A recent study by the Malta Financial Services Authority (MFSA) has revealed a significant shift toward digital banking, with over 60 per cent of clients now enrolled in mobile or internet banking services. This increase in digital service adoption, particularly for mobile banking, corresponds with a notable decline in branch visits for cash services and outward payments between 2022 and 2023. According to the MFSA, this trend was accelerated by the COVID-19 pandemic, which reshaped consumer behaviour across the financial sector.

The findings stem from a thematic review conducted by the MFSA to assess how local banks are adapting to technological advancements and the effectiveness of their digital services. This initiative aligns with the European Union's Digital Strategy, which promotes a human-centric digital economy and society. The study analysed data from 2022 and 2023, evaluating key areas such as mobile and internet banking adoption, chatbot use, ATM and branch activity, card transactions, and the availability of other online financial products.

While the data points to an overall decline in over-the-counter transactions, the MFSA acknowledges that a segment of the Maltese population continues to value face-to-face interactions, particularly for complex financial matters. This underscores the need for banks to strike a balance between digital innovation and traditional services.

Sarah Pulis, Head of Conduct Supervision at the MFSA, commented: "The digital transformation within Malta's banking sector is evident and commendable. However, it is crucial to recognise and respect the diverse preferences of our community. While many customers embrace digital banking for its convenience, others still value personal interaction. Our banks must continue to cater to both groups, ensuring inclusive and accessible services for all."

In response to the findings, the MFSA has issued a series of recommendations to banks through a 'Dear CEO' letter.

These include:

• Implementing educational programmes to improve customers' digital literacy and ease the transition to online banking.
• Strengthening cybersecurity measures to protect customer data as digital transactions increase.
• Ensuring that both digital platforms and physical branches are equipped to meet the evolving needs of all customer demographics.

The Authority also highlighted that many banks are already enhancing their digital infrastructure. Institutions are increasing their ATM networks, upgrading machines, and improving chatbot capabilities. Between 2022 and 2023, there was a rise in the number of issues resolved via chatbots, suggesting these tools have become more user-friendly. Future enhancements include allowing appointment scheduling through chatbots and offering services in Maltese.

Looking ahead, most banks plan to adopt online client onboarding by 2025, reducing the need for physical visits. Banks that already provide this service report higher adoption rates among younger clients, though the service is gradually gaining traction with older demographics.

The MFSA remains committed to monitoring the digital evolution of Malta's banking sector, ensuring that technological progress aligns with regulatory standards while serving the best interests of the public.