The race to build tomorrow’s financial infrastructure

December 2026  |  SPECIAL REPORT: FINTECH

Financier Worldwide Magazine

December 2026 Issue

Fintech is omnipresent. From digitalising financial services (FS) to rethinking what technology can deliver, the sector continues to reshape how money is moved, managed and accessed.

Covering everything from mobile banking and online payments to digital lending platforms, fintech has developed into a rapidly maturing market. Demand for seamless, contactless FS shows little sign of slowing.

From established financial institutions (FIs) to start-ups, market participants are responding to demand for faster, cheaper transactions and instant digital access.

Growth potential is particularly significant in emerging markets, including Africa and Southeast Asia, as well as lower and middle income economies. It is estimated that around 1.5 billion adults remain unbanked and a further 2.8 billion are underbanked, representing more than half of the world’s population.

Against this backdrop, fintech companies are experiencing strong demand for digital FS across both established and developing markets.

The technologies reshaping finance

A wave of new technologies is helping to meet that demand. Chief among them is artificial intelligence (AI), which is reshaping customer experiences, payments, digital assets and broader financial ecosystems.

Although FS firms were initially cautious in their adoption of AI, largely because of the sector’s risk-averse culture, research suggests that more than half of firms now regard the technology as critical to their future success.

Particular attention is being paid to agentic AI and autonomous AI agents. Unlike many existing AI tools, including generative AI (genAI) applications that require human prompts and intervention, agentic systems can execute financial tasks independently, respond to changing circumstances and improve workflows with limited human involvement.

These systems can adapt to new information and manage certain processes with minimal supervision. Yet finance leaders recognise that automation alone is not the objective. The aim is to build finance functions that operate more intelligently and effectively. In that respect, agentic AI offers finance teams a way to scale operations while improving decision making.

Industry participants are also assessing the commercial implications of these advances.

Two developments are having a particularly significant impact on the sector: the growing use of AI and the mainstream adoption of digital assets. FIs are deploying genAI across customer service, operations and compliance, while early agentic AI systems are beginning to manage more complex, multi-stage processes. These advances are helping to reduce servicing costs, accelerate product development and create demand for products and services designed to interact effectively with AI-driven systems.

At the same time, digital assets are becoming more deeply embedded within the financial system. Following regulatory developments in the US, including stablecoin legislation and approval for trading tokenised shares on major exchanges, banks and market infrastructure providers are expanding their ability to issue, hold and settle digital assets alongside traditional financial instruments.

Blockchain is increasingly being viewed as an additional channel for transferring money and securities, with growing applications in treasury operations, collateral management and cross-border payments.

The rise of digital assets

Stablecoins, tokenised assets and blockchain-enabled financial infrastructure are also gaining momentum. Together, they are helping to support a financial system that increasingly operates around the clock.

Built on distributed ledger technology, stablecoin payments can improve the efficiency of cross-border transactions by allowing funds to move between institutions at any time, reducing delays associated with banking hours and settlement windows. This can lower costs and improve access to international payments, particularly in emerging markets.

Stablecoins also operate on shared blockchain networks rather than on the proprietary ledgers maintained by individual banks. This allows participants to access the same transaction record and can enable settlement within a single system rather than through multiple intermediaries.

These developments are part of a wider shift in the structure of the fintech market.

Fintech is settling into a more established role within the financial system. Investment is increasingly concentrated among larger fintech firms that can demonstrate both scale and a credible path to profitability. Much of the sector’s activity is focused on the infrastructure that supports the movement, settlement and safekeeping of money and assets. Tokenised deposits, regulated stablecoins and tokenised securities are beginning to move into live market use, although challenges around interoperability and liquidity remain. Wealth and asset managers are also investing heavily in technology that enables them to serve growing client bases more efficiently while delivering more personalised services.

Many of the strongest growth opportunities are emerging within the core infrastructure of financial markets. Advances in tokenised assets and blockchain-based systems are helping to address practical challenges such as round-the-clock settlement and more efficient collateral transfers. The recent expansion of tokenised securities trading on major US exchanges highlights the direction of travel.

Attention is now shifting toward the next stage of development – ensuring different platforms can operate seamlessly together and support sufficient liquidity. Wealth and asset management also remains a major area of opportunity, with firms using technology to improve scale, efficiency and the delivery of tailored advice.

