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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
Now that the “One Big Beautiful Bill Act” is the law of the land, is there anything in there that fintechs and financial services companies need to be ready for?
There are two little-discussed items in the 900+ page statute may be of interest to the fintech and financial services industries One is a bit of a bankshot, the other represents a potential new hurdle for fintechs involved in payments, including cross-border transactions and micropayments.
Let’s start with the bankshot. The OBBBA includes a requirement that the Federal Communications Commission (FCC) and the National Telecommunications and Information Administration (NTIA) auction 600 MHz of spectrum behind 1.3-10 GHz by the year 2034. Why is this important? For one, the government stands to earn as much as $88 billion from the proceeds. At the same time, telecoms like T-Mobile and AT&T stand to gain bigly from greater access to a mid-band spectrum that represents the foundation of not just 5G but also future 6G networks, as well.
“Wireless spectrum acts as the invisible backbone for our digital economy,” Shane Tews, Nonresident Senior Fellow at the American Enterprise Institute, wrote last month. “Every smartphone call, streaming service, autonomous vehicle communication, and Internet of Things (IoT) device depends on this limited resource. As we approach widespread deployment of 5G and look ahead to 6G, the availability of commercial spectrum becomes increasingly vital to maintaining America’s competitive edge in the global technology race.”
While the biggest and most direct winners will be the telecoms who are able to buy the additional bandwidth, faster, low-latency connectivity will be a boon to fintechs and financial services companies when it comes to delivering current solutions faster, as well as offering new products and services that can take advantage of modern networks. Everything from account updating to more sophisticated anti-fraud technology to high-definition video banking could be positively affected by more robust 5G/6G connectivity. The broader network coverage could also support financial inclusion by making it easier for financial institutions, including regional and community-based financial institutions, to reach un- and underbanked communities in their vicinities.
The other aspect of the OBBBA that relates to fintech and financial services is the repeal of the de minimis tariff exemption. The de minimis tariff exemption allowed packages valued at less than $800 to enter the US duty-free and with less restrictive customs screening. The exemption came under fire from critics who feared a wave of low-value shipments from China and Hong Kong that would take advantage of the exemption.
Unlike much of what happens in Congress, there was actually bipartisan support for repealing the exemption; repeal also helped sync Senate and House versions of the legislation. The repeal is slated to take full effect by July 1, 2027—though partial implementation for Chinese imports has already begun.
How might this little-discussed feature of the OBBBA impact fintechs and financial services companies? Greater complexity in payments and cross-border transactions is one potential outcome as previously exempt transactions become subject to new tariff calculations. Along with this there are likely to be additional—and often more complex—compliance steps that firms will need to take including more extensive documentation, enhanced duty calculation functionality, and more. Companies will also have to explain and deal with the impact of higher prices on customers, who have become increasingly cost-conscious in recent years.
That said, there may be opportunity in this development for fintechs in the regtech space in particular. Firms with talent and technology in trade compliance, logistics, as well as tools to help automate new and complex regulatory requirements, will be ideal partners for fintechs, banks, and other companies as they navigate a world with far more dynamic trade and tariff policies than we’ve experienced in a long time.
At this point, if you’ve been working in the financial services industry since January, you’ve likely heard of stablecoins, and you may have heard of tokenized deposits. What may still be unclear, however, are the differences and similarities between the two.
Blockchain-powered financial infrastructure is on the rise, and it’s important for banks, fintechs, and regulators to understand new developments in the space, what’s possible, and what’s next. Here’s a brief overview of where stablecoins and tokenized deposits intersect, where they are different, and where they may be most useful.
Stablecoins
Stablecoins are digital assets that are issued by private companies or protocols and pegged to fiat currency. Some of you may be familiar with are Circle’s USDC, Tether’s USDT, and PayPal’s PYUSD. It is important to note that stablecoins are backed one-to-one by off-balance-sheet returns, such as fiat cash or Treasuries. Unlike fiat held at a traditional financial institution, however, they are not FDIC-insured.
Tokenized deposits
In contrast, tokenized deposits are bank-issued digital representations of fiat deposits, recorded on a blockchain. The deposits sit on the bank’s balance sheet, are fully integrated into the bank’s infrastructure, and are minted and backed by regulated banks.
Differences
There are key differences between stablecoins and tokenized deposits. First, let’s look at the issuer. While not always the case, most stablecoins are issued by private, non-bank companies. Even though some banks have issued “coins,” as in the case of JPMorgan’s JPM Coin, they are considered tokenized deposits and are usually used internally for payment settlement, not open to the public, and are not tradable on public blockchains.
The backing structure of stablecoins and tokenized deposits is also different. For example, stablecoins are not held on the bank’s balance sheet and represent a one-to-one reserve of fiat currency. In contrast, tokenized deposits are held on a bank’s balance sheet. This is useful when a firm wants to maintain liquidity to support lending and credit creation, and ensure that customer funds are protected in a regulated financial institution.
Speaking of regulation, FDIC insurance is a key differentiator between stablecoins and tokenized deposits. Stablecoins currently operate in a developing regulatory environment and, importantly, they do not offer deposit insurance such as FDIC. Tokenized deposits, on the other hand, are both insured by the FDIC and regulated.
Another key differentiating factor between the two blockchain-based payment tools is that they have opposite effects on liquidity. Stablecoins remove liquidity. That’s because when consumers exchange their fiat currency in exchange for stablecoins, their fiat currency leaves their wallet and sits in reserves, generally in the form of safe, passive assets like US Treasuries or custodial accounts. This reduces the money multiplier effect and may even weaken bank balance sheets over time. In contrast, tokenized deposits stay on the bank’s balance sheet, making the funds usable for lending, investing, and general liquidity management.
