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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
The US Senate Banking Committee unveiled the latest version of the CLARITY Act this week. The Act aims to establish a clear regulatory framework for digital assets.
The CLARITY Act offers enforceable guardrails for digital asset markets in an effort to protect consumers and investors, counter illicit finance and security threats, and support innovation in the US.
The bill is controversial, as it includes provisions to limit liability for decentralized software developers and enters an ongoing debate around whether stablecoins should be permitted to offer yield or yield-like rewards. After more than 10 months of bipartisan negotiations, the Senate Banking Committee is preparing for a key procedural markup. Here are five things you need to know about the new version of the CLARITY Act.
More than crypto regulation
While crypto regulation is making headlines, the Act comes with broader stakes as it also attempts to define who controls the future infrastructure of digital finance in the US. Supporters argue the Act helps preserve a more market-driven and decentralized approach by defining the boundaries of governmental power while protecting the autonomy of private developers and individual users.
This debate extends beyond crypto trading and will ultimately determine who will own and govern the next generation of financial rails. Stablecoins, tokenized assets, and AI-driven financial agents are on the rise, and the rules governing those future financial rails are yet to be settled. The companies and platforms controlling the new infrastructure could hold influence similar to what cloud providers, mobile operating systems, and card networks hold today.
Delineates between securities and commodities
The debate over whether digital assets are considered securities has been around for about a decade. That’s why determining when a token is treated like a security and when it can transition into a commodity is one of the biggest goals of the CLARITY Act. The determination will dictate how exchanges and platforms operate, which regulator oversees it, and what disclosures are required.
Yield is a battlefield
The debate over whether or not stablecoins can pay yield (or yield-like rewards) has been a major sticking point between banks and crypto firms. While banks argue that stablecoin yield products could compete directly with deposits and pull money out of the traditional banking system, crypto companies argue that restrictions would hurt innovation and competitiveness.
The Act does not explicitly use the term “yield” in relation to stablecoins. However, it does establish a regulatory framework that distinguishes between different types of digital assets based on whether they provide a financial return, such as interest. The CLARITY Act implies that if a digital asset provides a right to interest, it would likely fall under the jurisdiction of securities laws rather than being treated as a digital commodity or a permitted payment stablecoin.
While separate stablecoin legislation continues to evolve in parallel in the form of the GENIUS Act, the CLARITY Act intersects with those debates because of how digital assets offering financial return may ultimately be categorized.
About global competitiveness
Supporters of the Act argue that it is less about embracing crypto speculation and more about preventing the next generation of financial infrastructure from being built outside the US. Europe, Hong Kong, the UAE, and Singapore have already moved ahead with digital asset frameworks, and if the US does not create a set of regulatory guardrails within this arena, banks, fintechs, and crypto firms will feel less safe innovating in the digital asset space.
Even if it passes, the debate is far from over
The legislation does not resolve every concern. In fact, there are still ongoing debates around AML protections, DeFi oversight, systemic risk, political conflicts of interest, and consumer protection. So while the CLARITY Act brings more regulatory transparency to crypto, it also accelerates a broader debate about who will govern the future infrastructure of digital finance as stablecoins, tokenized assets, and AI-driven financial systems become more integrated into commerce and payments.
FinovateSpring wrapped up last week, and with content running Monday through Thursday, there was a lot to take in. Because I spent the majority of the time running from microphone to microphone, from stage to camera, I missed many of the key demos and presentations.
I did, however, have time for a lot of quality conversations (both on and off stage). Here are some of the insights from the event.
Lines are blurring
It is clear that the world of fintech and banking we had from 2010 to 2023 is slowly fading away. Conversations with multiple people, especially my on-stage breaking news analysis session with Jim Perry, solidified this sea change.
As an industry, we are no longer talking about banks vs. fintechs or banks partnering with fintechs. Instead, the lines are blurring between what is a bank and what is a fintech as fintechs shift to becoming infrastructure providers. Similarly, in the payments world, consumers no longer need to understand the difference between decentralized finance and traditional finance. The increased use of stablecoins with easy on and off ramps to fiat currencies removes the complexities involved in leveraging decentralized finance and makes it easy for consumers to use new tools without ever changing their habits.
Distribution channels are shifting
LLMs are slowly becoming a major distribution channel for a range of bank tools. Consumers are increasingly consulting their preferred LLM to shop for loans, life insurance, credit cards, and more. As AI agents become more prolific, the customer relationship will be one step further removed from the lender, insurance company, and credit card provider. Instead, these players risk becoming infrastructure providers operating behind the scenes while AI platforms control discovery, recommendation, and engagement.
AI progress may not be linear
We are moving very quickly toward an AI-first future and if you don’t already have a team of AI agents running tasks behind the scenes, it is easy to feel like you are behind. There are, however, a few downsides to AI that may change the trajectory of adoption.
First, banks are built to handle human risk, not AI agent risk. While banks implement access controls, require approvals, and document audit trails, this is not sufficient for AI agents, which have been known to circumvent guardrails and even blackmail users in order to accomplish their own objectives. Given these risks and systemic limitations, banks may need to slow their progress, especially when it comes to using agentic AI.
Second, scaling AI is limited. While we often talk about AI like scaling software, in reality, it is closer to building up infrastructure. The energy demand for AI tools is exploding, and compute is constrained by the construction of data centers, which can be expensive and difficult to approve and build because of regulatory and environmental constrictions.
Additionally, it is important to consider the risks that happen when decisions are made in real time. When AI models are making decisions quickly, any mistakes, manipulation, or fraud within the model will propigate at the same rate.
Finovate is still about community
Finovate isn’t the biggest fintech conference, and it never will be. That’s because we have a focus on community. Instead of attending a frenzied event where you only get five minutes with each person you meet, the Finovate networking hall creates space for deeper conversations and genuine connections.
