Fintech : the legal challenges

Abstract

Financial Technology or Fintech is the latest buzzword, taking the world by storm. Driven by innovative business models, offering new products and services, it is changing the Financial Services Industry, affecting the way we transfer and manage our finances and borrow money. Banks are no longer the exclusive service providers for bank services, as Fintech firms have started offering some of these services in a more efficient, technological way. However, this does not mean that banks and Financial Services firms will go out of business, as there is room for collaboration between incumbent firms and banks and Fintech companies. The Fintech revolution has been described as democratising Finance in the same way that the internet democratised information. The Fintech industry could rival the iGaming sector in Malta, in the creation of jobs and the benefit to the economy. However, whereas foreign jurisdictions have helped the sector develop and have become Fintech hubs in their own right, Malta is still trying to understand what this disruptive technology means for the Island. This thesis attempts to analyse the regulatory framework in Malta and the European Union, or lack thereof. A comparative study follows, delving into the current legal frameworks in place in the UK, Germany, the USA, Hong Kong and Singapore. In the final chapter, the legal challenges, as well as long-term recommendations for a Maltese Fintech sector are discussed. It is in the interest of the local economy that Malta should develop a regulatory framework, policies and a strategy in order to attract start-ups to set up shop in Malta and to encourage local start-ups to enter the industry, so that a Fintech eco-system is created. To achieve this, government incentives, programmes and sandboxing are imperative.