Use cases also differ between stablecoins and tokenized deposits. While stablecoins are best known for their use in cross-border payments, programmable payments, and in DeFi. Tokenized deposits are useful for domestic real-time payments, B2B payments, and treasury automation.
Similarities
But though they differ in all of these aspects, there are also a handful of similarities between stablecoins and tokenized deposits. First, both are programmable, blockchain-based representations of fiat currency. However, it is important to distinguish that, while stablecoins are backed by dollars (fiat currency), tokenized deposits are actual, digital representations of dollars.
Next, both can be used to enable payments and reduce settlement times. Because they take place on the blockchain, transactions in both stablecoins and tokenized deposits can take place in near-real-time. This eliminates the delays associated with traditional clearing and settlement systems, which can take up to three business days. Whether it’s a purchase, B2B payment, or interbank transfer, blockchain-based transactions allow for faster value exchange.
Additionally, both can be used in smart contracts, programmable payments, and embedded finance applications. And while tokenized deposits aren’t commonly used in the DeFi economy at the moment, that may change once regulated or institutional DeFi networks become more common.
Finally, stablecoins and tokenized deposits alike are useful for modernizing payment rails. Already in their infancy, both are acting as gateways to more advanced financial infrastructure. By enabling real-time, programmable payments on blockchain networks, they help move the financial system away from slow, batch-based legacy systems like ACH or SWIFT.
The future of both
Looking ahead, it is possible that stablecoins and tokenized deposits will coexist, as they both serve different niches. No matter which structure reigns supreme, however, we will certainly see traditional financial institutions and private DeFi companies increase their focus on interoperability and shared infrastructure. As regulatory clarity is enhanced on both sides and new pitfalls are discovered, the industry will likely converge on a hybrid model that blends the safety of traditional finance with the speed, transparency, and programmability of decentralized infrastructure.
The GENIUS Act passed in the US Senate yesterday with a 68 to 30 vote. The bill now moves to the House, where it’s up against the STABLE Act. This means that the House will need to choose between passing the GENIUS Act at face value or passing and reconciling the STABLE Act.
For financial services, the GENIUS Act is a big deal. That’s because it is not only the first stablecoin legislation to gain real bipartisan traction, but it will also serve as a foundation for the US to begin a digital asset ecosystem. Overall, there are four major implications the bill has on banks.
Stablecoins gain legitimacy and clarity
As a decentralized finance tool, stablecoins have long been grouped together with their crypto cousin bitcoin. Because of this, many traditional financial institutions in the US have shied away from associating themselves with stablecoins.
The GENIUS Act, however, offers both banks and fintechs a clearer legal framework to issue and use stablecoins since it outlines requirements for licensing, reserves, and oversight. Having regulation on their side reduces regulatory uncertainty and will encourage financial institutions to adopt the new payments tool and leverage stablecoins for new use cases. Reducing ambiguity around compliance and risk will also benefit firms exploring tokenization.
Banks may face new competition from Special Purpose Depository Institutions
The Senate version of the bill includes a controversial provision allowing Special Purpose Depository Institutions (SPDIs), such as Kraken, to operate across US states without the approval of each host state’s banking regulator.
If the bill is successful, it will allow fintechs with SPDI licenses to gain a regulatory shortcut because they do not need to comply with capital and liquidity requirements. This may erode the role of traditional banks in certain payment and custody markets and may not be a positive change.
“That is a pretty significant expansion of special purpose depository institutions,” Klaros Group Partner Michele Alt told American Banker. “I would ask, what else could you create as a special depository institution? How could this be used?”
Notably, however, even though the bill has passed through the Senate, the House’s version of the stablecoin bill doesn’t include a similar provision. This means that if the bill does pass through the House, the House and the Senate will need to convene for a conference to come to an agreement.
Rising expectations for real-time money movement
While consumers already expect many things in real-time, the GENIUS Act adds more pressure for banks and fintechs to deliver faster, more programmable payments. The bill will enable regulated stablecoins and essentially facilitate real-time settlement, 24/7 money movement, and programmable financial interactions.
This method of funds transfer won’t rely on traditional rails like ACH, wires, or even FedNow. If end users and businesses get accustomed to real-time, programmable payments, their expectations may be permanently shifted, requiring banks to keep up.
This adjustment would be tricky for banks, as many would need to invest in infrastructure that supports tokenized payments, smart contracts, and on-chain compliance.
Banks need to stay agile
If the House does not pass the GENIUS Act, it can advance its own bill in the form of the STABLE Act or negotiate a compromise. Either way, regulatory change is clearly in motion. Banks and fintechs should closely monitor the developments and begin scenario planning now. Whether it’s the GENIUS Act, the STABLE Act, or a hybrid outcome, stablecoin regulation is on the horizon. Those who prepare early will be best positioned to compete in a tokenized financial future.
Agentic AI agents, autonomous agents that act on behalf of users with minimal input, are not just coming to financial services. They’re already here. One of the most compelling use cases for Agentic AI is at checkout, where commerce, AI, and payments converge at the point where consumers make their purchase decisions.
In the past few weeks, three Agentic AI shopping and checkout announcements from major payments and technology players have made news headlines. So far, Google, Visa, and Mastercard are leading the Agentic AI payments charge, with PayPal and Perplexity not far behind. Here’s a look at what each company is doing.
