Fintech
May 2026 | WORLDWATCH | BANKING & FINANCE
Financier Worldwide Magazine
May 2026 Issue
Fintech is transforming financial services. From incumbents to start-ups, the market is flourishing amid increasing demand for faster and cheaper transaction processing, with artificial intelligence tools at the apex. Although challenges remain, funding constraints, intensified regulatory demands and escalating cyber security threats among them, the fintech ecosystem is rapidly evolving from disruptive origins toward a new paradigm characterised by sustainable, profitable growth.
FW: Looking back over the past year, which shifts or innovations have most significantly reshaped the fintech landscape? Where have you seen the strongest openings for growth or value creation in today’s market environment?
SPAIN
Muñoz: Over the past year, Spain’s fintech sector has entered a clear phase of maturity. On the one hand, the collaboration of fintech firms with the banking industry has been affirmed, while on the other, certain fintech firms have erupted as new global players in the whole financial services universe – from banking and payment services to asset management. Additionally, Spain’s early implementation of the Markets in Crypto-Assets Regulation (MiCA) has accelerated the institutionalisation of cryptoassets and tokenisation, creating space for regulated digital‑asset services. Notably, cryptocurrencies and blockchain remain one the largest fintech verticals in Spain by number of firms and growth, highlighting sustained market interest.
SINGAPORE
Kwah: Stablecoins are increasingly being seen as a general financial product, rather than a niche speculative asset, and they have been ingrained into traditional financial systems and processes in the last year. We are of the view that stablecoin adoption will only increase with time, and more financial institutions (FIs) will seek to incorporate stablecoins into their fund flows to improve transaction timings and to reduce intermediary costs. Regulations on stablecoins will also develop in tandem, and this will help to facilitate general adoption.
AUSTRALIA
Chan: It has been a big year for fintech. We are seeing significant activity around digital assets, insurance innovation and payments. Across financial services (FS) more broadly, there is certainly a focus on artificial intelligence (AI) adoption, and we are seeing significant investment at all levels, from incumbents right through to start-ups. Digital assets continue to be a key focus area for commercial players and lawmakers alike. On 1 April 2026, the Australian parliament passed the Corporations Amendment (Digital Assets Framework). The legislation introduces Australia’s first digital assets licensing framework, giving the sector clarity on regulatory requirements. Up until now, regulation has been in the form of policy guidance and ‘lawmaking through prosecution’. Insurance innovation continues its upward trajectory, driven by significant underinsurance in some Asia-Pacific countries. The increasing use of embedded insurance is aimed at improving consumer education and uptake of insurance.
FRANCE
Baladi: Over the past year, one of the most transformative shifts in fintech has been the evolution of AI from a productivity tool into ‘agentic AI’ – an AI tool that can act autonomously to achieve predetermined goals or outcomes by identifying and performing multiple steps required to achieve that goal without human intervention – used in areas like fraud detection, credit decisioning and compliance. A second defining shift has been the institutionalisation of digital assets and real-world asset tokenisation. The passage of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, as well as the MiCA regulation in the European Union (EU), contributed to provide needed regulatory clarity to bolster growth in this sector. Finally, we observed a shift in the payment area with business to business payment infrastructure being particularly dynamic in 2025. AI offers a strong opportunity for growth and value creation. It was reported that AI-focused fintechs attracted $16.8bn in investments. Boards and investors will now be demanding measurable capital impact.
FW: In what ways are emerging digital tools – such as AI-driven automation, cloud-native systems and real‑time data analytics – helping financial institutions streamline core processes while adapting to increasingly complex regulatory expectations?
SINGAPORE
Kwah: We have seen AI being deployed increasingly in the anti-money laundering (AML) and countering the financing of terrorism (CFT) and sanctions space. AML/CFT and sanction screening processes have traditionally generated many false positives, which required FIs to spend a large amount of time and cost to filter through these false positives to identify the true concerns and threats. As regulators have increased their pressure on FIs to reduce the time taken to conduct screening so as to identify money laundering or sanctions risks earlier, FIs have sought to deploy AI to reduce the time and cost taken to filter through these false positives.
“Fintech providers will need to embed transparency into their platforms as a foundational feature, and not merely as a compliance obligation, in order to appease both customers and the FIs they serve.”
