Issue link: https://maltatoday.uberflip.com/i/1128919
13.06.19 11 uptake to promote and to package them as products which we offer to our customers – sometimes using third party products. We are now following closely the frame- work announced by Government for the equity release scheme. Put simply, this would enable individuals and couples in their retirement years to supplement their income by releasing equity, i.e. value, from their property. It's a useful solution which provides income and allows a certain liv- ing standard to be maintained at a time when this is best needed. In a sense it's like the reverse of a home loan and in fact such products are known as 'reverse mortgages' in the US. In today's world of rapidly developing technology, the banking industry is facing challenges from newcomers such as Revolut. How does APS counter this challenge? Banks have traditionally provided the technology and channels for payments services, it's been like that for ages. But payment mechanisms are not exclusive to banks and we've been seeing more and more players arriving in recent years. So banks should focus on the activities that they are best at servicing. is doesn't mean we will abandon the payment space - far from it - but I accept that newcomers such as Revolut will come and offer tech- nology which could be cheaper and faster. at said, I believe that our myAPS app is a response to show that we are modern- ising our payment technology and offering our own solutions. And of course it com- plements our other banking services. Is the bank developing or evolving in light of new technology such as blockchain and Distributed Ledger Technologies? First, let's distinguish between block- chain and cryptocurrencies, which run on blockchain technology. From what we know, blockchain and DLT can bring efficiencies to banking systems and pro- cedures and there are examples of appli- cations being developed in a number of jurisdictions. ese include both internal/ back-office procedures - such as bank rec- onciliations, procurement and account- ing - as well as front-office procedures, which benefit customers directly, such as in on-boarding and compliance processes. Lots of pilot projects have been under- taken between banks, banking associa- tions, universities and fintechs aimed at using blockchain to improve efficiency and make banking safer, more authentic and efficient. As a bank we are following all the developments and we receive dem- os from solution providers. ey are inter- esting times indeed. Cyber attacks are an ever-present threat facing banks, with one of Malta's biggest bank having suffered a cyber attack in February which saw €13 million stolen by hackers and sent to foreign accounts. What measures does APS Bank have in place to protect itself from such attacks? After the cyber attack on BOV, it emerged that the activity had actually taken place several months before. e threats which eventually came to light at BOV had been sent to other banks and financial institu- tions. APS Bank was also subject to that attack but our systems repelled the threat on that occasion. I think that the serious- ness of the matter cannot be overempha- sized, cyber risk is now recognized as one of the major threats facing banks so much that international supervisory bodies fear that a future financial crisis might well be triggered by a cyber incident at a systemi- cally significant bank. We continue to fortify our defenses and we have many systems and measures in place for that purpose, including carrying out regular penetration testing and simu- lated or 'controlled' attacks. And of course we invest a lot in training, education and raising awareness amongst our staff and customers. But there is no sure solution and if I'm asked whether we can guarantee that we will never be a victim of an attack, I will not guarantee that. e success of a threat is always dependent on a bank's weakest link, and that link can be a human factor. As long as there are individuals involved in the chain, the threat remains. So it is a journey without a finish and our duty is to continue strengthening our walls of de- fence, sharpen our detection systems and heighten awareness. Criticism has recently been levelled at local banks - including from the Prime Minister - over complaints that it is increasingly difficult for foreigners or foreign companies to open bank accounts with local banks, with some gaming companies insisting that they need alternative banks in Malta since local banks refuse to open bank accounts for them. What is behind this reluctance to open such bank accounts? Is it that the bank is still skeptical of the gaming industry? At the end of the day, these are foreign workers with families who are finding difficulties in having access to financial services. Banks are in business and I would find it very hard to come across one that likes to decline business. As for APS Bank, we are on a growth trajectory and the results of recent years especially confirm that. We are in business and growing – no question about that. And the banks have financed the bulk of economic expansion in Malta, for many years. But the banking landscape has been changing dramatically, not least with the introduction of new laws and regulations which impact also our international corre- spondents. ere have also been incidents involving large global banks which have caused politicians and regulators to take actions which, in turn, cause those banks to review their business models and gen- eral attitude to risk. ere are also risks out there more challenging and elaborate than what we ever saw in the past, part- ly as a result of Malta's much more open economy, faster telecommunications ca- pabilities and greater interaction and link- ages with other financial systems. All of this requires banks to be on top of their risk appetite statement, which essentially defines what type of risk (and business) they want to take. is means that banks may have to be selective as to the activities they want to service. ink about it: we see specialisation and focus in more and more industries, professions …. so why should it be a surprise that banks too are selective in the business they want to do, reasons being various? For example, APS Bank has traditional- ly not been keen to service international business because, precisely in view of our local, community character, we tend to have better knowledge and understand- ing of the local business environment. So we look for local substance or relevance in the relationships we pursue and this means that we service international clients with a substantive connection to Malta. But we do not presently service gaming companies. ere is no ingrained ideol- ogy behind this, it's simply because there are particular risks and requirements in this segment which we are not the best equipped to service. Still we have nothing against the gaming industry and we regu- larly open accounts for employees of gam- ing companies. Of course there may be ex- ceptions but one has to look at those and understand the reasons – which would have nothing to do with the employer be- ing a gaming company! It's quite straightforward in my view: we cannot be everything to everybody and we should be transparent in that regard. I would much rather focus on the many activities that we service rather than those that we don't. And here I want to highlight our sup- port for new areas of economic activity where, contrary to what may be at times reported, we actually service. For exam- ple we recently approved the onboarding of our first VFA Agent authorized by the MFSA and we are following developments closely to see what other licensable activity we can support. So this idea that we are antagonistic to risk is not correct. But it's a delicate and complex balancing act and we need to be mindful also of the risk ap- petites of our correspondent banks, whose INTERVIEW mission and vision Marcel Cassar has been CEO of APS Bank plc since 2016. His 30+ year professional career started with a Big Four accounting firm, and he initially moved to bank regulation and supervision. Since 1996 he has held successively senior executive positions in banking and financial services. In May 2018 he was appointed Chairman of the Malta Bankers' Association, leading to a seat on the main board of the Brussels-based European Banking Federation (EBF). Marcel is a Certified Public Accountant, a member of the Malta Institute of Accountants and holds an MBA from University of Wales and Manchester Business School. He has made academic and conference contributions on bank strategy, transformation and governance and lectures in the M.A. Financial Services programme at the University of Malta.