Google’s AI-powered shopping agents
Google announced its AI Shopping Mode yesterday, a new online shopping experience that allows users to browse 50 billion product listings and buy the item they want using Google’s new agentic checkout at a price that fits their budget. Shoppers set their preferences by selecting “track price” on a preferred product listing and set the right size, color, and the amount they want to spend. If the item’s price drops into the user’s pre-selected price range, they receive a push notification and can have the agentic shopping agent buy the item for them with the push of a button.
Google is embedding an AI assistant into every step of the purchasing process, from browsing to payment, and is making the checkout experience hyper-personal, with less friction.
Visa’s intelligent commerce and agentic AI
Visa unveiled its Visa Intelligent Commerce tool last month. The new initiative will empower AI agents to deliver personalized and secure shopping experiences for consumers at scale. The program will equip AI agents to seamlessly manage key phases of the shopping journey, from product discovery, to purchasing, to post-purchase product management.
Unlike Google, Visa will offer APIs and SDKs that will provide third parties a suite of payments tools, including tokenization, authentication, and transaction controls, to embed into their own apps. In this sense, Visa is not just planning to launch a new checkout tool, it is building infrastructure for a world where the AI agent is the end customer.
Mastercard’s agentic payments through Agent Pay
Mastercard announcedAgent Pay, a payment framework for agent-driven commerce, 24 hours before Visa’s agentic AI announcement hit the wires. Mastercard’s tool aims to make payments smarter, more secure, and more personal by embedding them directly into the product recommendations generated by GenAI platforms.
When paired with Mastercard’s tokenization technology, Agent Pay will not only add security, but will also help retailers identify and validate customers to offer a more meaningful and consistent shopping experience. Overall, Mastercard is pioneering a payment model where AI, not the consumer, initiates the purchase.
Perplexity x PayPal
Earlier this month, GenAI-powered search engine Perplexity partnered with PayPal to enable in-chat shopping. Shoppers will be able to check out instantly with PayPal or Venmo when they ask Perplexity to find a product, book travel, or buy tickets. The entire process will be powered by PayPal’s account linking, secure tokenized wallet, and emerging passkey checkout flows, which could eliminate the need for passwords.
While it is not a formal “agentic” platform, the move shows that large language models (LLMs) are starting to transact directly and the partnership is a good example of how chat interfaces are evolving into commerce platforms. The announcement serves as a preview of agentic commerce where LLMs initiate and complete purchases in a single conversational flow.
Overall, these announcements signal a major shift in ecommerce. The online point-of-sale is moving from a consumer-initiated process to an AI-initiated transaction. At the outset, regulation, identity, fraud, and explainability will be a large challenge. Still, the shift to agentic commerce is well underway, and the companies building today’s infrastructure are setting the rules and structure for how agentic AI commerce will work in the future.
FinovateSpring wrapped up earlier this month, and one of the main discussion topics I heard repeatedly was how to proceed during an era of economic uncertainty combined with regulatory freedom. The US is taking a vastly different approach to regulation than Europe, which seems to be tightening its grip on compliance.
In the US, there are four major moves that have indicated the new administration’s stance toward regulation in banking and finance. Among the regulations that are shifting are:
The Consumer Financial Protection Bureau (CFPB)
The key rulemaking activity of the CFPB has been paused. Employees have been instructed to stop work on regulations involving overdraft fees and open banking.
Crypto enforcement actions
The Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have pulled back on enforcement actions in crypto, giving more clarity on stablecoin classification and providing more room for decentralized finance projects to operate.
Capital requirement rollbacks
Capital requirement rollbacks have reduced regulatory pressure on traditional banks. Key elements, like the supplementary leverage ratio and stress testing thresholds, have been softened or delayed, especially for regional banks. These rollbacks are designed to free up capital for lending and investment, but critics argue they increase risk by removing safeguards that were put in place after the 2008 financial crisis.
Basel III changes
Discussions of finalizing Basel III, which aims to require banks to maintain sufficient capital buffers and improve liquidity management, are still ongoing. However, lobbying has delayed its final implementation and resulted in a watered down version of some of its core provisions. A return to Basel II-style flexibility would prioritize bank competitiveness and profitability over strict capital adequacy.
While the current regulatory environment may give companies more room to innovate, most of the fintechs and banks I spoke with at FinovateSpring emphasized that they are still operating well within traditional regulatory boundaries, many of which are more stringent than today’s US standards. In fact, with AI now playing a major role across financial services, one compliance specialist noted that it’s increasingly common for firms to involve data scientists early in the compliance process to ensure new technologies meet regulatory expectations from the start.
Another focal point was third-party risk management, especially in today’s BaaS-driven banking environment. During my conversation with Christina Tetreault, Deputy Commissioner, Officer of Financial Technology Innovation at the California Department of Financial Protection and Innovation, she made it clear that bank-fintech partnerships are more than just IT projects. If the fintech’s technology fails, the bank will be held responsible for the issue.
As fintechs and financial institutions navigate this evolving landscape, the message from regulators and industry leaders is clear: regulatory freedom does not equal regulatory absence. Even as rules shift or stall, expectations remain high, especially when it comes to emerging technologies and third-party partnerships. In today’s environment, staying ahead means embedding compliance into innovation from the start of the project, proactively managing risks, and recognizing that regulatory clarity is still a moving target.
Credit unions are entering a new era, fueled by a combination of necessity, opportunity, and partnership. As the pace of the digital world accelerates, these community-focused organizations have increased their willingness to lean in and adopt new technologies. They are no longer simply seeking to compete with banks, but they are instead seeking to deliver the personalized, community-driven service that has always differentiated them. New fintech partnerships are helping credit unions modernize operations, meet rising member expectations, and stay resilient in a rapidly evolving financial landscape.