AUSTRALIA
Chan: The conversation around AI in the FS sector has shifted decisively from experimentation to implementation. While we are all familiar with AI chatbots, implementation in FIs is going well beyond this. In insurance, for example, the most impactful applications centre on automated claims triage and processing, fraud detection, enhanced underwriting and risk assessment, as well as natural disaster impact modelling. Beyond AI, cloud-native architectures are enabling banks and insurers to modernise core systems, scale operations more flexibly, and meet growing regulatory expectations around operational resilience and real-time reporting. Many FIs are upgrading legacy systems to streamline core operations. With all these projects, the FIs that succeed will be those that have structured their system upgrades with ‘compliance by design’. This is the ability for the systems to be compliant with regulatory expectations from the ground up, in the way they are designed for use in day to day business. In addition to AI-specific regulation that is being introduced, a major global supervisory trend is the regulation of operational risk. This captures risk that comes from dependence on third and fourth party providers, and the need for FIs to manage such risks including data protection and unexpected business disruption.
FRANCE
Baladi: AI-driven tools are fundamentally transforming how FIs approach regulatory compliance and operational efficiency. AI-driven automation enables real-time transaction monitoring by using machine learning to detect fraud more accurately than when done by humans, reduce false positives and improve anomaly detection speed. Large language models (LLMS) now enable text to code translation, converting regulatory texts into executable compliance rules. This allows organisations to reduce reliance on human coders and minimise interpretation errors. A study even showed that FIs deploying AI-driven compliance could reduce operational costs. Moreover, cloud-native systems provide scalable infrastructure enabling dynamic resource allocation while maintaining high security to face evolving threats. Such tools can help organisations achieve operational cost reductions and greater transaction processing capacity. Finally, real-time data analytics can allow for quicker anomaly detection by continuously screening transaction data and identifying suspicious patterns of AML or fraud.
SPAIN
Muñoz: AI is reshaping regulatory compliance by accelerating data collection, transaction monitoring and real-time risk assessment, particularly in areas such as AML, sanctions screening and onboarding. Real-time analytics is also growing in importance as supervisors such as the National Securities Market Commission (CNMV) increasingly rely on data oversight, while firms use analytics to detect fraud, monitor digital channels and adapt product governance to regulatory expectations. These technologies reduce manual workloads, strengthen risk management and enable a faster, more adaptive regulatory‑compliant operating model.
FW: What are the most significant strategic pressures fintech organisations are navigating today, from funding constraints to cyber security and competitive intensity? How are these forces shaping their decision making and operating models?
AUSTRALIA
Chan: Fintech organisations face a more demanding operating environment than at any point since the pandemic. The funding landscape has fundamentally reset. Investors are more conservative, demanding capital efficiency and demonstrable paths to profitability, with deal volumes contracting sharply and capital concentrating on later-stage, scalable platforms. As a result, in Australia, we are seeing consolidation at the higher levels and market exits at the other end of the spectrum. Nonetheless, the outlook is optimistic and there is support at both industry and government levels for fintechs to flourish in Australia. Cyber security and operational resilience have moved from board-level topics to existential priorities, with the Australian Securities and Investments Commission identifying cyber risk as a top concern and highlighting the growing risks created by cyber dependencies and AI. The insurance sector faces additional structural pressures from climate change: extreme weather claims are projected to increase, and a growing proportion of Australian homes risk becoming uninsurable, creating both an urgent challenge and a significant opportunity for parametric and climate-focused insurtech solutions.
SPAIN
Muñoz: Cyber security and operational‑resilience requirements have intensified with the full of implementation of the Digital Operational Resilience Act (DORA), which requires robust information and communication technology (ICT) risk frameworks, incident reporting and third-party oversight – raising compliance costs and forcing firms to upgrade infrastructure. Competitiveness has increased, as banks accelerate digital transformation and the lines between traditional FIs and fintech firms continue to blur. Meanwhile, the CNMV’s 2026 supervisory plan increases scrutiny of digital distribution, fraud prevention and cryptoasset activities, demanding more sophisticated governance and data-driven controls. From a funding perspective we will have to see how financial markets – including private credit – evolve in order to discern new roles and market concentration.
“Due to slower funding activities, some fintech companies have been forced to consolidate in order to grow and compete.”
FRANCE
Baladi: Fintech organisations are navigating a challenging environment, shaped by funding constraints, intensified regulatory demands and escalating cyber security threats. After years of market correction, fintech funding is stabilising but investors remain highly selective – prioritising companies with strong business models, proven revenue generation and clear paths to profitability – particularly for later-stage rounds. In any case, many fintechs have reported improving conditions, although emerging markets, particularly Sub-Saharan Africa, continue to face challenging funding environments. With cyber attacks reaching record levels in 2025 and affecting many areas, the FS sector is no exception, and faces increasingly sophisticated AI-powered cyber attacks, with fraud losses escalating dramatically. AI allows threat actors to conduct sophisticated attacks, bypass authentication controls and cause a wide range of damage, such as manipulating transaction flows. As a result, fintechs increasingly rank data breaches and privacy as critical operational risks, making investments in cyber security non-negotiable. Finally, traditional distribution models have been challenged by horizontal competition among players, which has seen payments giants entering lending markets and neobanks launching wealth management services.
