2004 and the industry today contributes in excess of 11 per cent to the GDP and employs over 10,000 workers.
“In sustaining the growth of this sector going forward, Malta needs to develop a sustained competitive proposition. Within this context, we need to ensure the sustained presence of regulatory innovation as an integral part of the overall proposition.”
We need to ensure the sustained presence of regulatory innovation as an integral part of the overall proposition
While saying that Malta’s financial services sector is at the tail-end of its emerging phase, Mr Farrugia believes there are still compelling growth opportunities going forward.
“Achieving the desired level of growth is very much dependent on a number of factors. These include the need to induce sustained innovation and ensuring that the sectors of the industry are given the required level of international visibility through a three-pronged outreach programme involving our political leaders, regulators and of course the industry players.”
Many observers are predicting that blockchain will affect businesses, in much the same way that the internet revolutionised the way we live and work.
“I do believe this is the case,” Mr Farrugia says. “This very much reminds me of the transition from facsimile to e-mail, with the stark difference that the application of blockchain technology may be extended to a number of economic sectors. I firmly believe that the application of blockchain technology is set to revolutionise the financial services sector over the coming three to five years as we see this technology unfold, disrupting traditional processes and procedures and disintermediating traditional service providers.”
Malta is pitching itself as ‘Blockchain Island’ in a bid to become a blockchain leader. Beyond legislative changes, what else does Malta need to deliver on its pitch?
“Apart from being first movers in the market having created a sound legal and regulatory framework, Malta has other USPs that further strengthen its proposition,” Mr Farrugia says. “The presence of a strong professional service infrastructure, ease of travelling to and from Malta, cost and fiscal competitiveness, ease of access to the regulatory authorities as well as the country’s longstanding economic and political stability all add a lot of value to Malta’s proposition of a Blockchain Island.”
Mr Farrugia will shortly be speaking at the Malta Institute of Accountants Biennial Conference, which will focus on the finance revolution.
“My contribution at the Malta Institute of Accountants Biennial Conference will revolve around the theme of the conference honing in on the implications within the banking and the wider financial services arena.”
Kenneth Farrugia will be speaking at the Malta Institute of Accountants Biennial Conference on November 16.
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