Malta- a rather unassuming country in the Mediterranean. It might not be the first place you think of when you think of the FinTech, technology, and digital development but you would be wrong!
Already the global home of iGaming, it is set to increase its capabilities further as the march of blockchain continues to take over and infiltrate every part of our lives.
Fintech Malta- does it have what it takes to be home to the new generation of the FinTech pioneers?
The word FinTech is a portmanteau (when two syllables of two words are combined to create a new word) of financial technology, and it is used to describe an emerging sector that has developed in the 21st century.
At first, the term was only used to apply to technology that was used at the back-end of established trade and consumer financial institutions, but since the 2000s it has expanded to include any tech innovation in the financial sector.
It can apply to startups, applications, tech companies and even legacy providers.
The use of devices such as smartphones for mobile banking, payment making, investing, and buying and trading cryptocurrency are prime examples of the technologies that are used to make financial services more accessible to members of the public.
The idea is that companies will seek to replace or enhance the processes that they provide for customers to access their products, by offering technologically advanced methods such as apps and new concepts.
In simple words, the most comprehensive definition is that while is a new financial industry that can apply technology to improve financial activities.
It is a sector that is growing at an incredible rate of around 2200% from $930 million in 2008 to more than $22 billion back in 2014.
London, as a leading international hub of the global world, sees more than 40% of the City of London workforce employed in financial and technology services.
In Europe, $1.5 billion was invested in Fintech in 2014, and countries such as Sweden, Holland, the UK and Lithuania are leading the way concerning popularity. Lithuania saw 51 FinTech licenses issued since 2016 alone.
In Asia, the Australian fintech sector accounts for 9% of its total GDP- more than the financial services in Hong Kong or Singapore.
With Brexit looming on the horizon, the sector is full of possibilities for jurisdictions within the EU and Malta is just one of the countries that are vying for the prime position.
But does Malta have what it takes not just to be the new home of many FinTech companies, but to further develop this revolutionary and disruptive sector?
Malta is a small island located in the southern Mediterranean between Sicily and North Africa. A member of the EU, with a workforce fluent in English, Maltese, and Italian, and no longer than a 3-hour flight from any main EU city, it is the perfect place to set up business.
The Maltese government and its authorities have always been supportive of inviting foreign investment and businesses to the island, and this is demonstrated by the growth of the iGaming industry in the country.
Over the last decade, Malta has firmly established itself as the centre of the is world.
The Malta Gaming Authority, the regulatory arm for online gaming has helped Malta to become one of the most respected gaming jurisdictions in the world.
For many companies, having an operating license from the MGA shows that they are in adherence with some of the most stringent regulatory and legal measures in the entire industry and it also suggests that they are fair and above board in their operations.
As such, Malta is home to hundreds of iGaming related businesses as well as hosting the headquarters for industry giants such as Betsson, Mr Green, Betfair, Paddy Power, Evolution Gaming, and Tipico.
Since the popularity of iGaming in Malta has exploded, so too have many other associated industries. IT, financial services, software development, and data centre companies have sprung up everywhere employing hundreds of local and international personnel and contributing to the air of innovation.
The country also offers a sound regulatory framework that both provide protection whilst nurturing growth and some rather nice tax incentives for those looking to base their operations in the country.
With plenty of suitable office space locations, 300 days of sunshine a year, and a strong infrastructure, it is not hard to see why it is a popular destination for many international businesses and start-ups.
iGaming is number one when it comes to leading industries in Malta, and as mentioned above, it has led to the development of various other sectors in related fields.
Within the FinTech sector, many areas are up and coming in Malta. But a new frontier of fintech is finding its feet in Malta, and that is cryptocurrencies and blockchain technology.
Crypto and Blockchain in Malta
These two incredibly disruptive technologies are here to stay, and the FinTech and financial services industry are going to have to embrace them sooner or later.
A big boost has come from the Maltese government, who sensing an opportunity like the iGaming one over a decade ago has decided to support the fledgeling industry instead of defeating it.
The government has announced plans to enforce a new set of rules, laws, and regulations that will support the expansion of the industry as well as protect consumers and investors. The idea is to bring a piece of mind to companies that choose to use these technologies, and the legislation will also seek to define the roles of intermediaries and provide regulation for Initial Coin Offerings.
As such it will be one of the first jurisdictions in the world to take positive steps towards the regulation of the industry, without stifling it.
