Dr Maria Terzi: The next defining shift in warfare will be the full integration of AI across both physical and digital domains

Dr Maria Terzi, Co-Founder & CEO, Malloc, believes that the next defining shift in warfare will be the full integration of artificial intelligence (AI) across both physical and digital domains. In interview with GOLD magazine, she elaborates on her claim while also giving an overview of Cyprus' small but agile defence cluster.

Malloc specialises in AI-powered mobile cybersecurity solutions for individuals, enterprises and governments, protecting against spyware, cyber threats and unauthorised surveillance. Its Privacy & Security VPN detects spyware and malware, blocks phishing and unsecured network traffic and encrypts data to prevent cyberattacks. The AI-Powered Network Threat Detection system analyses and detects suspicious traffic and data leaks, the Malloc App Security SDK secures government and military apps from hacking and espionage, while Malloc Business/VIP provides real-time security for defence personnel, government agencies and intelligence operatives.

Our part of the world has long been defined by conflict and uncertainty. Why do you believe that it has now become important for Cyprus to invest in the defence sector?

Investing in modern defence innovation is both a strategic necessity and an opportunity for Cyprus to strengthen its security and global positioning. In our focus area, AI-powered cybersecurity stands out. Unlike traditional military investments, it does not require large-scale infrastructure, making it a cost-effective and agile approach to enhancing national security. Additionally, spyware and cyber threats pose a direct risk to national security. By prioritising cyber defence, mobile security and AI-driven threat detection, Cyprus can safeguard critical communications, protect national interests and shield its citizens from surveillance and cyber espionage. In today’s world, defence is not just about physical security – it is about protecting digital infrastructure, communications and intelligence. Cyprus has the opportunity to lead in modern defence, building a resilient and forward-thinking defence ecosystem that effectively addresses modern threats.

While European defence R&D spending increased significantly – it reached €11 billion in 2023, more than double the amount spent in 2016 – the US and China still outspend the EU. How does this disparity impact your ability to innovate and compete on a global scale? Are there any other structural issues on a European level that need to be addressed?

The €11 billion investment in European defence R&D is a significant step forward, fostering innovation and technological advancement. However, structural challenges persist, particularly in funding allocation and the limited participation of emerging companies in defence ecosystems. Fragmented procurement processes, complex regulations and slow adoption cycles create barriers that prevent agile startups and specialised tech firms from scaling and integrating their solutions into national security frameworks. To remain competitive globally, Europe must accelerate funding allocation, streamline procurement and establish clearer pathways for emerging technologies to integrate into national and European defence programmes. A cohesive, innovation-friendly strategy will enable European defence startups to contribute more effectively to the continent’s security landscape.

On a local level, does the relatively small size of Cyprus’ defence cluster present challenges in competing with larger ecosystems or are there unique strengths you can leverage?

Cyprus’ relatively small defence cluster does present challenges when competing with larger ecosystems, particularly in terms of resources, funding and industrial capacity. However, its size also allows for agility, innovation and specialisation in areas where it can have a significant impact. For example, AI-driven defence does not require traditional large-scale industries. Unlike conventional military hardware, AI-powered cybersecurity and cyber defence solutions can be developed with agility and efficiency, allowing Cyprus to leverage its technical expertise rather than relying on heavy industry or extensive infrastructure. Additionally, being a small but strategically located nation, Cyprus can act as a hub for defence technology in the region, by fostering collaboration with European and international partners. Rather than seeing its size as a limitation, Cyprus can leverage its technical expertise and strategic location to carve out a niche in modern defence innovation.

Cyprus is strengthening its defence ties with nations like the US and France while aiming to allocate 2% of its GDP to defence. How have these impacted your work, and what additional changes are needed to position Cyprus as a key player in Europe’s defence ecosystem?

Cyprus’ closer defence ties with the US and France, along with its 2% GDP commitment to defence, indicate a shift toward greater military and cybersecurity investment. However, to maximise its strategic role, further steps are needed, starting with greater participation in European cybersecurity and defence R&D programmes, ensuring that Cyprus is not just a consumer but an active contributor to European security. Another is a more structured approach to integrating cybersecurity startups into national defence strategies, allowing for faster adoption. Additionally, stronger public-private partnerships foster a local defence technology ecosystem that can develop solutions tailored to modern cyber and hybrid warfare threats.

Finally, as drones, robotics and AI take centre stage in the theatre of modern warfare, what do you see as the next defining innovation?

I believe the next defining shift in warfare will be the full integration of AI across both physical and digital domains. AI is transforming cyberwarfare, electronic warfare and battlefield intelligence, making conflicts faster, more automated and data-driven. However, as AI plays a larger role in both attack and defence, I see AI-driven cyber defence as a critical necessity. Without it, autonomous systems will be vulnerable to hacking, signal manipulation and adversarial AI interference. The real challenge will not be about who has the most advanced AI-driven military systems but who can secure and control them most effectively. In my view, the ability to defend AI-powered warfare assets from cyber threats will define military dominance in the future.

Collaborations

Founded by a joint pre-seed grant from the Research Innovation Foundation and KIOS CoE at the University of Cyprus, Malloc collaborates with universities, enterprise and industry alliances to drive innovation globally. As a member of the App Defence Alliance (under the Linux Foundation with Meta, Microsoft and Google) and the Cyberstand Standardisation Community, it helps shape global app security standards and prevent mobile security threats. Malloc has worked with Google and Microsoft to enhance its AI and infrastructure and collaborated with VISA and Eurobank Greece on pilots to address emerging mobile and app security challenges.

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