The focus on the fintech community is intentional. It is what keeps people coming back year after year. At a time when so much of the industry is being shaped by automation and digital interactions, there is still real value in face-to-face conversations, spontaneous introductions, and the kind of discussions that continue long after a panel ends.
Some of the most valuable insights from last week came from hallway conversations, lunch meetings, dinners, and the moments in between sessions where people could speak candidly about what they are building, where they are struggling, and where they believe the industry is heading next.
In July of 2025, the GENIUS Act, the first comprehensive federal framework for stablecoins, became law. Last week, the US Office of the Comptroller of the Currency (OCC) issued a notice of proposed rulemaking (NPRM) to implement the GENIUS Act’s requirements for payment stablecoin issuance and related activities.
While the new proposed rulemaking makes the GENIUS Act a reality instead of just a statute, it doesn’t change the intent of the GENIUS Act. It operationalizes the GENIUS Act by creating a dedicated regulatory section for issuers, establishing the licensing mechanics and timelines, forming the capital and operational requirements, and stipulating foreign issuer treatment.
2025 GENIUS Act
The 2025 GENIUS Act had a crucial role in setting the stage for the legality of stablecoin payments. It defined what a payment stablecoin is and who is allowed to issue stablecoins. It stipulated that stablecoins require full reserve backing with liquid assets, prohibited interest-bearing stablecoins, and created a federal and state regulatory structure. Overall, the purpose of the 2025 Act was to set guardrails. With this year’s notice of proposed rulemaking, the OCC is bringing a more procedure-focused approach.
New dedicated regulation
As mentioned above, the OCC is operationalizing the GENIUS Act in four major ways, the first of which creates a dedicated regulatory section (12 CFR Part 15) that establishes standards and requirements for stablecoin issuers. Creating the new part in the CFR changes the GENIUS Act from a written requirement into more enforceable supervisory standards.
New licensing
Additionally, new licensing mechanics come into play that create a defined pathway for entering the stablecoin market. Under the OCC’s proposal, prospective permitted payment stablecoin issuers (PPSIs) must submit a formal application outlining their business model, governance structure, reserve management approach, technology infrastructure, and risk controls. The proposal establishes what constitutes a “substantially complete” application and outlines supervisory review expectations. The new licensing process makes stablecoin issuance similar to applying for a bank charter, rather than launching a new product.
New capital and operational requirements
Similarly, the 2026 capital and operational requirements make stablecoin issuance look more like running a regulated financial institution than launching a new product. While the 2025 GENIUS Act focused primarily on reserve backing, the OCC’s 2026 proposal stipulates minimum capital thresholds, liquidity buffers beyond token redemption obligations, formal governance structures, internal control standards, and explicit third-party risk management expectations.
Established banks already have these processes embedded into their operating procedures. For fintechs, however, the new requirements may call for meaningful investment in governance, compliance documentation, and risk oversight infrastructure. These new formalities raise the cost of entry into the stablecoin issuance market.
New foreign issuer treatment
The OCC’s 2026 proposal incorporates foreign issuer rules directly into the scope of the plan, meaning that non-US players can no longer rely on regulatory ambiguity as a strategy to enter the market.
Just as the proposed framework requires US issuers, foreign issuers serving US users would still be required to apply for OCC registration, provide evidence of Treasury’s comparability determination, consent to US jurisdiction and OCC access to records, and meet requirements around US-available reserves (subject to any reciprocal arrangement).
This limits offshore entities operating in regulatory gray zones while marketing to US customers. The new rulemaking makes clear that global stablecoin players will need to align with US supervisory expectations, creating a more demanding roadmap for cross-border participation.
What this means for banks and fintechs
The proposed rulemaking makes clear that stablecoins are moving closer to the core of regulated banking activity and are increasingly being treated as part of the financial infrastructure rather than as a crypto experiment. As stablecoin issuance begins to resemble supervised activity, banks enter the conversation from a position of structural advantage. With governance frameworks, capital planning, risk management, and compliance processes already embedded in their operating models, traditional financial institutions may be better positioned than fintechs to comply with the regulatory demands of stablecoin issuance.
As compliance costs associated with stablecoin issuance rise, so does the barrier to entry. Not every fintech will have the appetite or resources to meet capital, liquidity, and supervisory expectations. The increased friction, however, brings institutional credibility to a payment type once considered adjacent to Bitcoin. This credibility lowers the risk for issuers as well as for end consumers and will ultimately transform stablecoins into an everyday tool.
What is the state of community banking in the US today? How are community banks evolving and transforming at a time of both potential opportunity and unprecedented challenge and competition?
Success stories about how community banks across the country are taking advantage of new technologies like generative AI and embedded finance will be a major part of the conversation later this year at FinovateSpring, May 5 through May 7, in San Diego.
With that in mind, today we’re taking a look at the findings from the 2025 CSBS Annual Survey of Community Banks that was unveiled at the Community Banking Research Conference last fall.
Rising competition from within and without the community
The competitive challenge from nonbanks remains a major concern for community banks throughout the US. Especially in areas such as payment services and wealth management, these fintech competitors have effectively leveraged enabling technologies like AI and embedded finance to create digital platforms able to attract customers, especially younger customers who are digitally native and have fewer ties to the traditional banking system. Nonbanks without a physical presence, for example, produced a 7% year-over-year change in competitiveness in payment services, according to the community bankers surveyed.
That said, nonbanks still trail other community banks as the biggest competition in seven out of nine product and service categories. Community banks identified local regional banks as their main competitors in payment services and nonbanks as their primary rivals in wealth management and retirement services.
The battle over deposits continues to be a significant challenge for most banks and financial institutions, and community banks are no different. While transaction deposit levels have stabilized in recent years, competition from nonbank institutions has grown, especially among those nonbanks that are out-of-market. This has compelled community bankers to adjust their pricing strategies based on local market rates; the survey noted that the number of community bankers that said that they “always” responded to rate changes increased by more than 38% to represent a quarter of all survey participants.