They will set up a new Malta Digital Innovation Authority which will provide certification for blockchain platforms as well as be responsible for verifying cryptocurrency transactions. It is hoped that this will be an essential step towards businesses using distributed ledgers for cross-border payments, with increased peace of mind.
While the authorities recognise that using blockchains will remove the need for third-party intermediaries, they acknowledge that because it offers cheaper and more efficient solutions, a way should be found to support this rather than attempt and then fail to stop it.
Providing legal certainty and trust in an otherwise wild sector is hoped to encourage more and more blockchain and crypto companies to base themselves in Malta and for the country to become an important location for the industry.
Already, many specialised blockchain and crypto companies are popping up, from law firms and corporate services companies specialising in the sector, to marketing agencies that specialise in promoting ICOs, there is no doubt that Malta is one of the most prepared jurisdictions in the world for the impending crypto and blockchain boom.
Malta is home to many local and international banks, one of which is HSBC. It also provides a base for many leading private banking and investment firms that provide advisory and management services to international clients.
Financial services now account for approximately 12% of Malta’s GDP, and they contribute over EUR 1 billion in direct and indirect revenue. Also, the sector employs over 10,000 people and the World Economic Forum rates it as one of the top 20 financial services jurisdictions in the world.
It has also developed a comprehensive framework of legal and regulatory laws that are designed to sustain development in this area and are in compliance with EU and Global Standards. As such, the country has earned a reputation as a jurisdiction that has attracted blue-chip banks, fund managers, investment houses, and professional practices including the big four accounting firms, from all over the world.
The country has over 580 investment funds of over EUR 10 billion, but it is also a prime location for startups and smaller firms.
As a centre of digital development and excellent, one would expect that the IT industry was also a leader in the Maltese economy. It has become such due to the rise of iGaming and the number of financial services companies that have required cutting-edge technological solutions and support to help grow their businesses.
There is a huge market for software and web development with those who can programme and develop, in huge demand. There is also a large number of data server providers in the country catering to the iGaming industry.
Database management, software development and systems administration and engineering are also massive and there is a continuous stream of IT-based companies setting up in the country.
With all these FinTech and finserv companies putting down roots in Malta, there is a considerable need for both local and international talent. Many recruitment and headhunting companies have set up shop in the country to help connect talent with demand.
These firms work specifically within iGaming, Banking, Fintech, and finserv sectors and are doing their bit of growing the industry.
With all of these new and innovative products on the market, knowing how to market them efficiently is a somewhat unique skill set. From web design and development to PPC advertising, SEO and of course, the marketing of ICOs, a whole new marketing sector has popped up that exclusively supports the FinTech sector.
Offering high-tech and original solutions from apps, to innovative campaigns, data collection, and more, the FinTech marketing sector is on the rise.
Local Financial Startups
When it comes to FinTech companies in Malta, some pretty big names already call it home, here are just a couple of examples.
- Em@ney – This is an e-money institution that is based in Malta and offers its international clients e-money and prepaid card services.
- MoneyPlus Card – This is an e-money institution that provides prepaid card services to a range of clients throughout Europe.
- Mistral Pay – A payment institution based in Malta, they offer payment processing services and prepaid cards to a range of customers.
- Papaya – Papaya is e-money prepaid card provider that is also based and headquartered in Malta.
- Syspay – Another e-money company based in Malta, Syspay offer their clients payment processing services throughout the EU.
What To Expect In The Near Future?
The future of FinTech is looking bright in Malta and I have little doubt that they have all of the necessary ingredients needed to become one of Europe, if not the world’s leading FinTech jurisdictions.
Having already conquered the world of iGaming and provided lots of opportunities for related FinTech industries to flourish, it is expected that crypto and blockchain will build further on this progress.
With the Maltese government offering one of the most comprehensive and supportive legal and regulatory frameworks, coupled with a rather friendly tax regime, there is little reason for people to doubt its potential.
As a hotbed of innovation and technological development, Malta offers a winning combination of talent, ideas, potential, and support that means we have only begun to scratch the surface of its FinTech journey.
As for what the future holds, when the new cryptocurrency and blockchain laws come into force in due course, we expect to see a massive influx of related businesses looking to set up here.
Then as Brexit happens, Malta will be in prime position to offer a sunny, low cost, regulatory sound location for the FinTech businesses.