Fintechs offer an alternative to bank accounts with traditional banks

In these difficult times, companies in high-risk sectors are finding it increasingly difficult to open bank accounts and execute transactions efficiently. This problematic situation has been caused by several forces impacting the banking and payments industries.

In this article, we will look at these market influences and, further, how fintechs provide a lifeline to underbanked businesses.

The (banking) situation on the ground for high-risk traders

It is common for companies in high risk sectors to be rejected outright by traditional banks in Malta. Often they are not even allowed to apply for an account because the banks informed them from the start that they would be rejected.

Cryptocurrency exchange? Rejected.

Cannabis manufacturer? Rejected.

Online casino? Rejected.

Even if, and this is a big IF, they are allowed to apply for an account, they may encounter other overwhelming obstacles.

A frequently encountered obstacle is that the process of opening an account can take several months. This can be a huge inconvenience for the trader. These delays can be caused by several reasons such as slow customer service and unnecessarily bureaucratic processes. But they can also be caused by complications resulting from a lack of understanding of the applicant’s industry.

Industries such as iGaming and Crypto operate with innovative business models that may be unfamiliar to banks. This lack of familiarity creates confusion and misunderstandings, leading to delays in the account application process.

Another common obstacle faced by high-risk traders is that if they are allowed to open an account, these accounts may have strict transaction limits, thus making the use of the account ineffective or even unsuitable for use. For example, a merchant may only be allowed to transact with other businesses and not directly with consumers. This limitation would be problematic for a betting company that has to pay out winnings to players.

The third obstacle, often criticized, are the high bank and transaction fees that are charged. Banks often justify these fees by stating that the high fees are necessary to cover the additional compliance costs that come with high-risk merchants. There is some truth to this statement, but the extent to which financial institutions are taking advantage of the situation is another matter altogether.

The reality is that high risk traders based in Malta need banking and payment partners. And unfortunately, many banks do not want their business.

Why do businesses find it difficult to open bank accounts?

There are several reasons why banks reduce risk and no longer serve high-risk traders.

One of the main reasons has to do with the money laundering risk of serving merchants from high-risk sectors. To make matters worse, many local banks depend on their relationships with foreign correspondent banks, and so if the latter are unwilling to bear certain risks, local banks are forced to offload risky traders from their books.

Another reason why high-risk traders cannot open an account is the one we discussed earlier. This has to do with banks’ limited knowledge of certain industries deemed high risk. These industries, like iGaming and Crypto, tend to move very quickly and therefore dedicated staff are needed to keep up with developments.

Without in-depth knowledge of the industry, banks may find it difficult to sufficiently assess the risks of new business models and may therefore prefer to keep things simple and reject these sectors outright.

International companies in these high-risk sectors in Malta need to manage cross-border payments efficiently. But if they can’t work with the banks, what’s the solution? This is where fintechs come in.

Fintechs offering alternatives to accounts with traditional banks

Although the situation regarding banking services to high-risk industries may seem grim, all is not lost.

Businesses rejected by traditional banks can now apply to open a dedicated IBAN account with a locally regulated fintech such as FinXP. IBAN stands for International Bank Account Number.

These fintechs aim to serve the underbanked enterprise market. These Euro IBAN accounts serve the same purpose as a current account with a bank. They can be used for SEPA payments, bulk payments and most importantly accounts can be opened efficiently, 100% online.

A fintech like FinXP is able to serve high-risk traders because it has deep in-house knowledge of these fast-paced industries and most importantly, it doesn’t rely on intermediary banks to open accounts. The company is also a principal member of Mastercard, which means it can issue debit cards to customers.

Meeting the challenges of today’s financial world

Although the situation with banks is difficult for high-risk industries, there are solutions.

Forward-looking fintechs such as FinXP provide a suite of efficient payment services that make life easier for businesses. The financial services sector is evolving and fintechs are leading the way. This is the way.

For more information about FinXP, contact us directly through our website at

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