Fraud and financial crime remain paramount concerns
In terms of internal risks, community bankers cited cybercrime as a top issue by far all others. Both credit and debit card fraud are the most common types of fraud reported in terms of dollar losses, with check fraud, identity theft, and account takeover also among the chief challenges. The survey noted that these financial crimes—card fraud, check fraud, and identity theft with account takeover—represent the lion’s share of both total fraud cases and dollar losses.
To this point, the community bankers surveyed indicated that they were putting resources to work combatting fraud and financial crime. After safety and soundness practices, money laundering and consumer protection standards maintenance accounted for the second and third largest commitments of total compliance expenses.
“We continue to put more resources into cybersecurity and technology risk,” one respondent noted, “which has grown rapidly as part of our cost structure. We’ve invested heavily in systems and processes and added staff to review outputs to protect customers and prevent fraud. Fraud is not yet a large loss item for us, but it could be.”
E-signatures and remote deposit over AI and BaaS
For all the talk of AI and stablecoins, the technologies that are moving the needle for many community banks are more pedestrian and practical than one might imagine. Technologies viewed as “extremely” or “very” important included such solutions as e-signature, remote deposit capture (RDC), and integrated loan processing systems. At the bottom of the list of priorities? Interactive teller machines (ITMs) and fintech partnerships for Banking-as-Service were deemed “not at all important” by more than 50% and nearly 40% of respondents, respectively.
Asked to look forward over the next five years, the responses from the community bankers are similarly grounded. The top response by far, with more than 75% of respondents in agreement, was that the expansion of mobile banking services will be the most promising opportunity for their bank in the next half decade. Fully integrated loan processing systems came in second at just over 61% with cloud-based core systems at more than 53%. AI? As a tool for enhancing customer interactions, AI technology earned less than half the number of respondents. Partnerships with fintechs? For digital transformation, about a third. For BaaS, about a fifth.
What do community bankers want from fintechs?
The 2025 CSBS Annual Survey is a rich source of information and insight into the thinking of community bankers in the US right now. For fintechs looking to work with these institutions, either as partners or vendors, the survey offers a number of takeaways that can help make those connections fruitful for both fintechs and community banks.
Boosting deposit growth—Fintechs can support community banks in boosting deposit growth by offering tools such as personalized savings plans and competitive interest rate management solutions. Enhanced customer engagement platforms that heavily incentivize deposit loyalty can also be valuable. Fintechs can also provide community banks with analytics to help them identify and respond to deposit trends.
Scalable loan management technology—Making the process of loan origination, underwriting, and servicing easier for community banks is key to helping them win against competition in key financing areas such as small business, agriculture, and commercial real estate. This is also where AI-powered solutions can have a dramatically positive impact. Streamlining processes, improving applicant review, and enhancing the customer experience in lending overall are areas where fintechs have a significant track record of success and can greatly benefit community banks.
Operational efficiency and compliance—It is true for most businesses and community banks are no exception. Enabling technologies are making manual tasks increasingly unnecessary, as automation and agentic AI transform legacy workflows into smooth operational processes free of human error. These technologies are also making it easier for institutions—including community banks—to be more aware of their regulatory responsibilities and to be better able to act quickly and completely to ensure compliance. Fintechs specializing in compliance management tools and services can be key allies for community banks at a time of significant regulatory change and uncertainty.
Last week, Finovate Global looked at how key trends are shaping fintech innovation in the UK. This week, our Friday column crosses the channel to consider the most significant forces shaping fintech innovation on the Continent, especially among advanced industrial economies in the West and Baltic north.
In our examination of the UK, we highlighted navigating regulatory complexity, accelerating technological transformation, and meeting rising customer expectations as three key issues facing banks and financial services providers there. These issues are also important to markets in the advanced markets of Europe. However, there are additional themes that distinguish the concerns of bankers in developed Europe from their colleagues in both the UK and the US.
Profitability and Competitiveness in the Shadow of NIRP
One of the challenges that European banks are still dealing with is the legacy of negative interest rates. Just as the US economy was emerging from its post-Global Financial Crisis (GFC)-initiated ZIRP or zero interest rate policy, the EU was plunging into what would be a seven-year experiment in negative interest rates (NIRP). A response to the threat of deflation in the wake of the Global Financial Crisis and, more acutely, the sovereign debt crisis of 2010-2012, the EU’s NIRP policy lasted longer and was more extreme, with rates falling to -0.50%.
The impact on EU banks has been significant. Even as interest rates have normalized since NIRP ended in 2022, net interest income for EU banks has remained squeezed, impeding profitability. Additionally, European banks suffer from structural challenges to greater profitability that extend beyond the legacy of NIRP. Among them is one fundamental issue: there are a lot of banks in Europe, arguably too many, all chasing too few customers. Considered on a per capita basis, countries such as Germany, Austria, Switzerland, and Italy have a very large number of banks and similar financial institutions relative to their populations. By comparison, the UK is significantly less “bank dense,” and even the US, which is often accused of having “too many banks,” is considered only moderately bank dense.
Along with excess capacity, issues of market fragmentation and high cost-to-income ratios all contribute to an environment in which achieving profitability as an EU bank remains a challenge. Banks struggling to make money often hesitate to make the necessary investments in technology that can help them reach new customers, access new markets, and offer new products and services.
A More Integrated Union? Overcoming Fragmentation to Enable Innovation
Both the EU and UK face challenges when it comes to digital transformation. But the differences between the two regions are significant and in some ways related to the issues of market fragmentation that plague EU bank profitability. When it comes to digital transformation and investing in technology, fragmentation and diversity between member states make the task more difficult and more expensive. Larger EU banks often have country- and product-specific legacy cores—sometimes even different cores built in multiple decades. These legacy cores not only fail to communicate well with each other, but also often exist in increasingly outdated mainframe environments. On the other hand, smaller banks and financial institutions in the EU often simply can’t afford major core replacements.