This collaborative approach isn’t new to credit unions, rather, it’s part of their DNA. “Credit Unions have always been collaborators,” said Ami Iceman Haueter, Chief Research and Digital Experience Officer at Michigan State University Federal Credit Union. “We’ve had to be creative and scrappy to stay relevant and competitive in a crowded market. Fintech partners are a natural fit for this collaboration. Many allow us to personalize our service or products to our members and create a custom mix of solutions to go all in for our members. That’s what we do best. Having partners that are equally committed to that vision is invaluable. It’s what will carry us forward as an industry allowing us to continue showing up for our communities.”
The environment today is ripe for credit unions to take full advantage of this collaborative mindset. The combination of heightened member expectations, accessible new technologies, and a fintech community eager to partner has created a unique moment of opportunity. Below, we’ve highlighted four key reasons why credit unions have become some of the most active adopters of fintech innovation.
Tech integration is now compulsory
Credit unions now have to engage because involvement in certain technologies has become table stakes in the banking world. Over the past few years, the baseline expectations for banking services have shifted dramatically. Real-time payments, mobile-first experiences, and frictionless, digital onboarding are no longer differentiators, they’re requirements. If credit unions want to remain competitive and retain younger members, they must adopt similar digital tools that big banks and fintechs have. In 2025, falling behind on technology isn’t just a risk to growth; it’s a risk to survival.
More credit union-specific fintechs
The fintech ecosystem has matured immensely since the first bank launched online in 1994. Today, many providers are now creating solutions designed specifically for the unique needs of credit unions. From specialized digital lending platforms to member-centric financial wellness tools, fintechs are recognizing credit unions as an important, underserved market. This tailored approach makes partnerships more attractive and accessible, helping credit unions stay up-to-date on the latest tech trends.
Embedded finance is the ultimate enabling force
Embedded finance has made it easier for credit unions to leverage third-party technologies without needing in-house technical expertise. Gone are the days when integrating new technology required a complete overhaul of a credit union’s core system. Today’s embedded banking models allow credit unions to “plug and play” fintech solutions into their existing infrastructure. Because of this, these smaller players can offer services like buy-now-pay-later, upgrade their digital account opening workflows, or launch a new mobile app with a fresh look. Overall, embedded solutions allow credit unions to deliver tech-forward experiences without the burden of in-house development.
Regulatory clarity has eased pressure
Regulatory clarity and eased regulatory scrutiny has reduced barriers to forming partnerships with fintechs. As regulators have become more familiar with fintech partnerships, clearer guidelines and frameworks have emerged to support innovation in the credit union space. New charters, sandbox programs, and cooperative frameworks help credit unions explore partnerships more confidently. With better guidance in place, credit unions can engage with fintechs without facing the regulatory uncertainty that once made these partnerships seem too risky.
All of these aspects, and more, will be on full display at FinovateSpring, which takes place May 7 through 9 in San Diego.
If you’re attending next month’s event, don’t miss a special session designed exclusively for your credit union. TheCredit Union Spotlight: Closed Door Session will take place on Wednesday, May 7, from 3:20 to 4:50, and will offer the opportunity to meet companies that are building technology specifically for the credit union ecosystem. Each company will provide a short introduction, followed by roundtable discussions where you can dive deeper into their solutions. If you’re interested in joining, please email [email protected]. Please note that space is limited and subject to approval.
Is anyone else having difficulty keeping up with all of the changes that have taken place since the new administration took office last month? Over the course of the last 18 days, sweeping shifts have reshaped regulations, agency leadership, and key financial policies— creating both uncertainty and opportunity for businesses navigating this evolving landscape.
While many of these changes will have broad implications for U.S. citizens and organizations operating in the country, I’ve distilled the most significant updates on the White House’s website impacting financial services. Below, I break down the four most critical developments that banks, fintechs, and other financial institutions need to watch closely.
Imposing a regulatory freeze
On January 20, President Trump signed an executive order to halt new rulemaking and review pending regulations across federal agencies. It also calls for the withdrawal of any rules that have been sent to the Office of the Federal Register but not published yet. The administration plans to use the pause to reassess both existing and proposed regulations so that they align with its policy objectives.
For banks and fintechs, this makes it challenging to prepare for future regulatory requirements. It may impact firms’ compliance timelines and will likely confuse financial services companies’ strategic planning efforts.
Strengthening hold on digital assets
On January 23, President Trump issued an executive order titled “Strengthening American Leadership in Digital Financial Technology.” The order prohibits the establishment of US central bank digital currencies (CBDCs). It also establishes a working group to propose a regulatory framework for digital assets within 180 days and allows individuals and entities to access and use open public blockchain networks.
This may present opportunities for banks and fintechs to engage in the stablecoin economy, especially when it comes to cross-border transactions and digital payments. Additionally, governmental protection of an open blockchain may spark the creation of new blockchain-based products and services.
Removing barriers to AI
Also on January 23, President Trump issued an Executive Order titled Removing Barriers to American Leadership in Artificial Intelligence that aims to enhance the US’s position in AI. The order removes existing AI policies and directives that are considered barriers to innovation. Within 180 days, officials are tasked with creating a plan to sustain and enhance America’s global AI dominance.