Organisations that successfully combine emerging financial infrastructure with established customer relationships, funding capacity and regulatory permissions are likely to be particularly well positioned as the market develops.

Regulatory frameworks have evolved in parallel. Comprehensive stablecoin regimes have emerged in the US through the Guiding and Establishing National Innovation for US Stablecoins Act and in the European Union (EU) through the Markets in Crypto-Assets Regulation, while the UK continues to develop its own regulatory framework.

Payments and embedded finance

Embedded finance is another area attracting attention. The term describes the delivery of FS through non-traditional channels, allowing software platforms to provide products such as payments, accounts, lending and card issuing directly within their own offerings.

The customer interaction may take place through a website, mobile application or in-person environment. In each case, users can access financial products without leaving the platform or engaging separately with a third-party provider.

Payments remain another major area of focus. Around the world, real-time payment systems and next-generation payment rails are expanding, including FedNow in the US and Pix in Brazil. These systems can settle electronic transactions within seconds.

For businesses and consumers alike, real-time payments accelerate more than the movement of funds. They also support the immediate transfer and processing of financial data, enabling faster decisions and more responsive services.

Payment rails remain fundamental components of the global financial system, supporting secure and efficient transactions both domestically and internationally.

The ability of fintech companies to overcome geographical and physical barriers continues to create opportunities for consumers and providers alike. Access to more tailored and affordable financial products has the potential to expand financial inclusion and improve the efficiency of the global financial system.

Challenges nevertheless remain. As fintech continues to mature, firms must contend with funding pressures, expanding regulatory obligations and increasingly sophisticated cyber threats.

With further innovation expected over the coming years, the sector will increasingly be judged by its ability to solve practical problems and deliver measurable value, rather than by the novelty of the technology itself.

Innovation meets regulation

While AI and other emerging technologies have dominated industry discussions over the past 18 months, governance has moved closer to the centre of strategic decision making within FS. Rapid technology adoption has prompted regulators, investors and customers to scrutinise accountability, resilience and long-term sustainability more closely. For many firms, success increasingly depends on demonstrating that innovation can be delivered safely, transparently and profitably.

This shift is particularly visible in the deployment of AI. As AI becomes embedded in activities such as credit assessment, fraud detection, customer service and compliance, regulatory attention is focusing on oversight and control rather than adoption itself.

In the EU, the AI Act has sharpened that focus. Although obligations relating to standalone high-risk systems, including credit scoring, have been deferred until 2 December 2027 following the adoption of the Digital Omnibus package, the wider direction of policy remains unchanged. The delay reflects practical implementation challenges rather than reduced regulatory ambition. Firms will still be expected to demonstrate explainability, human oversight, strong data governance and clear accountability under existing conduct and prudential frameworks. The additional implementation period provides an opportunity to strengthen risk management processes, governance arrangements and technical documentation ahead of full compliance.

The UK has taken a different approach. Rather than introducing AI-specific legislation, it has relied largely on existing regulatory frameworks, including the Consumer Duty and the Senior Managers and Certification Regime. Responsibility for oversight sits with sector regulators applying established legal principles within their respective areas. At the same time, the government continues to examine targeted regulation for advanced frontier AI models.

Despite these differences, firms face broadly similar expectations. They must be able to explain how AI systems reach decisions, demonstrate that outcomes are fair and identify who is accountable when problems arise. Continued advances in genAI and agentic AI are likely to place further pressure on governance frameworks. Organisations that establish robust model governance practices early are likely to be better prepared than those that leave compliance work until later.

The same questions are increasingly shaping relationships between banks and fintech companies.

Bank-fintech partnerships face growing scrutiny from regulators. Because banks remain responsible for the conduct of their fintech partners, they are demanding stronger controls and more rigorous risk management standards. Many successful fintech firms incorporate compliance considerations into product design from the outset rather than treating regulation as a separate workstream. Strong governance frameworks can support expansion into new markets and help attract institutional clients.

Regulatory expectations surrounding bank-fintech partnerships have become increasingly demanding. Banks remain accountable for the activities of their fintech partners and are therefore seeking equivalent standards of governance, risk management and internal controls. Boards are paying closer attention to areas such as AI, third-party dependencies and digital assets, with a growing emphasis on clear accountability and oversight.