Uneven development and country-specific challenges often hold back fintech innovation in the EU. Even where the EU has effectively encouraged innovation, such as PSD2, which mandated open banking, adoption and implementation has varied widely by country. While open banking adoption rates in parts of Europe, such as the Baltics, are exceptional, many other countries, including Western European countries like France, Germany, and Spain, have had more modest rates of implementation. In this context, it will be interesting to see how the different countries embrace Wero, the new pan-European instant payments and wallet scheme currently being introduced throughout the EU. Here, countries like France, Germany, and Belgium are experiencing strong implementation and user adoption trends, while others, including Spain, Italy, and Switzerland are lagging.
How are some of the other enabling innovations—such as AI and DeFi—shaping banking and financial services in Western Europe? The European Banking Authority characterizes adoption of AI in its industry as “widespread but cautious.” Unsurprisingly, use cases in customer service are the most common, as is the use of AI to help in AML/CFT screening. In addition to customer service, streamlining internal workflows is another popular use case for AI among EU banks. Generally speaking, the larger markets of the EU—Germany, France, the Nordics—are experiencing the most robust use of AI in banking and financial services.
The story is similar with DeFi and blockchain technology adoption in banking: the larger countries tend to have more banks engaged in activities such as digital asset custody services, tokenization, and trade finance. One especially interesting development is the pursuit of a euro stablecoin, an effort led by a consortium of EU banks including ING, UniCredit, and SEB that is expected to lead to a MiCA-compliant euro stablecoin launch later this year.
A Regulatory Year of Reckoning for Payments, Crypto, and AI in the EU
There is a variety of regulatory events coming this year. Some of them are the latest chapters in policies that were enacted last year, while others will make their compliance debut here in 2026. With regard to the former, regulations such as DORA (Digital Operational Resilience Regulation) which was passed in 2025 and deals with ICT, third-party, and operational risk, will continue to have an impact as institutions look to ensure compliance with resilience requirements for governance, testing, and incident reporting. Elements of the Basel III reforms, initially designed to help fortify banks in the wake of the Global Financial Crisis, have been postponed from scheduled implementation this year to 2027. Speaking of postponements, another significant regulation, the Enhanced Operational Risk Reporting Deadline, has been moved forward to June of this year.
Other key regulatory developments to anticipate for EU banks and financial services providers include the rollout of new payment regulations including PSD3, which focuses on licensing and institutional requirements, and PSR (Payment Services Regulation), which deals with day-to-day operational issues. PSD3, in particular, will be an important mandate insofar as it seeks to correct a number of problems with the previous open banking directive, PSD2. PSD3 features significant guidelines and requirements with regard to fraud prevention and liability, and also paves the way for open finance.
What about the enabling technologies highlighted in the previous section? With regard to DeFi and crypto, the Markets in Crypto-Assets Regulation (MiCA) comes fully into effect in 2026. Among the requirements are that cryptocurrency firms must have MiCA licenses to operate by the middle of the year. While this will address centralized service providers (CASPs) in the DeFi market, it does not specifically define the parameters of DeFi, including what services should be subject to MiCA. This conversation will be key for EU policy-makers in 2026.
As for AI, 2026 will be a big year, as well. Enacted in 2024, the EU AI Act will require AI systems designated as “high risk” to adhere to new guidelines with regards to creditworthiness, loan origination, risk evaluation, and automated decisioning. Additionally, the Act will require these systems to use strong governance, risk management documentation, transparency, human oversight, and quality control. Note that the Act categorizes AI systems by risk: minimal/no risk, which is virtually unregulated; limited risk, where compliance consists largely of transparency obligations; high risk, which is strictly regulated; and banned AI, which includes capabilities such as social scoring by governments and real-time remote biometric identification. Another key development is the launch of national AI regulatory sandboxes in each EU member state by August of this year, as mandated by the Act. Here, both Denmark and Spain have been credited as being ahead of the game in terms of getting these initiatives underway.
Here is our look at fintech innovation around the world.
Asia-Pacific
Singapore-based Airwallex acquired Paynuri in bid to enter the South Korean market.
Indonesian fintech UangCermat raised $26.4 million in a combination of equity and credit facilities.
Vietnam announced that crypto firms that want to participate in the country’s pilot digital asset market will need a minimum capitalization of VND 10 trillion ($400 million).
Financial infrastructure and payment solutions provider Montran opened a new office in Dubai.
Saudi Arabia’s EdfaPay, a payment infrastructure solutions company, secured approval to launch SmartPOS service in the Kingdom.
Central and Southern Asia
Indian digital payments giant PhonePe secured approval from the country’s financial regulator to launch an IPO, slated for mid-2026.
Pakistan-based fintech Neem raised an undisclosed sum in Pre-Series A funding in a round that featured participation from Epic Angels, the largest all-female investment collective in the world.
Kazakhstan enacted a range of new laws to regulate digital assets and to allow banks to expand into fintech, AI, and digital payments infrastructure.
Latin America and the Caribbean
Uruguayan cross-border payment platform dLocal teamed up with international AI device ecosystem company HONOR to launch local payments in Peru.
Cryptocurrency exchange Bybit launchedBybit Pay in Peru via integrations with the country’s Yape and Plin digital payment platforms.
UK-based stablecoin infrastructure company Noah partnered with Brazil-based digital wallet and investment platform Picnic.
Heading into 2026, there are some challenges to banks, fintechs, and financial services companies that are almost universal. How can firms navigate regulatory uncertainty? What is the most sustainable pace for the adoption of enabling technologies like blockchain and AI—much less basic modernization and digital transformation? What do consumers expect from banks and financial services providers in 2026 and how can these institutions do a better job of serving them?
With FinovateEurope coming to London in less than a month, this week’s Finovate Global will examine these issues in the context of fintech in the United Kingdom. Future editions will look at how these trends are playing out in Western and Southern Europe, the Baltics, as well as Central and Eastern Europe.