SINGAPORE
Kwah: Funding constraints and increased regulatory controls are key challenges facing fintech companies. Due to slower funding activities, some fintech companies have been forced to consolidate in order to grow and compete. On the regulatory front, we note that more countries have introduced regulations to govern fintech services, such as payment services, and a financial licence is usually required to carry out such activities within jurisdictions. This has led to increased acquisition of existing licensed entities, as global FIs seek to scale up and to offer regulated services into more jurisdictions.
FW: What recent regulatory updates or supervisory frameworks have had the greatest impact on digital finance? How are fintech providers adjusting their products, governance practices and compliance processes in response?
FRANCE
Baladi: The most impactful recent regulatory developments in digital finance include the EU’s DORA, effective since January 2025, which mandates that FIs implement robust ICT risk management, incident reporting and resilience testing protocols. In addition, the MiCA regulation, fully applicable from late 2024, has established a harmonised framework for cryptoasset service providers across Europe, which has had an impact on digital finance organisations. It is also worth noting that the Payment Services Directive 3 (PSD3) and Payment Services Regulation (PSR) proposals, having reached provisional agreement in late 2025, introduce stricter fraud prevention requirements, enhanced authentication mechanisms and improved open banking provisions. As a response to such regulatory evolutions, fintech providers are increasingly treating governance and compliance as core design principles rather than afterthoughts. For instance, organisations may embed know your customer (KYC), incident response and data rights into their product architecture from inception. Additionally, fintech providers also increasingly invest in regulatory technology solutions for automated compliance processes to reduce costs, improve accuracy and accelerate regulatory reporting.
SINGAPORE
Kwah: In Singapore, the introduction of the Financial Services and Markets Act 2022 (FSMA) had a substantial impact on fintech companies. In particular, part 9 of the FSMA which took effect on 30 June 2025, affected a number of fintech companies which had, before 30 June 2025, tried to operate a digital payment token business without a financial licence by operating the business from Singapore but targeting customers outside Singapore. Prior to the FSMA, it was possible for such businesses to operate without a financial licence as they would fall outside the scope of the Payment Services Act 2019 by targeting only customers outside Singapore. With the introduction of part 9 of the FSMA, such a business model is no longer viable as the FSMA has required such businesses to be licensed under the FSMA.
SPAIN
Muñoz: Recent regulatory developments have had a profound impact on Spain’s digital finance ecosystem, particularly due to the implementation of two major EU frameworks: DORA and MiCA. DORA is forcing FIs and fintechs to upgrade governance frameworks and modernise their technological infrastructure. Meanwhile, MiCA is reshaping the cryptoassets landscape in Spain, shifting supervisory competence over cryptoasset service providers from the Bank of Spain to the CNMV, prompting significant adjustments in governance, disclosures and AML-KYC controls. Fintech firms are responding by strengthening compliance architectures, enhancing cyber security and redesigning product governance to meet higher compliance requirements.
“Fintechs increasingly rank data breaches and privacy as critical operational risks, making investments in cyber security non-negotiable.”
AUSTRALIA
Chan: In addition to the digital assets licensing regime that was passed by the Australian parliament on 1 April 2026, payments regulation has been in the spotlight, with the Reserve Bank of Australia announcing a ban on surcharges for debit and credit cards. From October 2026, retailers will no longer be permitted to include a surcharge for debit and credit card based payments in Australia. Interchange fees paid by Australian businesses will also be capped at a lower rate. This will no doubt drive further payments innovation. In line with global trends, regulatory focus on operational resilience is having a significant impact on digital finance. In Australia, this includes the Australian Prudential Regulation Authority’s ‘Prudential Standard CPS 230 on Operational Risk Management’, which commenced on 1 July 2025 but begins in earnest on 1 July 2026 with the end of transitional arrangements. The regulation requires FIs to demonstrate robust management of operational risks, the ability to maintain critical operations through severe disruptions and exercise effective oversight of material service providers. In order to effectively supply services to banks and insurers, fintechs have had to adapt to the new regulation even though they are not directly impacted themselves.
FW: How do you anticipate the fintech ecosystem will develop through the rest of the decade? Which technological, economic or policy trends are likely to drive its evolution over the next few years?
