Maria Panayiotou: FinTech and RegTech are transforming the way fund management companies operate

Maria Panayiotou, President of the Cyprus Investment Funds Association (CIFA), believes it is is time to attract more foreign investment into Cyprus, while also facilitating investments from Cyprus into other market, as she has great confidence in the abilities and business acumen of the professionals and companies based on the island.

In an interview with GOLD magazine, she discusses CIFA's role at the forefront of legislative advocacy and strategic development for Cyprus' investment funds sector, and its commitment to fostering a resilient and innovative financial ecosystem.

CIFA has urged the swift passage of a bill through Parliament concerning the establishment and operation of Fund Administration Companies for Collective Investment Organisations. What is the significance of this bill for the investment funds sector?

The bill is a crucial development for Cyprus’ investment fund sector. It completes the sector’s legislative framework, which is essential in an environment where regulatory and legal certainty are increasingly demanded by investors and market participants. The bill introduces a layer of security that reassures investors about the integrity of fund operations and ensures that administrators adhere to high standards. Moreover, it positions Cyprus as a more attractive hub for fund administration by aligning its regulatory environment with global standards. This creates confidence in both domestic and foreign investors, boosting the sector’s growth.

CIFA has been at the forefront of pushing for these legislative updates, and its collaboration with CySEC (Cyprus Securities and Exchange Commission) and the House of Representatives reflects the sector’s willingness to continuously modernise and adapt. That said, a potential challenge that comes with this bill concerns the sector’s ability to keep up with continuous regulatory changes. The global investment landscape is very dynamic and the regulations governing it are constantly evolving in response to technological advancements and changes in investor behaviour. So, while the new bill is a positive step, it is also imperative that the sector remains flexible and proactive in its regulatory approach.

CIFA projected a positive outlook for Cyprus’ investment funds sector in 2024. As we approach 2025, to what extent has the sector’s actual performance this year aligned with your expectations?

Despite numerous global challenges, including geopolitical tensions and fluctuating economic conditions, Cyprus’ investment fund sector has remained resilient throughout 2024. It has experienced growth and played a key role in the country’s economic stability. The sector not only saw an increase in activity but also contributed to the creation of new business opportunities and jobs, generating significant revenue for the Government.

In a year when high lending interest rates have made traditional financing less accessible, the investment funds sector has proven to be a critical source of financing for major projects in Cyprus. This demonstrates the sector’s adaptability and ability to thrive, even when faced with challenging external conditions. Looking to 2025, the performance in 2024 serves as a strong foundation for continued growth. The sector’s ability to weather these challenges reinforces its importance to Cyprus’ broader economy and signals a positive outlook moving forward.

How has the rise of technology and the digital transformation influenced the investment funds sector in Cyprus?

The rise of technology and the digital transformation has had a profound impact on the investment funds sector in Cyprus, just as it has in other parts of the world. FinTech and RegTech are transforming the way fund management companies operate. These technologies improve operational efficiency, reduce costs and make compliance with regulatory requirements much more straightforward. The use of automation and AI-powered tools allows fund managers to analyse vast amounts of data quickly, providing them with better insights for decision-making.

Additionally, RegTech solutions help companies stay compliant with the constantly evolving regulatory landscape by automating reporting and ensuring that all necessary filings are completed accurately and on time. CIFA recognises that embracing these technological advancements is essential to remain competitive on a global scale. Companies that fail to adapt risk falling behind, as technology has become a critical driver of success in the investment funds industry.

How does CIFA collaborate with global financial institutions and regulatory bodies to ensure that Cyprus remains aligned with international best practices in fund management and governance?

CIFA’s collaboration with international financial institutions and regulatory bodies is a key factor in ensuring that Cyprus remains aligned with global best practices in fund management and governance. The Association is a member of several prominent organisations, including the European Funds and Asset Management Association, the International Investment Funds Association, and the International Capital Market Association.

These memberships provide Cyprus with access to the latest developments in the global fund management industry and ensure that the country’s regulatory framework is in line with international standards. Moreover, CIFA works closely with CySEC and the European Securities and Markets Authority (ESMA) to ensure that Cyprus continues to adopt the latest regulatory updates. This proactive approach to regulation is crucial in maintaining the trust of investors and ensuring that the investment funds sector in Cyprus remains competitive on a global scale.

Cyprus is often seen as a strategic gateway for investment into Europe, the Middle East, and Africa. How is the investment funds sector capitalising on this unique geographical location and what steps is CIFA taking to strengthen these connections?

While Cyprus’ geographical location as a gateway to Europe, the Middle East, and Africa has traditionally been one of its competitive advantages, its significance is evolving in the modern world. In today’s globally connected environment, physical location is becoming less important than factors such as political and economic stability, regulatory compliance and the quality of services offered.

However, Cyprus still stands out as a strategic location due to its combination of advantages, including its European Union membership, political stability and high standard of living. These factors make it an attractive destination for investment funds looking to access the broader European market while also tapping into opportunities in the Middle East and Africa. CIFA is actively working to strengthen these connections by promoting Cyprus as an ideal destination for investment funds.

Looking ahead, what do you see as the major opportunities and challenges for Cyprus in the next five to ten years in terms of investment? What industries or sectors do you expect to drive future growth?

Cyprus will face both opportunities and challenges in the next five to ten years. One of the main challenges concerns the global economic and geopolitical environment. As a small, open economy, Cyprus is highly susceptible to external shocks and any significant disruptions in the global economy could have a substantial impact on its investment funds sector.

Internally, one of the biggest challenges concerns the modernisation of the state apparatus to make it more business-friendly. This includes simplifying administrative processes, improving the speed of decision-making and increasing the use of technology to improve efficiency. If Cyprus can address these internal challenges, it will be well-positioned to remain competitive globally.

In terms of opportunities, industries such as renewable energy, technology and financial services are expected to drive future growth. These sectors offer significant potential for investment and Cyprus is in a strong position to capitalise on these opportunities.

On a more personal note, this is still your first year as President of CIFA. What are the main objectives you hope to achieve during your term of office?

My primary objective, along with the CIFA Board, is to create a new ecosystem that will not only bolster the service sector but also contribute to the broader Cypriot economy. I have great confidence in the abilities and business acumen of the professionals and companies based in Cyprus, and I believe it is time to attract more foreign investment into Cyprus, while also facilitating investments from Cyprus into other markets.

Additionally, one of the critical challenges we are addressing is the need to modernise the way citizens approach financial management. The financial practices of previous generations no longer serve us well in today’s complex economic environment. In this respect, we aim to educate the public on how to take advantage of the services offered by investment funds to better manage their personal and family finances.

(This article was first published in the October issue of GOLD magazine. To view it click here)