Marianna Karamanli: Why EMIs are reshaping business finance in Cyprus

By Marianna Karamanli | Head of Corporate and Banking Department
MKS Audit & Consulting Ltd

As a Corporate and Banking professional in the corporate financial services industry, I have witnessed first-hand the significant transformation taking place in Cyprus’s financial landscape. Traditional banks continue to play a fundamental role in the economy, providing essential financial services to individuals and businesses. At the same time, the rapid development of financial technology and the emergence of Electronic Money Institutions (EMIs) are creating new opportunities for businesses seeking greater flexibility, efficiency and accessibility.

Rethinking Compliance in Traditional Banking

In recent years, traditional banks have significantly strengthened their compliance, risk management and customer due diligence procedures. Enhanced KYC, AML and regulatory requirements are undoubtedly essential for maintaining a secure and stable financial system.

The challenge, however, arises when compliance becomes primarily a procedural exercise rather than a genuine assessment of the customer and the risks associated with their activities. Due to the size and complexity of traditional banking institutions, account opening and ongoing monitoring may involve several departments, layers of approval and standardised procedures. This can result in a process where clients are assessed largely according to the same framework, regardless of their individual risk profile, business model or circumstances. Businesses may therefore be required to provide extensive corporate, financial and transactional information, sometimes through repeated requests, before an account becomes fully operational. While such measures are intended to strengthen compliance, an approach that does not sufficiently distinguish between different risk levels can create unnecessary delays and frustration, while potentially weakening the trust and credibility that should form the foundation of the relationship between a financial institution and its clients.

For international businesses and newly established companies, such procedures can create practical challenges, particularly where an efficient payment infrastructure is required to commence operations, receive funds, settle suppliers and manage international transactions.

The Rise of Digital Financial Services

Against this backdrop, Electronic Money Institutions (EMIs) are emerging as an increasingly significant component of the modern financial ecosystem.

EMIs are built around digital technology and electronic payment services. Their digital-first approach can provide businesses with greater accessibility and operational flexibility, allowing financial activities to be managed remotely through modern online platforms. Depending on their regulatory authorisation and services, EMIs may provide payment accounts, international transfers, multi-currency solutions and corporate payment cards.

Efficient Compliance and International Payments

Importantly, the advantage of the EMI model does not necessarily lie in reduced compliance requirements, but in the ability to use technology to deliver compliance more efficiently. EMIs can leverage advanced digital onboarding solutions to collect, verify and analyse customer information in a streamlined manner. By integrating automated KYC, AML screening and risk-assessment tools, they can assess customer information efficiently and establish an appropriate risk profile without unnecessarily prolonging the onboarding process. This allows compliance requirements to remain effective while making the overall customer experience faster, more tailored and responsive to the individual client’s risk profile.

One of the key advantages of the EMI model is its ability to respond to the needs of today’s increasingly international business environment. Companies now regularly operate across multiple jurisdictions, work with international suppliers and customers, and conduct transactions in different currencies. In this context, speed, accessibility and efficient cross-border payment solutions have become increasingly important.

Banks and EMIs as Complementary Partners

The growth of EMIs should not, however, be viewed simply as a replacement for traditional banking. Traditional banks remain essential, particularly for services such as lending, credit facilities, mortgages, structured finance and other conventional banking products. Instead, traditional banks and EMIs can operate as complementary elements of a modern financial structure.

The development of EMIs also demonstrates that regulatory compliance and innovation can successfully coexist. Strong compliance standards remain fundamental, but technology can help deliver these requirements through more efficient and streamlined processes. The ability to combine regulatory oversight with technological innovation can create a financial environment that is both secure and better aligned with the practical needs of modern businesses.

Businesses can therefore benefit from having greater choice in how they manage their financial operations. An EMI may serve as an efficient solution for day-to-day payments, international transactions and corporate payment services, while a traditional bank may continue to provide financing and other specialised banking facilities.

The Opportunity for Cyprus

For Cyprus, this represents a significant opportunity. The continued development of the EMI sector can enhance the range of financial solutions available to local and international businesses, support digitalisation and strengthen Cyprus’s position as a competitive destination for international commerce.

The future of financial services is therefore unlikely to be defined by traditional banking versus EMIs. Rather, it will be shaped by choice, innovation and the ability to provide businesses with secure, efficient and flexible financial solutions. EMIs are no longer simply an alternative to traditional banking; they are becoming an integral part of the modern financial ecosystem, complementing traditional institutions and playing an increasingly important role in shaping the future of financial services in Cyprus and across Europe.

The MKS Perspective on Financial Innovation

Recognising this rapidly changing financial landscape, MKS Audit & Consulting Ltd is embracing the evolution towards Electronic Money Institutions (EMIs) and digital financial solutions. Serving a local and international portfolio of high-net-worth businesses and individuals, MKS has extensive experience working with Cyprus’s traditional banking institutions and has gained first-hand insight into both the challenges and opportunities of the conventional banking environment.

This experience has reinforced our view that businesses increasingly require financial solutions that are efficient, flexible and technologically enabled. By combining our established expertise in corporate and banking services with the opportunities offered by the EMI sector, MKS aims to act as a bridge between traditional banking and the new generation of financial services, helping businesses navigate an increasingly digital and international financial environment.