Navigating Regulatory Complexity: Balancing Innovation and Risk
More than a decade later, the consequences of the UK’s decision to leave the European Union continue to reverberate throughout the region: and its financial sector is no exception. In the years since Brexit, the UK’s Financial Conduct Authority (FCA) has created and implemented its own financial regulations, including guidelines for the use of enabling technologies like crypto assets and AI, that diverge from those in the EU.
The UK’s Financial Services and Markets Act (FSMA), for example, regulates stablecoins through use cases related to payments, whereas the EU’s Markets in Crypto-Assets (MiCA) Regulation, is broader, including asset-based tokens as well as e-money tokens. Policies in both regions have been credited for their emphasis on consumer protections. Nevertheless, some have suggested that the UK’s approach, by comparison, is more focused on balancing innovation with risk management, in alignment with the UK’s efforts to position itself as an international hub for digital finance.
Unsurprisingly, this pattern is also apparent in the differing approaches the UK and the EU have taken toward AI regulation in financial services. Whereas the UK’s approach seeks to grant more space for financial institutions and fintechs to experiment with AI technologies and relies on existing regulators (i.e., the FCA) to ensure compliance, the EU approach, with its AI Act, puts a primary focus on risk management. The Act itself categorizes AI systems by “risk levels” (high, limited, minimal) and mandates risk assessments, transparency disclosures, and compliance with other technical standards.
Accelerating Technological Transformation: Early Embrace Leads Broad Adoption
The UK’s early embrace of open banking has helped the region not only develop a robust open banking and finance ecosystem, but also has fueled its embedded finance industry. The combination of an active regulator in the FCA, innovations such as standardized APIs, and the availability of regulatory sandboxes have helped the UK reach a point where analysts believe its embedded finance market alone could double from 6.5 billion pounds ($8.7 billion) in 2024 to 15.8 billion pounds ($21 billion) by 2029. This far surpasses the EU’s embedded finance growth expectations of $194.6 million by 2030.
While fraud and cybersecurity threats are as much a concern in Europe as they are in the UK, the UK’s status as a major international financial hub also means that it suffers from a disproportionately high rate of cybercrime and fraud. Even innovations like Faster Payments have had the unfortunate consequence of making certain types of fraud—such as Authorized Push Payments (APP) scams—easier for cybercriminals to pull off. It is true that the UK does an exceptional job when it comes to fraud reporting; in the UK tracking and analyzing fraud data is more centralized compared to the EU where this data is predictably more fragmented. However, this alone does not account for the difference in fraud rates.
One area of transformation that still haunts much of the UK banking and financial services sector is the reliance on outdated infrastructure. The persistence of outdated core systems significantly limits the ability of banks and other financial services providers to innovate and scale. Successfully modernizing and digitizing their systems is key to enabling them to take advantage of some of the enabling technologies noted here: from AI and blockchain technology to faster payments and tougher cybersecurity protections.
It is true that both the UK and the EU suffer from more mainframe-based core banking infrastructure and layers of middleware than is beneficial to either region’s financial sector. This is especially true when the less developed areas of both—the UK’s north and the EU’s east—are taken into account. What is interesting is that the demand for modernization is greater in the UK, where there is both strong pressure from regulators and from increasingly digitally savvy consumers. The dominance of a few major banks in the UK also puts significant constraints on modernization, and encourages a tendency to innovate and modernize “around the core” rather than engage in wholesale replacement.
The UK banking and financial services customer is sophisticated, digitally savvy, and is willing to experiment with new banking and fintech innovations across payments, lending, investments, and more. Because of this, the UK enjoys a relatively high trust in banks, creating a virtuous circle that, along with these other factors, incentivizes innovation in financial services and a higher degree of engagement among financial services consumers.
As such, it is no surprise that the chief concern for UK banking consumers is financial crime and fraud. If anything, it is refreshing that a population open to new technologies and methods in an area as delicate as finance is similarly focused on ensuring that these new financial products and services are secure. Moreover, because fraud fears are a consistent, but not necessarily dominant concern, it is worth noting that much of what drives concerns over financial crime involve recent developments such as faster payments and greater personalization. In this light, it is clear that the key to ensuring continued adoption of innovations in fintech and financial services—for individuals as well as businesses—lies in a path to adoption that is accessible, transparent, regulated, and safe.
Here is our look at fintech innovation around the world.
WeLab, a Pan-Asian fintech that operates a number of digital banks in the region, raised $220 million in a debt and equity round involving HSBC and Prudential.
Liminal Custody, a digital asset custody firm, joined the Fintech Association of Japan.
Temenos and Myanmar Citizens Bank partnered to fortify core banking operations and facilitate real-time payments.
Sub-Saharan Africa
Capital.com secured a license from Kenya’s Capital Markets Authority (CMA).
Caisse des Dépôts et Consignations de Côte d’Ivoire announced an investment in local fintech GREEN-PAY.
US fintech PayServices filed a lawsuit in US federal court against the Democratic Republic of Congo (DRC) over a failed banking and payments infrastructure modernization project.
Central and Eastern Europe
German insurtech Enzo raised an additional €4 million in seed extension funding.
Google launched Universal Commerce Protocol (UCP), an interoperability layer that lets AI agents discover products, authenticate users, and complete transactions.
Unlike AP2, which governs how agents move money, UCP orchestrates the entire commerce flow.
UCP will require banks to create new approaches to authentication, consent, liability, and trust as AI agents become active participants in commerce.
Google unveiled its Universal Commerce Protocol (UCP) today, which essentially serves as the plumbing for how AI agents buy things on consumers’ behalf. But what does it really do and how is it different from Google’s AP2 launched last fall? Here’s a simple breakdown of the newly launched protocol.
What does UCP do?
