An analysis of the expected sectoral competitiveness resulting from disruptive innovation in the financial services sector

Abstract

Technological advancements are creating unprecedented challenges for policy makers who strive to preserve a balance between maintaining a regulated regime, fostering innovation and ensuring a competitive environment. Taking this into consideration, this dissertation sets out to explore the expected competitiveness achieved through the regulation of disruptive innovation in the financial services sector, particularly in the provision of services related to crypto-assets. The study explores both the impact of the national regulatory framework on sectoral competitiveness and the expected effect of European Union legislation on the national regime. The research implements a mixed methods design and adopts a deductive approach, analysing the concepts of regulation, disruptive innovation and competitiveness. Qualitative data was gathered from seven semi-structured interviews, while quantitative data was obtained from two legislative texts. A thematic and content analysis was performed, respectively. This study presents several findings. Firstly, through the regulation of disruptive innovation, the regulator created a competitive advantage in the financial services sector by being a first-mover. The regulatory framework paved the way for a competitive regulated environment in Malta which enabled the national ecosystem to acquire unique knowledge and expertise. However, the harmonisation achieved through European Union regulation will supersede national regulation, creating a competitive European wide market for crypto-assets. Additionally, this study posits the substantial influence political and economic factors have on competitiveness and its functions