This emphasis on reducing regulatory barriers may lead to both banks and third party fintechs adopting AI technologies at a faster rate. However, as AI is a double-edged sword, the relaxed regulatory environment may create uncertainty as organizations wait for new guidelines to develop.
Implementing the DOGE workforce optimization initiative
On February 11, President Trump issued an Executive Order titled Implementing The President’s ‘Department of Government Efficiency’ Workforce Optimization Initiative, which intends to streamline the federal workforce and enhance operational efficiency. Controversially, the order gives Elon Musk and his team direct access to data held at the US Treasury Department. As a result, a coalition of more than a dozen US states is planning to file a lawsuit to block access in order to protect the personal data of US citizens.
By reducing staffing at federal agencies that oversee financial institutions, the order may impact the efficiency and thoroughness of regulatory examinations and compliance enforcement. The instability could also cause uncertainty for banks, disrupting strategic planning and compliance efforts.
Other actions
There are two other actions not yet listed on the White House’s official news release page, but each is significant.
Earlier this week, the Associated Press unveiled that the Trump administration ordered the Consumer Financial Protection Bureau (CFPB) to suspend all of its activities. Finovate Analyst David Penn reported on the details of the situation, including what the CFPB can still do and who may take over the agency if it continues to exist.
Today, the Wall Street Journal exclusively reported that the Trump administration is also considering folding the FDIC into the Treasury Department. Experts cited that this is unlikely to transpire, however, as Congress is unlikely to pass such a measure. “This idea would pose an enormous risk of terrifying Americans about the safety of their deposits and triggering bank runs,” Former Federal Regulator Patricia McCoy told CNN.
With only a few weeks to go until 2025, it is time to take a look at some of the trends we can expect to see more of in the next 12 months. There are a handful of topics that seem to be dominating the conversation in fintech as we wrap up 2024, and here’s what you’ll need to know as we head into 2025.
Crypto
I have to apologize for this one, because I know that many readers don’t want to hear anything about crypto. It does, however, need to be considered.
Why it’s big: After a dip and many volatile few years, crypto is entering a more mature phase. The conversation is no longer just about Bitcoin and speculative trading. Instead, we’re seeing increased institutional adoption and clearer regulatory frameworks emerging across the globe. With this, major players are poised to enter (or re-enter) the crypto space, which positions crypto as no longer a fringe technology, but a part of the financial ecosystem.
What you need to do about it: If you haven’t already, now is the time to educate yourself and your organization about crypto. Go beyond the basics and evaluate how blockchain technology might be relevant to your own operations. Also, stay informed about regulatory changes, as they are sure to change as crypto continues to evolve.
Stablecoins
This technically fits into the crypto category, but it deserves a highlight all on its own because of the potential. Stablecoins are a type of cryptocurrency pegged to a fiat currency or a commodity, such as gold.
Why it’s big: Stablecoins bridge the gap between the volatility of traditional cryptocurrencies and the stability of fiat currencies. They have been successfully used in cross-border payments, remittances, and payroll for global workforces because they enable instant payouts at rates much cheaper than funds sent via traditional banking rails.
What you need to do about it: Organizations operating in payments should investigate the costs and benefits of integrating stablecoins into their offerings. In particular, if your firm services businesses with international clients or cross-border supply chains, you should explore how stablecoin adoption could help service your commercial clients.
Open banking/ Section 1033
For U.S. readers, open banking made its debut in the form of a CFPB ruling in October of this year. Firms with the largest assets have until 2026 to comply, and those with assets between $10 billion and $250 billion have until 2027. There may be benefits to early compliance.
Why it’s big: The new open banking rule shifts data ownership from the financial institution to the individual consumer. This shift creates more opportunities for innovation, improved transparency, and more personalized services. The U.K. and Australia, which are early leaders when it comes to open banking, have already proven that giving consumers control over their own data is beneficial to multiple parties.
What you need to do about it: Even though some firms have until 2027 to prepare, start preparing now, as you may need to invest in infrastructure upgrades such as developing new APIs. Early compliance could give you a competitive edge by offering you time to create new products and services tailored to your customers.
Honorable mentions
Condensing fintech down into three topics does not capture the widespread nature of the industry, so here are some honorable mentions.
Agentic AI You may notice I did not include AI, which is a notoriously hot topic, among the top three trends. That is because the industry has finally moved beyond talking about AI as the technology to implement, and now considers it as the enabling technology that it is. Agentic AI, however, has its own role to play, especially in wealth management and back office automation. AI that can act independently to make decisions based on customer preferences or operational needs will play a large role in shaping fintech’s future.
BNPL With Klarna’s IPO taking place in 2025, we can expect to see interest in the BNPL space surge to new heights. However, it won’t reach 2020 levels because questions about regulation and profitability remain, especially as interest rates vacillate. However, BNPL continues to evolve with new players entering the space and existing ones expanding into adjacent markets like subscriptions and services.
Regtech The ongoing fallout from the Synapse failure has created a renewed focus on regulatory compliance. Banks are rethinking their regtech strategies, while new regtechs are leveraging tools such as large language models and GenAI to meet demand for automated compliance tools and fraud detection solutions.
Real-time payments The adoption of real-time payment systems has been gaining momentum across the globe, especially since the launch of the Federal Reserve’s FedNow service in 2023. While more businesses and consumers are slowly becoming accustomed to instant transactions, banks have shown hesitancy to send real-time payments.
Pay-by-bank In many ways, pay-by-bank goes hand-in-hand with open banking, which is fueling the growth in pay-by-bank. Direct, bank-to-bank payments are popular with merchants because of the lower fees and faster settlement times. Consumers, however, may be hesitant to use pay-by-bank unless they receive a monetary incentive at the point of purchase.
