Open banking and the road to open finance : a Maltese perspective

Abstract

This dissertation thoroughly examines the evolution of open banking and its regulatory landscape in Malta, along with other jurisdictions including the UK, US, Mexico, Brazil, Australia, and the wider European Union (EU). As the global financial landscape transitions from open banking to open finance, and with the European Commission proposing a legislative framework for open finance, this research focuses on how Malta, a country that has yet to fully embrace the concept of open banking, will embrace open finance, if at all. The study investigates the underlying factors contributing to Malta's limited adoption of open banking, such as the country's size, lack of awareness and the culture of the Maltese; and seeks to determine how Malta can transition to open finance. Additionally, it includes an in-depth comparison between the EU and the UK. Given the UK's notable success in open banking adoption and boasting the largest number of open banking customers worldwide, this study seeks to understand what Malta and the EU could do differently to achieve the UK’s success. This dissertation proposes recommendations to address the challenges faced by Malta. These recommendations include the organization of regulator-led workshops aimed at encouraging financial institutions in Malta to offer open banking solutions. Encouragingly, Malta recently licensed its first financial institution to provide payment initiation services, signifying a positive step towards open banking adoption. However, it is crucial for Malta to fully embrace open banking before progressing to open finance.