Fintech regulation blog

Fintech regulation: A catalyst for innovation?

Many of the biggest tech topics in 2023, especially in the fintech sector, were accompanied by regulatory question marks, spotlighting the critical role of fintech regulation. How to ensure the ethical development and usage of AI? How to regulate Big Tech’s forays into the financial space? How is the UK Government going to shape the DPDI bill as a post-Brexit alternative to GDPR? How does Open Banking regulation and governance need to progress for the UK to remain a global leader? 

For many, 2024 seems to promise regulatory change in answer to last year’s questions and conundrums. At the end of January, Labour announced a proposal to ‘modernise the regulatory burden’ for UK financial services, in a move intended to drive growth in the sector. At the same time, it’s fair to take a more pessimistic view (many have). Eyes remain on the FCA’s Joint Regulatory Oversight Committee following the failure to meet delivery deadlines set out in its Open Banking Roadmap for 2023. 

We’ll have to wait and see which way the pendulum swings – but for now, what is clear is that innovation and fintech regulation are closely linked, and this is worth discussing in more detail as we close the first quarter of the year. Let’s look at how these guidelines can serve as a catalyst for innovation within financial services. 

Consumer-centric Fintech Regulations 

‘Regulation’ is a word that still carries some burden for many businesses. The cost of living crisis has led consumers to increasingly recognise and demand careful and customer-centric regulation, especially for financial services as money becomes a more worrisome subject. Not to mention the rise in scams, proliferating bank branch closures, and the crypto minefield.

More than ever, consumers want and need the financial services institutions they rely on to take their interests seriously, and this can be proven through regulations such as last year’s Consumer Duty. Businesses are aware of this, and many fintechs are rising to the challenge of driving financial inclusion by applying new technology to processes like loan approvals. In the age of hyper-personalisation, ethical data usage is essential to meeting customer needs, but this can only be unlocked within a strong regulatory framework to guarantee full trust. 

Two sides of the same coin 

Considering that the financial services sector is one of the most heavily regulated in the UK, it’s common for companies to worry that they’re spending their time jumping through hoops when they could be spending it innovating. This challenge is magnified for fintechs navigating the intricate landscape of fintech regulation, particularly the fast-moving (or maybe more often, not-fast-moving-enough) tech regulations, especially when it comes to the complexity of regulating AI. The UK’s regulatory approach has been criticised as inefficient and disjointed. This is a problem not only for meeting consumer expectations but also for giving fintechs the ability to regulate so that they can innovate. 

Rather than being a hindrance to innovation, effective and efficient regulatory moves can provide fintechs and other organisations with a springboard from which they can execute ambitious projects and identify new opportunities for growth. The case of Open Banking is compelling evidence of this: the UK’s global lead on the development and deployment of this technology was driven by the Payment Services Directive 2 (PSD2) which came into effect in 2019. Since then, UK banks, fintechs, and regulators have taken PSD2 and run with it, making the UK one of the most significant and advanced Open Banking players in the world. 

Making it happen

For the last year or so, industry experts and commentators have increasingly questioned whether the UK’s position as a global fintech leader is stable. This has largely been to do with the loss of regulatory momentum in the UK. As we’re still waiting for updates from the Joint Regulatory Oversight Committee on what the next phase of Open Banking will look like, there’s a danger that this waiting game is a barrier to fintech innovation. Often organisations see regulation as restriction, but effective and well-organised regulation actually opens doors for new possibilities and new opportunities – just look at what can be done through increased access to data, automation, and consumer-first approaches like Consumer Duty. 

Making your voice heard

Navigating the regulatory landscape can be daunting – and knowing what to say about it even more so. Keeping up with the pace of regulatory change, and the often complex and wide-reaching impacts is not a small task. But it’s essential to get your voice out there. If you want to build stakeholder trust, demonstrate your sector expertise and appear as an industry thought leader, there really is no substitute for timely and considered comment on regulations. At Babel, this is one of our favourite things to do and one of the most rewarding in terms of coverage – regulatory talk is a prime opportunity to hit nationals. 

We make this happen by playing the long game. At the start of this year, we developed a timeline of all ongoing and upcoming regulatory changes so that we can have these conversations with our clients with ample time to spare. This way, we can build impactful commentary which can be approved and saved for when the day comes. For ‘Issues Jumps’ (or ‘newsjacking’), time is of the essence, so keeping a keen eye on the progress of upcoming changes well in advance is a game-changer. 

If you’re interested in learning more about how Babel can support your company with effective and strategic media relations, please get in touch at

Written by

From the Babel team

Welcome to Babel
winning B2B technology PR.
We understand your business. We create compelling content. We always deliver.