MFSA identifies innovation and FinTech among core 2021 priorities

Malta’s financial services regulator has highlighted the sector of FinTech and Innovation as one of its five cross-sectoral supervisory priorities for 2021.

As has often been noted, the world of FinTech is intertwined with the Fourth Industrial Revolution that is currently taking place across the world. The MFSA is committed to ensuring that Malta will be at the forefront of this new wave of innovation - one that will shape the future of the financial services industry.

The Authority first published its FinTech strategy back in May 2019, seeking to promote a long-term, holistic framework to support and encourage growth, innovation, and competition within the Maltese financial sector.

This was soon followed by the launch of the MFSA FinTech Regulatory Sandbox. The Sandbox has made it possible for interested operators to safely test their solutions within the market under a predetermined set of conditions. As a result, this has encouraged further creativity and innovation from FinTech operators while also enabling the MFSA to better understand and prepare for the future of financial services.

The importance of this milestone in the long-term vision of this field was noted at the time by the Authority’s Chief Officer of Strategy, Policy and Innovation, Michael Xuereb, who commented that both “financial services start-ups and incumbents view the Sandbox as a much-needed tool to help in the adoption of innovative solutions within their operations in an orderly manner, whilst enabling them to offer value-added products and services”.

More recently another development in relation to FinTech relates to the MFSA being recognised as a member within the Global Financial Innovation Network (GFIN). This initiative is being led by the UK’s Financial Conduct Authority (‘FCA’) with the aim of bringing together financial regulators and related organisations from across the world to discuss and support financial innovation for the ultimate benefit of the consumer.

Moreover, last September, the European Commission adopted a new Digital Finance Package, which builds on the EU FinTech action plan 2020.  The Digital Finance Package will have considerable, cross-sectorial impact, on the financial services industry, driving wide breadth of policy and legislative changes in the next four years. The MFSA shall be carrying out the necessary policy and legislative changes to address the Digital Finance package in its full scope holistically and in close collaboration with all impacted stakeholders.

To this end, and in line with its FinTech Strategy, the MFSA will be continuing with its work on creating an ecosystem in which FinTech start-ups and operators can flourish. Ultimately, this will benefit the financial services sector as a whole, since it will bolster innovation and competition thereby helping to bring about an improved customer experience.

In this way, the MFSA will ensure that Malta will be in a position to harness the vast potential offered by the FinTech sector, and establish itself as an international FinTech hub, attracting global financial services providers who wish to make use of the opportunities generated by this industry.

As in the case of all its supervisory priorities, the Authority will also be taking steps to ensure that its work in this field complements and supports its core objectives of guaranteeing investor protection, affirming the integrity of Malta’s financial markets, and safeguarding the stability of the financial system.

By and by, the world of FinTech and Innovation lies at the very heart of the future of the financial services sector, and by placing it among its top priorities for the upcoming year, the MFSA is sending out a clear signal of intent to continue its role in developing this crucial sphere.