Co-developed with major retailers and ecommerce players, including Shopify, Etsy, Wayfair, Target, and Walmart, Google’s Universal Commerce Protocol is essentially a standardized way for AI agents to discover products, request prices, authenticate users, and complete transactions. You can think of it like HTTPS, which is a set of rules that serves as a standardized protocol that governs and encrypts how browsers request and servers send web content over the internet.
Similarly, UCP is an interoperability layer that allows many systems to talk to each other and enables AI agents to make purchases and decisions on a consumer’s behalf, instead of just making product recommendations. UCP is more than a marketplace or a wallet. The new protocol coordinates the various aspects of how agents, merchants, identity systems, and payment rails interact during a transaction.
Google plans to use UCP to power a new checkout feature on select Google product listings that will allow shoppers to check out using Google Pay and PayPal from eligible retailers in AI Mode within Search and in the Gemini app.
From an end users’ perspective, this may seem similar to OpenAI’s partnerships with retailers like Walmart that allow shoppers to make purchases within ChatGPT. Google’s move, however, is markedly different. That’s because Google owns the payment rails. While the retailer remains the seller of record, Google controls the checkout experience as well as the protocol, which standardizes identity, payment credentials, shipping information, and consent.
How does UCP differ from AP2?
The final quarter of 2025 brought a deluge of new agentic commerce protocols to the market, creating confusion about the roles of protocols and the players involved. Among the protocols launched last year was Google’s AP2, its Agent Payments Protocol. AP2 is much narrower in scope than UCP, however, because while AP2 governs how an AI agent is allowed to move money, UCP orchestrates the entire commerce flow.
UCP handles product and service discovery, pricing and availability queries, merchant interaction, user intent and authorization checks, transaction confirmation, and fulfillment. AP2, on the other hand, is entirely payments focused. It handles payment initiation, authorization limits, credential handling, transaction execution, and settlement signaling.
What does all of this mean for banks?
Agentic commerce is moving fast and is set to change how transactions are initiated, authorized, and executed. As AI agents take on a more active role in purchasing, banks will need to rethink their role in the transaction stack and consider how to authenticate AI agents and create policies around who is liable when an agent transacts. Fortunately, protocols like UCP create auditability and can program trust into every transaction.
SoFi has launched SoFiUSD, a fully reserved US dollar token issued by SoFi Bank, positioning itself as a stablecoin infrastructure provider for banks, fintechs, and enterprises seeking faster, always-on settlement.
Although branded as a stablecoin, SoFiUSD’s cash-only backing and on-demand redemption model place it closer to a tokenized bank deposit.
SoFi’s approach aligns more closely with JPMorgan’s JPM Coin than with non-bank stablecoins like KlarnaUSD, underscoring a growing divide between bank-issued tokenized deposits and fintech-issued stablecoins as programmable money adoption grows.
Lending and wealth management fintech SoFi is entering the stablecoin market today. The San Francisco-based lending and wealth management company has launchedSoFiUSD, a fully reserved US dollar token issued by SoFi Bank.
The new tool blurs the line between a traditional stablecoin and a tokenized bank deposit. The distinction between these two terms matters, as banks and fintechs are increasingly taking different approaches to bringing regulated money onto blockchain rails.
SoFiUSD will allow SoFi, an OCC-regulated insured depository institution, to serve as a stablecoin infrastructure provider for banks, fintechs, and enterprise platforms with an aim to streamline operations with the faster and more efficient money movement that stablecoins offer. SoFi’s new stablecoin will enable partners to leverage SoFi’s framework to issue white-labeled stablecoins or integrate SoFiUSD into their own settlement flows.
SoFiUSD will be used for:
Settling SoFi’s crypto trading business
Offering third parties such as card networks, retailers, or businesses faster, safer settlement 24/7
Powering SoFi Pay for international remittances and point-of-sale purchases
Serving as an alternative form of payment for Galileo’s partners
Acting as a secured dollar-denominated asset for companies operating in countries with volatile currencies
“Blockchain is a technology super cycle that will fundamentally change finance, not just in payments, but across every area of money,” said SoFi CEO Anthony Noto.“With SoFiUSD, we’re using the infrastructure we’ve built over the last decade and applying it to real-world challenges in financial services. Companies today struggle with slow settlement, fragmented providers, and unverified reserve models. SoFi is helping address these gaps by combining our regulatory strength as a national bank with transparent, fully reserved on-chain technology to provide a safer and more efficient way for partners to move funds.”
While SoFi is calling SoFiUSD a stablecoin, its reserve model acts more like a tokenized deposit. That’s because the token is fully backed by cash held at SoFi Bank and redeemable on demand, representing bank deposits on-chain. This structure removes liquidity and credit risk and positions SoFiUSD as regulated bank money rather than a crypto instrument.
SoFi may be using the term “stablecoin” for three reasons. The first is market familiarity, as the term “stablecoin” is more widely recognized than tokenized deposits. The second is regulatory ambiguity, since US regulators have yet to formally define how tokenized deposits should be treated. The third is interoperability, with “stablecoin” indicating compatibility with today’s on-chain payment rails.
By launching what is effectively a tokenized deposit, SoFi joins a small but growing group of regulated banks experimenting with blockchain-based bank money, most notably JPMorgan Chase, which launchedJPM Coin in November. Like JPM Coin, SoFiUSD keeps reserves inside the banking system and uses on-chain rails to modernize settlement rather than to create a parallel form of money.
The tokenized deposits approach stands in contrast to KlarnaUSD, Klarna’s recently announced stablecoin, which is issued by a non-bank and backed by reserves held outside the issuer’s balance sheet. While KlarnaUSD is designed to improve payments efficiency for cross-border commerce, SoFiUSD’s approach leverages a bank charter to embed stablecoins directly into deposits, lending, and treasury workflows.
As banks and fintechs experiment with programmable money, the distinction between bank-issued tokenized deposits and non-bank stablecoins may prove critical in determining which models scale beyond payments into the core of financial services.