SINGAPORE
Kwah: The demand for faster and cheaper transaction processing will continue. This means that technologies, such as stablecoins and tokensiation, which can potentially cut down on intermediaries and streamline processes, will remain popular and become increasingly mainstream. Regulators are likely to focus on this as faster and cheaper processes should not lead to less financial stability or less retail protection. Adequate legislation and regulations will therefore need to be put in place to govern these new technologies.
SPAIN
Muñoz: It is difficult to anticipate a four-year period in such an evolving and diverse landscape, but the decisive factor will be subject to available funding and profitability in the industry. Isolating the industry from geopolitical and capital intensity, in our view, tokenisation and regulated digital‑asset markets are expected to expand as MiCA’s licensing regime matures, developing crypto services and new financing models. AI will become increasingly embedded in compliance, risk management and customer-facing applications. At its turn, the EU’s regulatory agenda – including the technical development of MiCA, DORA and the Retail Investment Strategy – will help create a more unified, competitive and safe digital finance market, giving consumers better protection while still supporting innovation.
AUSTRALIA
Chan: It is exciting times ahead for the fintech ecosystem. As the volume of personal data collected and processed continues to grow, consumers increasingly demand clarity regarding how their data is used, shared and protected. Fintech providers will need to embed transparency into their platforms as a foundational feature, and not merely as a compliance obligation, in order to appease both customers and the FIs they serve. Driven by embedded finance and open data frameworks, traditional boundaries between FS sectors are eroding, enabling any platform – financial or otherwise – to seamlessly integrate and deliver financial products to end users. But this does not mean we will see a return to bancassurance; if anything, major banks in Australia have offloaded their insurance divisions, meaning there is more opportunity for partnerships.
FRANCE
Baladi: Through the remainder of this decade, the fintech ecosystem will evolve from its disruptive origins toward a new paradigm characterised by deeper embedding into traditional financial infrastructure, closer partnerships with established players and a fundamental shift from growth at all costs toward sustainable profitability. In terms of technological trends, AI, particularly agentic AI, will be the defining technological force, with studies showing that 74 percent of fintechs rank AI as the most relevant topic for the industry’s future. It is also expected that organisations will leverage other innovations such as biometric authentication that is becoming more widely adopted in embedded finance use cases for data and transaction security. Economically, according to some studies, annual fintech revenues are projected to grow sixfold to reach $1.5 trillion by 2030, with Asia-Pacific expected to become the largest market, outpacing the US with a 27 percent growth rate. Finally, anticipated policy and regulatory trends, in particular structured around the MiCA framework and the PSD3/PSR payment reforms, will reshape competitive dynamics and enable innovation within clearer regulatory perimeters.
“Recent regulatory developments have had a profound impact on Spain’s digital finance ecosystem, particularly due to the implementation of two major EU frameworks: DORA and MiCA.”
Elena Muñoz is a senior associate at Cases Lacambra, where she is part of the financial services and M&A team. She has extensive experience in corporate and regulatory law, advising on investor protection, investment services and fintech-related matters. She has been involved in the issuance of capital instruments, including their legal structuring, compliance with prudential and solvency requirements, preparation of contractual documentation, and coordination of the necessary authorisations with supervisory authorities. She can be contacted on +376 728 001 or by email: elena.munoz@caseslacambra.com.
Ahmed Baladi is a partner in the Paris office of Gibson Dunn. He is co-chair of the firm’s privacy, cyber security and data innovation practice group, and a member of the artificial intelligence and technology transactions practice groups. He has developed renowned experience in a wide range of privacy matters, including the implementation of global privacy compliance and governance programmes tailored to complex and evolving regulations. He can be contacted on +33 (1) 5643 1300 or by email: abaladi@gibsondunn.com.
Chee Hian is a director at Prolegis LLC and head of FSR, Singapore for the Herbert Smith Freehills Kramer Prolegis Formal Law Alliance. He specialises in financial service regulations and advises on both contentious and non-contentious matters in the financial services regulatory space. He advises financial institution clients across a broad range of issues, such as licensing applications, structuring of regulated business, business conduct rules, product offering rules and anti-money laundering and counter-terrorism financing compliance. He can be contacted on +65 6812 1352 or by email: cheehian.kwah@hsfkramer.com.
Timothy Chan is a Sydney-based special counsel and insurtech lead (Australia) at Norton Rose Fulbright, specialising in corporate, regulatory and contentious legal matters within the insurance sector. He advises brokers, insurers and insurtechs on transactions, distribution and regulatory issues. He also founded The InsurTech Lawyer blog. He can be contacted on +61 (2) 9330 8472 or by email: timothy.chan@nortonrosefulbright.com.
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SPAIN
Cases Lacambra
FRANCE
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SINGAPORE
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AUSTRALIA
Norton Rose Fulbright Australia