You may not think of the U.S. when it comes to having a czar in a leadership role. However, Axios reported last week that President-elect Trump is considering naming an AI czar that would be responsible for coordinating policy and governmental use of AI. This is notable because, as of now, the U.S. does not have a central agency governing and regulating the use of AI.
If put into power, a U.S. AI czar would potentially be responsible for unifying the country’s AI strategy across government and private sectors. The AI czar would also be charged with creating regulatory clarity and streamlining regulations for AI development in key industries such as fintech, healthcare, and eCommerce. Given the U.S.’s current role in the global economy, an AI czar could play a role in setting global standards for fintech AI regulation.
Benefits
There are some surprising benefits to a potential AI czar taking leadership in the U.S. First, the leader would have the potential to coordinate AI innovation and guide global efforts. This centralized orchestration could accelerate the development of AI-powered fintech solutions like fraud detection, credit scoring, and personalization strategies. Additionally, for both banks and startups, having clear, government-issued guidelines for the use of AI offers many benefits, including increased investor confidence and faster adoption of AI across subsectors. Finally, having an U.S.-led AI strategy could foster cross-border partnerships and may also be able to influence international fintech standards.
Risks
As with many applications of AI, however, there are potential risks and challenges associated with the crowning of an individual as AI czar. First, there is significant potential for favoritism to shape the role. According to Axios, the AI leader will not require Senate consent. Rather, Elon Musk and Vivek Ramaswamy, who Trump has selected to lead the new Department of Government Efficiency (DOGE), will have input into who is selected for the AI czar role. This raises concerns over potential favoritism and bias. Regardless of who is placed in the potential role or how they are appointed, there are also risks that the use of AI will end up over-regulated and that centralizing control of AI usage could stifle fintech innovation across the globe.
Global impact
U.S. policies created under an AI czar might intensify competition with other countries in the AI-arms race. Specifically, the role may help the U.S. compete with China, which has heavily invested in AI. Creating an AI czar could help the U.S. catch up with China by fostering rapid advancements in AI applications in fintech and related fields. In addition to clarifying regulation around the use of AI, the appointed person could help by coordinating research, funding, and partnerships at a national level. This streamlined approach might also encourage collaboration among U.S. fintech companies, making them more competitive in global markets.
What’s next?
Regardless of what happens (or doesn’t happen) with the AI role, both banks and fintechs should pay close attention while monitoring any U.S. AI policy changes. This applies to both firms that are creating their own AI-driven solutions in-house, as well as to those that leverage AI-driven solutions from third party providers. Everyone is in the AI game– whether they think they are or not– and the decisions made by policymakers will shape the rules of that game.
74 hours, 52,012 steps, 6 cups of coffee, 8 selfies, and one unforgettable experience.
I am, of course, talking about Money20/20, the mega fintech and banking event that has been taking place in Las Vegas since 2012. With over 10,000 attendees and 300+ vendors, this year’s U.S. event was just as brilliant as in years past.
Themes
Money20/20 is a choose your own adventure type of show, with six stages and two podcast recording studios that each host a range of rotating content throughout the course of four days. Given the wide variety of content available, it was hard to see everything. However, there are three major themes that stand out as highlights: open banking, AI, and the evolution of the payments experience.
Open banking
Open banking– specifically the recently released Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act– was one of the hottest topics of the show. The majority of people on the networking floor I spoke with had not read the entire, 594-page ruling. However, everyone seemed to agree that the scope of 1033 extends far beyond simple account switching capabilities. Panel discussions surrounding the rule also tended to agree that the purpose of the rule is data ownership, and not necessarily data portability.
AI
The topic of AI pulsed throughout almost all on-stage conversations, and was very visible in sponsor pitches on the exhibit hall floor. Money20/20 even featured its own AI bot named Aiana who interacted with the MC on one particular stage. At times, Aiana’s conversation with the MC seemed to be quite coherent and relevant, but the bot occasionally missed the mark.
Perhaps the thing about the AI discussions that surprised me the most was that it was rarely the main feature of a discussion. Instead, conversations tended to pose AI more as a technological enhancement to current offerings, rather than featuring it as the main technology that firms should focus on. This shift gives me some hope that we have moved past talking about the hype of AI and into thinking of it as an enabling technology.
Payments
Payments was a huge focus for multiple on-stage discussions at the show. Among the hottest topics were cross-border payments, stablecoins, and instant payments. What was missing from many conversations that I saw in this realm, however, were discussions of the impact of fraud and regulation. I think this may have been because many speakers on stage represented larger firms or fintechs in the payments space who wanted to get a more positive message across without bringing up the topic of risk.
AI Adoption Index
In addition to these on-stage themes, I was able to review data published in Money2020’s very first AI Adoption Index report, All in on AI: Financial Services Adoption Index 2024. Produced in conjunction with Acrew Capital, the index surveys 221 leading financial institutions and combines that with data about all publicly announced AI initiatives since the start of 2023. Here are some of the top highlights:
76% of companies indicated they have announced an AI initiative
46% of companies have announced GenAI initiatives
Out of all initiatives, 57% are put in place to generate revenue, while 43% aim to reduce costs
Public companies announced 40% more initiatives compared to private companies
Block, Intuit, JP Morgan, Chime, and Stripe account for 15% of the total AI initiatives
51% of companies surveyed have built AI into their core customer-facing product. This figure does not include AI usage in a CRM setting.