Fraud is growing more sophisticated and has become supercharged by generative AI, deepfakes, and increasingly organized social-engineering networks. The changing dynamics have forced both banks and fintechs to rethink their defenses as criminals adapt faster, more frequently, and with more personalized attacks. Across fintech, it is clear that traditional fraud controls are no longer enough to protect customers.
But while the entire industry is facing the same escalating threats, fintechs have been especially creative in rolling out new layers of protection. Over the past year, a handful of standout features have emerged that combat fraud by proactively shaping customer behavior, interrupting social-engineering tactics, and closing gaps that legacy systems can’t reach. Here are three unique new innovations worth watching (and borrowing).
Revolut’s geolocation restrictions
Revolutreleased a safety feature yesterday that allows users to restrict money transfers to specific, user-approved geographic areas. If a transfer request is made from the customer’s device, but takes place at a location that the customer has not listed, the app blocks the transaction automatically, even if the fraudster has the user’s credentials. The feature uses both device GPS and Revolut’s internal risk engine to reduce account takeover losses.
Why banks should care: Geolocation locking adds a low-friction layer to fraud defense, especially for reducing authorized push payment fraud (APP) and account takeovers. By having the user determine their restricted, “safe” locations, banks could offer users more granular control over how and where their money can move.
Monzo’s and Robinhood’s in-app scam warnings
Both Monzo and Robinhood help users determine whether an inbound call claiming to be from the bank is legitimate. When a customer is on a call and opens their mobile app, the app displays a banner that clearly communicates that the call they are on is not with the bank. In Robinhood’s case, the message states, “We are not currently trying to call you. If the caller says they’re from Robinhood, they are not. Hang up.”
Why banks should care: Impersonation scams are one of the most expensive forms of APP fraud. Adding an in-app, real-time verification banner is an extremely simple but effective way to interrupt fraudsters.
iProov is fighting deepfakes with biometric verification that detects AI-generated faces and synthetic video spoofing. The company analyzes pixel-level light reflections, which it calls “liveness assurance,” and uses deepfake-detection models to identify whether a live user is present. This is becoming essential for remote KYC, account recovery, and high-risk authentication.
Why banks should care: Banks increasingly rely on remote onboarding and passwordless authentication, but deepfakes are now able to defeat many of the legacy selfie-verification systems launched in the past decade. Deploying deepfake-resistant biometrics is becoming essential to prevent fraudulent account opening and social-engineering-driven account resets.
Each of these features has one thing in common: they put friction in exactly the right place. The friction isn’t applied to every transaction, and they won’t deter honest customers, but they will help stop fraud in common places. By using smarter triggers, real-time context, and design choices, fintechs are able to interrupt fraudsters. And while each solution won’t stop all fraud, they take care of some of the heavy lifting while minimizing the burden of friction on end consumers.
In July, JPMorgan Chase (JPMC) began notifying fintech data aggregators that it intended to begin charging significant fees for access to its customers’ bank account information. The shift triggered concern among aggregators about their business models, stirred interest among other banks eyeing similar moves, and raised red flags with regulators concerned about the broader economic fallout. Now, nearly five months later, the bank and its fintech partners have struck a deal on those fees, according to CNBC.
JPMC spokesperson Drew Pusateri said that the bank has updated contracts with aggregators that make up more than 95% of the data pulls on its systems, including Yodlee, Morningstar, and Akoya. Plaid was the first player to mutually agree on a new data access contract, inking a deal in September.
“We’ve come to agreements that will make the open banking ecosystem safer and more sustainable and allow customers to continue reliably and securely accessing their favorite financial products,” Pusateri said in a statement. “The free market worked.”
In this “free market” that Pusateri referenced, JPMC ultimately agreed to charge data aggregators a lower and more predictable price than what was initially proposed in July. While still a paid model, the fact that the terms were negotiated within four months indicates that market pressure, bargaining power, and competitive dynamics shaped the final outcome without the need for regulation.
While the parties declined to disclose specific details regarding the price, as well as the term of the agreements, it is clear that the revised agreements preserve commercial viability for the aggregators while allowing JPMC to monetize the data access.
By agreeing on reasonable terms, aggregators are able to operate with certainty when it comes to data sharing and open banking as the formal agreement brings clarity to open banking operations at a time when the CFPB has paused to revise Section 1033 of Dodd-Frank.
Importantly, today’s announcement marks a sea change in financial services. JPMC, which has historically been a leader in many aspects of banking, has signaled to other firms that they can generate a new revenue stream by leveraging their consumers’ financial data. And given JPMC’s scale and market influence, the move to charge fees will not be an isolated event. Other major banks are now positioned and incentivized to adopt comparable fee structures.
Regardless of the time frame it takes others to adopt a similar strategy, the potential of a new revenue stream will reshape the economics of US open banking over the next 12 to 24 months.
Generative AI-powered shopping has been gaining steam in the latter half of this year and is shaping up to be one of the top trends as we move into 2026. The availability and convenience of Gen AI tools are shifting consumers’ shopping habits away from traditional browser-based shopping as these new tools become more deeply embedded in the shopping experience.
Adobe for Business published a report earlier this year that shows momentum in the use of generative AI-powered chat services. The report, which surveyed more than 5,000 US individuals, aimed to complement a study conducted during the 2024 holiday shopping season that examined consumers’ usage of Gen AI-powered chat services and browsers.
There are six standout findings from the report that exemplify the shift in consumers’ habits.
Generative AI traffic to retail sites exploded
Adobe found that the first surge during the 2024 holiday season reached a growth of 1,300% year-over-year. Following this, the recent data shows that traffic from Gen AI-powered chat tools and browsers has continued to accelerate, reaching a 4,700% year-over-year increase as of July 2025. AI-driven visits now represent a meaningful and fast-growing share of retail shopping and research activity.
