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As the closing keynote speaker at this year’s FinanceMalta Annual Conference, Patrick L. Young had the unique opportunity of merging the many compelling and knowledgeable views conveyed during the 10th annual event as well as adding his own insight to the important topics discussed.
No major conference can avoid the Brexit topic and indeed nowhere is the topic of perhaps more interest in Europe than Malta which hosted the last Commonwealth summit in 2016. The underlying message throughout the speeches, beginning with Lord Marland of Odstock, was opportunity – an opportunity that must be established with the key understanding that financial services centres are not a free game.
There is always opportunity in a world of developing products with expanding global benefits. Brexit is no exception. It presents yet another window of opportunity for both outright “new new” things and the “tail” of some UK operations which promote and need a closer EU administrative embrace.
Brexit is not about a misguided belief of defenestrating the British Financial Services industry. Rather it is about utilizing the moderate opportunities which come about due to the new European order – both within the EU and beyond. Malta’s English fluency and Anglo-Saxon legal base makes it an appealing base for business. Thanks to the possibilities that will arise from Brexit, Malta has a wondrous chance to expand its position as a financial centre.
The Brexit opportunity runs parallel to the possibilities with ‘fintech’. While general media is more focused on the effects it will have on the retail investor and online banking, the reality is that the innovation of fintech is taking place in the wholesale markets. Although lined with many pitfalls, Fintech is a fascinating opportunity for Malta. It is important to consider how to regulate, and indeed, where and when to regulate. The difficulty, in this fast-evolving world, is establishing a regulatory system which is fit for purpose.
Many western nations are delaying the evolution of our shared digital future by attempting to save old established industries through the formation of new laws. The future, however, is not about Uber drivers versus taxi drivers. Thus, politicians protecting licensed cabs with restrictive regulation is dangerous. We are on the verge of an era when the driverless car will flourish across the world; therefore, we must concede to Schumpeterian creative destruction to achieve the better results for all citizens. Financial regulation faces the same issue, those making the rules must understand what a very different future we face driven by technology.
The core model of apps like Uber and Airbnb, to name two, is a variant of the exchange, the finest model for growing commerce that the world has ever seen. Comparable to the open markets where Maltese traded with Phoenicians thousands of years ago, exchanges are embodied today in a regulated process of the Malta Stock exchange. Accordingly, exchanges must remain at the epicentre of all financial markets, allowing bourse-style processes like crowdfunding to grow under pragmatic regulation.
This brings us to the next point of discussion: Blockchain. It is the technology which exploded from a nerd sub-Reddit topic to being the future of all organisations within barely five years. Believe the hype, the age of blockchain is upon us.
The Bitcoin cryptocurrency has made the blockchain mainstream creating a Copernican Revolution in money and financial markets; nonetheless, Distributed Ledger is hardly a new thing. Steve Tendon’s fantastic presentation revealed its origins through the likes of the Domesday book in medieval England… the exciting point is that the digital distributed ledger now has an amazing opportunity to make government, society, and corporations of all form, vastly more efficient.
Patrick L. Young ended his presentation by looking forward to 2027: the 20th Anniversary FinanceMalta conference. With threats everywhere, any financial centre must guard its reputation vigorously, but, looking ahead one thing is clear, the Maltese Islands must remain quick to succeed. Stasis is not an option; this will only enable competitors to leapfrog the progress that Malta has already made.
Whether in Brexit, on the Distributed Ledger, or across fintech – from any angle of the financial services industry, the only way to move forward is to continue progressing while regulating with a pragmatic eye to the long-term future. Malta clearly has vast potential; however, there is no time to pause progress – the outcome in the digital world of opportunity awaits. The result for Malta in its selected segments will be a simple binary option: Victory or Death!
