Beyond growth: The next test for Malta’s financial services industry

Maria Darby-Walker

There was a time when the financial services industry changed slowly. Banks looked like banks. Insurers looked and acted like insurers. Competitors were traditionally familiar names playing by familiar rules.

That world has moved on. A bank or insurer today may find its keenest competitive threat comes not from a traditional rival, but from a technology firm people deal with every day, or from a fintech challenger.

The question facing financial services businesses everywhere is deceptively simple: how do we stay relevant? It’s a question posed in boardrooms the world over – and Malta is no exception.

Financial services have been one of the island’s economic successes. Over three decades it has built an internationally-recognised industry spanning banking, insurance, investment services, wealth management, payments, fintech and professional services – a sector that today accounts for 7% of Malta’s Gross Value Added and around 6% of the country’s workforce, according to recent figures from the Malta Financial Services Authority (MFSA) and industry bodies such as FinanceMalta.

But thriving industries and businesses rarely have the luxury of standing still.

Successful digital challengers such as Revolut have shown how quickly customer expectations shift – accounts opened in minutes, instant payments, simple apps on people’s phones, a more customer-friendly approach – these have reset what people expect from a financial services institution, even as many continue to navigate the challenges that come with rapid growth and increasing regulatory scrutiny.

The lesson isn’t that every bank or insurer should turn itself into a technology company. It’s that every institution needs to properly understand what its customers truly value. Trust and security remain non-negotiable, but customers now also expect services to be fast, simple, and intuitive.

Established firms carry the weight of legacy systems, regulation, and complex operating models. New entrants can move faster but face the harder task of scaling safely and building a customer base, often at vast expense. Success will go to those who strike the balance: innovative yet disciplined, agile but resilient, customer-focused with robust controls.

As a board director in financial services, one of the more striking changes I’ve seen over recent years, is how the risk landscape has grown more complicated. Operational resilience is now a boardroom issue. Businesses depend on technology providers, outsourced partners, cloud infrastructure, and increasingly intricate supply chains – and a problem outside the organisation can quickly become a problem inside it, as we saw with the cyberattack on Jaguar Land Rover in the UK. The Cyber Monitoring Centre estimated that the attack cost the UK economy £1.9 billion (€2.2 billion), describing it as one of the most damaging cyber events in the country’s history; more than 5,000 businesses in JLR’s supply chain were affected, with production halted for weeks and the ripple effects lasting considerably longer.

The relevance for financial services’ companies is clear: today’s risks rarely stay neatly contained within company boundaries or traditional sector definitions. Businesses need a clear picture of not just their own operations, but the wider ecosystem they sit within.

Customer data poses a similar challenge. Financial institutions hold vast quantities of sensitive information. Used well, it improves services, helps prevent fraud, and creates better customer experiences. But systemic weaknesses will be exposed and exploited, damaging, possibly irreparably, the one asset a financial business can’t do without: trust. Reputational harm, regulatory censure, fines, and lost business follow close behind.

One risk gaining ground is “shadow AI”, where employees paste sensitive client data or code into unapproved, publicly available AI tools, creating an immediate and often invisible data leak. Clear AI governance, employee training, and appropriate controls, are now essential parts of good risk management.

This is why good governance matters. The best firms build cultures where innovation is encouraged but challenge is welcomed too – where ambitions for growth are matched by investment in controls, people, and systems.

For Malta, these questions carry weight. Smaller financial centres have real advantages: they can be entrepreneurial, responsive, and closely connected, with regulators, businesses, and policymakers able to work together and respond to issues more easily than in larger markets. But international credibility rests on keeping standards. The MFSA’s 2025 Annual Report, published earlier this month, gives some sense of the scale of supervision now under way: 1,849 supervisory interactions with authorised entities over the year, 1,023 new authorisations approved, and €570,673 in penalties imposed. Consumer protection, sustainability, cyber resilience, and operational efficiency all feature as continuing priorities, alongside developments across banking, insurance, capital markets and crypto-assets, as European and global standards keep evolving. Sustained attention to anti-money laundering, financial crime prevention and effective regulatory oversight will remain essential to that credibility.

The strongest financial centres have come to recognise that effective regulation is not the opposite of competitiveness – it’s part of what makes a jurisdiction attractive.

EU membership is central to Malta’s competitiveness. A single MFSA licence allows a Maltese-based financial company to “passport” its services across the entire EU and EEA market of some 450 million consumers, under frameworks such as MiFID II, Solvency II and PSD2 – and, for crypto-asset firms, the newly harmonised MiCA regime – reducing the need for separate authorisations across individual markets.

But membership cuts both ways. Malta must match the standards of other member states, consistently. Firms are working through the operational requirements of the EU’s Digital Operational Resilience Act (DORA), and crypto businesses face this year’s deadline to convert from Malta’s earlier national licensing regime to full MiCA authorisation. Effective passporting depends on strong trust between regulators, particularly as other EU supervisors rely on Malta’s oversight as well as their own. Moreover, Malta isn’t the only small EU domicile offering this access – Ireland, Luxembourg, Cyprus and Lithuania are competing for much of the same business – so Malta’s advantage will need to be earned through speed, transparency and sustainability, not through the licence alone.

So, what might the next decade look like?

The successful financial services businesses of the future may not simply be those with the greatest scale or the newest technology. They’re more likely to be those with the ability to continually reinvent themselves – organisations that adapt to customers’ needs, use technology intelligently and safely, attract the best talent, and maintain the discipline and resilience on which trust depends.

For Malta, the opportunity is significant. The island has already proved that a small jurisdiction can build a financial services industry with international relevance. The next challenge is moving from growth to sustained excellence.

Financial organisations that succeed won’t be those that choose between innovation and regulation, speed and security, ambition, and responsibility. They’ll be those that understand these qualities must exist together – and that agility only creates lasting value when combined with world-class standards, strong governance, and a relentless focus on good customer outcomes.

MFSA’s CEO, Kenneth Farrugia, recently stated that the authority’s focus remains on “building trust, strengthening resilience and shaping the future of Malta’s financial services industry”.

It’s a fitting ambition – not only for Malta’s regulator, but for every Maltese financial services business preparing for the future.

After three decades of growth, Malta’s financial services industry has earned its place on the international stage. Its next chapter will be defined not by protecting what has already been built, but by having the confidence to challenge it.

Maria Darby-Walker, non-executive director, Visiting Fellow at

Oxford University and Business mentor