Over one-third of US consumers have used AI for shopping
According to Adobe’s 5,000-person survey, 38% of consumers have used generative AI at some point during their shopping process, while 52% plan to do so this year. Shoppers are most commonly using it for product research (53%), recommendations (40%), finding deals (36%), creating shopping lists (30%), and gift ideas (30%).
AI shoppers are more engaged and informed
Consumers that arrive at a website from AI-powered sources spend 32% more time per visit, view 10% more pages, and have a 27% lower bounce rate than those coming from traditional sources such as search, social media, and email. Shoppers using Gen AI also report an increase in satisfaction, with 85% of users saying that AI improved their shopping experience and 73% now rely on it as their primary product research tool. Overall, shoppers using Gen AI tools are more engaged than shoppers using traditional ecommerce methods.
Conversions still lag
While consumers are increasingly using Gen AI tools for browsing, many stop there and fail to actually make the purchase. In fact, Adobe’s study showed that AI-driven traffic is still 23% less likely to convert than traditional traffic. This figure has actually shown a bit of improvement over the past few months. The study showed that conversion rates were 49% lower in January 2025 and 38% lower in April 2025. This suggests that consumers increasingly trust AI-powered recommendations enough to complete purchases directly.
Revenue-per-visit from AI sources is catching up to non-AI visits
When it comes down to dollar figures, it turns out that Gen AI-powered shopping isn’t as valuable, though that is quickly changing. Adobe’s study found that AI-driven revenue-per-visit rose 84% from January 2025 to July 2025. While AI-driven visits were worth 97% less than non-AI visits in July 2024, they were only 27% less than a non-AI visit a year later. This indicates shoppers are moving from using AI purely for research to actually buying through AI-driven paths.
Mobile is fueling AI-driven shopping growth
According to the study, in July 2025, 26% of AI-driven retail traffic came from mobile. This is up by 8 percentage points from 18% six months earlier. Adobe expects mobile AI use to further close the conversion gap, given consumers’ tendency toward more impulse-driven shopping on phones.
All of these statistics paint a picture of what we can expect to happen to ecommerce in the next few years. As consumers increasingly turn to their preferred Gen AI tool when they start their shopping journey, we’re witnessing the early stages of a new kind of marketplace. In ecommerce 2.0, we’ll see discovery, recommendation, and payment converge within a single interface. Competition in this new frontier will no longer be about who owns the checkout. Rather, it will centralize around who owns the conversation that leads there. As the 2025 holiday shopping season picks up, expect to see fintechs, retailers, and payment providers racing to claim their spot in the Gen AI shopping ecosystem.
If you’ve been paying attention to the open banking conversation in the US, you are aware that it is currently on the cusp of a major shift. In July, the Consumer Financial Protection Bureau (CFPB) filed a surprise motion to pause the legal battle over its Section 1033 data access rule. The Bureau then announced its plans to rewrite the rule altogether, and initiated a call for public comments.
The purpose of Section 1033 is to align principles on how consumers access and share their financial data. The rule essentially stands as the legal backbone of open banking in the US. For its part, the CFPB’s role is to define the technical and legal framework behind the mechanics of consumer data access. The Bureau is tasked with creating standards for data access, consent, and security.
The public comment period ends tomorrow, October 21, but writing a new rule will likely be anything but smooth. Aside from the various viewpoints from opposing stakeholders, which complicates the CFPB’s effort to write a fair ruling for all parties, there is now another wrinkle in the story. Last week, White House budget director Russell Vought said on a podcast that he wants to close down the CFPB. If the CFPB were indeed dismantled, would open banking stall or survive?
When the public comments period ends tomorrow, the CFPB will begin drafting the new open banking proposal. Further complicating the matter, the rewrite is unfolding alongside ongoing litigation over the original rule. The Financial Technology Association (FTA) is defending the rule in court after the Trump administration moved to overturn it back in May. In September it argued against an effort by the Bank Policy Institute to keep the rule on hold indefinitely, saying that big banks are trying to limit how much authority the CFPB has over open banking in hopes of shaping what the new version of the rule will look like.
Between the drafting of the new rule and all of the litigation, the next six-to-twelve months are pivotal in steering the open banking conversation. And yet, even as the rule is being rewritten and argued over in court, a much bigger question looms: what happens if the CFPB itself disappears? If Vought’s comments are correct and the CFPB is indeed completely dismantled there are a few likely scenarios of what may happen moving forward:
Regulatory limbo
With no agency to finalize or enforce 1033, the rule could be delayed or stalled indefinitely. This delay would slow technological adoption and would make open banking once again driven by the market, instead of regulation.
In fact, for years, banks and fintechs have been building API-based data-sharing frameworks and forming independent networks such as FDX, which unifies the financial industry around a common standard for the secure and convenient access of permissioned consumer and business data.
In the absence of regulatory guardrails, however, big banks could set the terms of data access and possibly introduce unreasonable fees or restrictive policies. Additionally, smaller fintechs could be squeezed out, which would ultimately reduce consumer choice. As a result, the US would have a more industry-controlled version of open banking instead of a consumer-centric model.
Reassignment
The authority to shape, finalize, and enforce 1033 could shift to other agencies such as the FCC or OCC. Swapping agencies, however, may create jurisdictional confusion since neither agency has a direct consumer-data mandate. This confusion may lead to slower adoption and reduced technological innovation.
If federal leadership falters, however, individual states may step in to organize their own regulations. States like California or New York may end up writing their own data-sharing laws. This would result in a patchwork of regulations, increasing compliance costs and complexity, especially for new fintechs seeking to compete. In theory, Congress could pass national open banking legislation, but bipartisan agreement on financial regulation (or any regulation) is rare.
Wiping out the CFPB will not wipe out the underlying law, Section 1033 of the Dodd-Frank Act of 2010. However, even though the law would continue to stand on its own two feet, the rulemaking, enforcement, and coordination around the law could be thrown into disarray. If the rulemaking is stalled for too long, it is likely that we will see individual states take matters into their own hands.