Conversations
As always, the highlight of the event was the people. After working in this space for 15 years, I’ve found a diverse network that fosters community and works to build each other up. During last week’s event, I met Finnovator Founder Michelle Beyo, who discussed the benefits of personal data ownership; caught up with Sam Maule, who talked about the downsides of pay-by-bank (and was forced into yet another conversation about Walmart); Tiffani Montez, who explained why open banking is far superior to ye olde account aggregation; as well as multiple others who added depth and color to the topics being discussed.
Experience highlights
Money20/20 is now part of a newly launched Informa division called Informa Festivals, and the conference fits this description quite nicely. There are multiple elements of the conference that are all about the experience. And while not all of them are officially sanctioned by Money20/20, each element comes together to craft an amazing conference experience.
Throughout the event venue there were multiple photo opportunities, including a talking selfie wall that lit up, greeted conference goers, and invited them to get their picture taken. Then there was the connection wall, where attendees could scan their badges in conjunction with others, see their names projected onto a wall, and receive a Money20/20 branded coin that they could use to exchange in a merchandise store. There was also a video studio where the conference recorded a video of attendees in front of an animated “honey wall,” complete with a live beekeeper who danced at the end (yes, you kind of had to be there for that one).
Outside of the event, I enjoyed a morning of yoga sponsored by Mesa, Visa, and JP Morgan; a women in fintech happy hour event (complete with a Dolly Pardon impersonator) sponsored by Alloy; and a Halloween-themed happy hour with costumes and Beetlejuice selfies sponsored by SentiLink. Thanks to everyone for putting on such great events, and a huge thank you to Money20/20 for hosting me!
Which presidential candidate will be better for fintech over the next four years?
Of all the issues roiling the presidential campaign in 2024, it is safe to say that the future of fintech is not among the top two or three. Nevertheless, it is also safe to say that the fintech industry under a Trump administration will face different challenges and opportunities than it would under a Harris administration.
Let’s first look at how the policies of Republican candidate Donald Trump might impact fintech and financial services more broadly.
“The Crypto President”
Whether or not “they” are calling Donald Trump “The Crypto President,” the man who once called Bitcoin “a scam” has since had a change of heart when it comes to cryptocurrencies.
The now-famous quote — “You know, they call me the crypto President …” — comes from an ad the former president ran in August marketing his fourth series of non-fungible token (NFT) digital trading cards. Earlier this year, Trump suggested creating a “strategic national bitcoin stockpile” with the goal of ensuring that America is the “crypto capital of the planet.”
While not prominently noted on the Trump campaign’s website, the Republican party platform with regards to digital assets includes a reference to the opposing party’s “unlawful and unAmerican Crypto crackdown” on the one hand and opposition to “the creation of a Central Bank Digital Currency” on the other. The party, whose positions are likely identical to those of the former commander-in-chief, also pledges to defend the right of American citizens to mine Bitcoin and to self-custody of their digital assets.
Republican re-deregulation
The idea of a Republican president embracing deregulation in general has been baked into voter perceptions of the party since the 1980s, at least. And as Jamie Dimon, Chair and CEO of JPMorgan Chase, rails against regulators (“if you’re in a knife fight you better damn well bring a knife,” he recently told attendees at the American Bankers Association Convention), the question is whether the Trump administration is likely to supply Mr. Dimon with the silverware he seeks.
Looking again to the RNC platform, the most specific reference to deregulation is a pledge to “reinstate President Trump’s Deregulation Policies” as part of the former president’s plan to “Cut Costly and Burdensome Regulations.” If past is prologue, then Trump’s signing of the Economic Growth, Regulatory Relief, and Consumer Protection Act in 2018 could provide some clues. Here, we find initiatives to expand access to mortgage credit, incentivize capital formation, and provide additional protections for student borrowers.
Do tax cuts + tariffs = inflation?
Aside from tax cuts, the most noteworthy element of Trump’s economic plan is his embrace of tariffs on goods manufactured outside of the United States. In fact, the former president has gone so far as to suggest that the income tax be eliminated in favor of his new, tariff-based approach to funding government operations.
And while this is extremely unlikely, the combination of Trump’s tax cut proposals and his enthusiastic attitude toward tariffs could ironically pave the way for an economy that is more vulnerable to inflation. This could lead, ultimately, to higher interest rates and tighter monetary policy compared to where the American economy is at the end of 2024.
You don’t have to be a long-time, fintech veteran to remember the devastating impact that higher borrowing costs can have on the startup community — or its financiers. And it is hard not to fear that a “double-dip” resumption of these conditions could leave startups and their backers in an even more constrained and risk-averse position than they have been this year.
Now let’s look at how the policies of Democratic candidate Kamala Harris and how they might impact the fintech industry.
From big banks to junk fees
A story in today’s Washington Post highlights Vice President Kamala Harris’s tenure as California attorney general and her role in strengthening a “multibillion dollar mortgage settlement” with major banks in the wake of the Great Financial Crisis. Not only is this a significant component of Harris’s resume, it is also a tale she eagerly tells while on the campaign trail.
It is worth noting that, for all the fighting words, most observers expect the Vice President to be more business-friendly than the notoriously pro-labor current President. Nevertheless, it is easy to see a Democratic administration looking to fortify and even extend a range of consumer protections in financial services.
That said, the emphasis from the campaign is less about bashing the big banks and more about addressing the smaller annoyances of everyday consumer life. Under the banner of ‘Lower costs by protecting consumers from fees and fraud,’ for example, the Harris campaign pledges to ban junk fees across the board and make it easier to cancel unwanted subscriptions.
