How Europe and Asia can grow financial services through innovation and collaboration

Written by Jesmond Gatt, Chairman of the Board of Governors of the Malta Financial Services Authority

Across the globe the financial services sector sits at the heart of a fundamental transformation that will have far reaching impacts for governments, business and society alike. From the heart of the Mediterranean to the shores of the Pacific Ocean, rapid technological advancement and digital innovation are opening up a host of new possibilities for industry, and many advanced economies are now demonstrating a strong focus on the sector to serve as a key driver for growth at a time when other traditional sectors are either encountering turbulence or facing decline.

In navigating this transformation, several questions present themselves. Chief among these is how can the opportunities in financial services be fully unlocked and, just as importantly, how do countries regulate and oversee the sector in a way that supports growth and innovation, while at the same time ensuring the necessary guardrails and protections are in place?

These are questions we cannot and should not answer alone. The pace and scale of the changes already underway necessitate extensive knowledge sharing between colleagues and counterparts, seeking out best practice and lessons learnt wherever possible. Europe and Asia have much to learn from one another in this respect.

The value Malta places in a collaborative approach on this front is reflected in its recent participation at the Expo Osaka 2025, which offers important opportunities for engaging with representatives across the region and beyond on precisely these questions.

As the European Union’s fastest growing economy, Malta is among those jurisdictions to have placed the expansion of financial services at the heart of its vision for the future and efforts to sustain growth.This strategic approach is already paying off with recent estimates showing that financial services account for 97.5% of foreign direct investment (FDI) in Malta. It is therefore no surprise that the sector is one of seven identified as part of the Government of Malta’s Vision 2050, which seeks to drive sustainable growth of 5% GDP annually by 2035.

Within financial services, FinTech is considered instrumental and Malta has been working to establish itself as a European hub for the sector for several years now. The country has adopted a supportive stance for emerging technologies and is one of the few in the world with clearly established regulatory frameworks for DLTs, ICOs, and virtual currencies. It was the first European country to implement a full licensing regime for Crypto-Asset Service Providers (CASPs). At the same time Malta has developed various schemes and support systems for entrepreneurs and start-ups in the sector includinga dedicated Start-up Residence Programme for founders, core employees, and their families, as well as the €10m Malta Venture Capital Scheme for investment in start-ups. Growth of the sector is also supported by dedicated fintech incubators, a tech-savvy workforce, and a robust network of legal accounting, and compliance professionals with sector-specific expertise.

When it comes to FinTech, Asia is a powerhouse that has maintained significant momentum following the early adoption of mobile payments and QR codes. In 2024, the region accounted for 48.2% of the global FinTech market, with digital payments and transfers sectors acting as significant drivers in the sector. Across the region innovative frameworks, sandboxes and new measures to safeguard consumers provide welcome examples of how regulators can create the conditions within whichindustry players can evolve, adapt and grow; capitalising on emerging opportunities, while also driving efficiencies.

Asia is home to some of the most extensive efforts to date to effectively harness AI with regards to everything from detecting fraud and Anti-Money Laundering initiatives, to the provision of personalised investment advice through robo-advisors. The region has also been at the forefront of governance in this space with Singapore launching the world’s first AI Governance Testing Framework and Toolkit in 2022 – ‘AI Verify’, helping to position it as a leader in the field and serving as a source of inspiration in the development of similar initiatives elsewhere. There is also a lot to be learnt from the region’s early development of super-apps, which took off in Asia long before Europe. 

On all these scores, and much more, knowledge sharing and collaboration are essential in identifying the best ways to exploit the opportunities and navigate the pitfalls, as technological and digital advancements fundamentally reconfigure the landscape of possibilities before us. Only by learning from one another can we move faster and farther. This is especially true when it comes to developing regulation that strikes the optimal balance between managing risk and enabling growth.