Problems often emerge when business growth outpaces the development of governance and control frameworks. Weaknesses in these areas can become apparent through regulatory reviews, enforcement action or changes in bank partnership arrangements. Conversely, organisations that invest in governance and controls early in their growth journey tend to experience fewer operational challenges as they scale. Strong governance is also increasingly viewed as a commercial advantage rather than simply a regulatory obligation.

From open banking to open finance

Data-sharing frameworks are developing in a similar way. Open banking has become firmly established in the UK, with more than 16 million users and continued growth in adoption. Attention is now turning toward open finance. The FCA’s Open Finance Roadmap, published in April 2026, outlines a broader ecosystem in which data can be shared across pensions, mortgages, insurance and investments, as well as current accounts. Initial priorities include improving access to small and medium-sized enterprise lending and mortgages, with work on a broader regulatory framework continuing through 2027.

The potential economic benefits are significant. According to Open Banking Limited and EY, open banking and open finance together could generate annual economic benefits of £7.4bn within five years. Realising that opportunity will depend on resolving issues around common standards, liability frameworks, consumer trust and commercially sustainable business models. Similar initiatives are also under way across the EU, Australia, Asia and Latin America.

The security imperative

Security remains central to the success of open finance and the wider FS sector. As financial ecosystems become more interconnected, protecting them is becoming increasingly important.

Fraud continues to present a major challenge. Criminals are using AI to generate sophisticated impersonations, synthetic identities and deepfakes at scale. Regulators have responded by placing greater responsibility on payment providers, most notably through measures such as the UK’s mandatory reimbursement regime for authorised push payment fraud, introduced by the Payment Systems Regulator in 2024. AI is likely to play an increasingly important role in countering these threats, with transaction monitoring and behavioural analytics becoming standard tools across the sector.

Operational resilience has also become a board-level priority. Initiatives such as the EU’s Digital Operational Resilience Act, which began applying in January 2025, and the UK’s framework for critical third parties reflect regulators’ concerns about concentration risk, particularly where large parts of the market depend on a relatively small group of technology and cloud service providers.

Modernising the foundations

Banks and FIs are also continuing to modernise their technology estates. Cloud-native and application programming interface-driven architectures are increasingly replacing legacy systems and providing the foundation for real-time payments, embedded finance and faster product development.

The benefits include improved scalability, lower operating costs and shorter time-to-market. Modern infrastructure is also essential for effective AI deployment and participation in open finance initiatives.

Migration programmes remain complex and costly, however. Many successful transformations have involved introducing new platforms alongside legacy systems before completing a gradual transition. Partnerships between established FIs and technology providers have therefore become increasingly important. Across the sector, technology modernisation and operational resilience are increasingly being treated as interconnected priorities rather than separate initiatives.

What comes next

These themes are likely to remain central as the sector evolves.

Three developments are expected to play a major role in shaping the sector over the coming years: greater regulatory clarity, increasingly autonomous AI systems and intensified competition for customer relationships. As digital asset regulation moves from policymaking into active supervision, firms are likely to face greater scrutiny of licensing arrangements, custody models and compliance capabilities. Meanwhile, more advanced AI applications are raising fresh operational, legal and governance challenges.

AI is evolving beyond systems that support human decision making. Newer technologies are increasingly capable of carrying out actions independently, including initiating payments and executing trading activities. This creates important governance questions for firms, particularly around authorisation, accountability, operational limits and auditability. Organisations will need clear frameworks to ensure autonomous actions can be monitored, controlled and traced when necessary.

Competition for customer relationships is also expected to increase as new forms of digital money provide consumers and businesses with alternatives to traditional deposits and investment products.

As regulatory frameworks mature, firms with strong controls, robust governance and well-established compliance capabilities are likely to be better positioned to expand and capture new opportunities. Strong AI governance, resilient operating models and effective data-sharing frameworks can help build customer confidence and support business growth.

FS is entering a period in which sustainable growth, effective governance and operational resilience are expected to carry as much weight as technological innovation itself.

© Financier Worldwide

BY

Fraser Tenant and Richard Summerfield