Economies of opportunity
The Harris campaign has touted its concept of an “Opportunity Economy,” in which the federal government plays an active role in helping individuals, families, small businesses, and communities maximize their ability to thrive in a capitalist economy. This includes launching a small business expansion fund that leverages low- or zero-interest loans to help entrepreneurs grow their businesses and create jobs. This “Opportunity Economy” also mandates that the federal government commit to allocating a third of its contracts to small businesses, reducing the number of excessive occupational licensing requirements, and helping small businesses cut bureaucratic red tape and file taxes more easily.”
The Vice President’s plan does target startups specifically, setting a goal of 25 million new business applications over the next four years, and a tenfold expansion of the startup expense deduction from $5,000 to $50,000. Additionally, Harris’s campaign calls for an “America Forward” tax credit designed to incentivize investment and job creation in “key strategic industries” as well as “scaling up and making permanent” the National Artificial Intelligence Research Resource. The latter is a shared research infrastructure that provides startups and researchers with access to computing power, data, and analytics tools to support innovation in AI.
Housing and the “sandwich generation”
Two areas of the Vice President’s agenda — the pledge to build more housing and the goal of making both day care and elder care easier and more affordable for caregivers — could have interesting impacts on financial services and fintech. The former, which includes a plan to build three million additional homes and provide $25,000 in down payment assistance, could send a jolt through the financial services industry that would impact bankers, lenders, and mortgagetechs alike. The campaign is also championing tax credits to encourage homebuilders to build affordable homes and a Neighborhood Homes Tax Credit, which supports “investment in homes that would otherwise be too costly or difficult to develop or rehabilitate.”
The latter proposal — to ease the financial burden of Americans who are caring for both young children and elder parents — does not make a prominent appearance in the Harris campaign’s website. But those who have heard the Vice President speak in recent weeks are familiar with the challenge, which she describes as the fate of the “sandwich generation.” The Harris campaign has suggested a number of remedies — from Medicare expansion to boosting the pay of homecare workers. What is interesting from a fintech perspective is the idea that resources devoted to eldercare in particular could draw attention to the work of fintech innovators from Golden, to Eversafe, to Bereev that specialize in providing financial services to seniors and those who are caring for them.
Many of these plans from the Harris campaign will require the approval of a Congress that could easily remain split between the two parties. While that may limit the scope of even the successful initiatives, it would provide the kind of balance (or, if you prefer, gridlock) that has often accompanied strong economies. And that, in itself, would be a good thing not a bad thing for fintech and financial services.
Today is a day the U.S. financial services community has been waiting for for at least a year– the Consumer Financial Protection Bureau (CFPB) issued its final 1033 rule making. The new rule, issued in the form of a 594-page document, aims to enhance consumers’ rights, privacy, and security over their own personal financial data.
In order to accomplish this, the CFPB is requiring financial institutions, credit card issuers, and third-party fintech providers to make consumers’ personal financial data available to transfer to another provider for free. As a result, consumers will be able to add or switch providers in order to access better rates, receive better terms, and find services that best suit their needs. The CFPB states that the rule promotes competition and consumer choice, and will ultimately help improve customer service.
“Too many Americans are stuck in financial products with lousy rates and service,” said CFPB Director Rohit Chopra. “Today’s action will give people more power to get better rates and service on bank accounts, credit cards, and more.”
Today’s rule comes about a year after the CFPB issued a much shorter, 29-page document that proposed the change. So, aside from the document length, how does last year’s proposal differ from this year’s official ruling? Here are a aspects to note.
As you may expect the final ruling provides a much more comprehensive and detailed explanation of the CFPB’s approach to regulating consumer access to financial data. The new document offers the rationale behind the rule, defines key terms, specifies requirements for data providers and third parties, and analyzes the rule’s potential impact on the market. Here are some specific differences between the proposed rule-making and today’s official rule.
Transitioning away from screen scraping
The final rule-making discusses the issues of screen scraping and emphasizes the aim to promote safer and more standardized methods to access data via developer interfaces.
Liability considerations
Today’s rule touches on the liability that stems from data sharing and explains the CFPB’s approach to addressing the liability with regulations and industry standards.
Interaction with other laws
The final rule includes a discussion on how it interacts with other existing laws, such as the Fair Credit Reporting Act (FCRA) and the Gramm-Leach-Bliley Act (GLBA).
CFPB oversight and enforcement
The rule released today includes the CFPB’s plans for overseeing and enforcing the rule’s requirements, including details on supervising third parties and addressing consumer complaints.
Scope of data coverage
The final rule offers a detailed look at the types of data covered by the rule, including discussions about specific data fields and potential exclusions.
Definition of consumer
Today’s rule specifically defines what constitutes a consumer for the purposes of the rule. It also offers explanations about why it includes trusts established for tax or estate planning purposes in its definition of consumers.
Requirements for developer interfaces
The final rule lays out specific requirements that data providers must adhere to when it comes to the performance, security, and functionality of their developer interfaces.
Prohibition on fees
Today’s rule offers an explanation on why it is prohibited to charge fees to access data.
Authorization and revocation procedures
The final rule details how consumers can authorize and revoke third-party access. It also discusses what organizations must put into their authorization disclosures, and details the consumer notification process.
Third-party obligations
Today’s final rule details obligations for third parties that access consumer data, including limitations on data collection, use, and retention, as well as requirements for data accuracy and security.
Impact analysis
The final rule analyzes the potential benefits and costs of the rule for various stakeholders, including data providers, third parties, and consumers.
