Regulatory authorities are urging for a more adaptable and responsive regulatory landscape
The Financial Conduct Authority (FCA) is playing a pivotal role in shaping the future of the UK's financial services sector, with a focus on fostering sustainable, innovation-led growth.
According to a study by University College London, fintech institutions could offer better access to credit for consumers, particularly low-income households. However, these institutions also carry specific tail risks that current regulation has not fully stress tested. Recognising this, the FCA is taking steps to address these risks while harnessing the potential benefits of fintech.
The FCA's Strategy 2025 prioritises open finance as central to driving innovation-led growth. Through initiatives such as the Open Finance Sprint 2025, it has facilitated collaboration among over 110 stakeholders to develop data-sharing use cases that enhance financial wellbeing, growth, and resilience. Technological enablers, including mature standards for APIs, transparent consent mechanisms, accountability frameworks, and interoperability, enable smoother data flows, fostering innovation in product and service offerings.
The FCA is also launching a Smart Data Accelerator aimed at testing impactful use cases and facilitating agile policy development. This can accelerate the deployment of innovative financial products while adapting regulation dynamically. Cooperation between the FCA and the UK Government to publish a comprehensive open finance roadmap by March 2026 demonstrates structured efforts to sustainably grow the sector, making the UK a competitive global financial hub through innovation.
However, the FCA faces challenges in balancing innovation facilitation with rigorous conduct and prudential standards, especially as new rules related to non-financial misconduct and senior personnel fitness tests are introduced. Technical and operational challenges in achieving interoperability and common standards across diverse financial institutions and technology platforms also pose significant hurdles.
Despite these challenges, opportunities abound. Harnessing open finance can improve consumer empowerment through better financial verification and tailored services, promoting inclusive economic growth. Enhancing SMEs’ access to finance and improving mortgage market efficiency via upcoming TechSprints can stimulate broader economic growth. Positioning the UK as a global leader in innovative financial services regulatory frameworks can attract investment and talent.
A smarter, more agile regulatory environment that recognises the interplay between innovation, competition, and systemic resilience is central to supporting the UK's growth mission. The FCA's new secondary objective is a call to action, with the aim of embedding growth considerations into the regulatory DNA to reshape financial services as a catalyst of long-term, inclusive, and internationally competitive growth.
Case studies have exposed a shift in equity fundraising, with capital increasingly supporting innovative start-ups. The FCA can play a vital role in simplifying cross-border investment approvals and improving the environment for international listings. Research presented during the FCA economic research competition offers insights on how financial regulation, when aligned with the UK’s growth mission, can actively contribute to a more productive, resilient, and inclusive economy.
Another major insight from the competition lies in how risk is conceptualised in a post-crisis world, with a focus on updated, dynamic monitoring tools and a regulatory approach that understands the potential of non-bank financial entities to transmit or amplify shocks. The financial sector, which contributes over 8% of the UK’s gross domestic product, has undergone transformative changes over the past decade, with the rise of fintech and cryptocurrency markets.
However, high entry costs and burdensome regulations are issues that deter both domestic and foreign listings in the UK’s capital markets. Export competitiveness has declined since Brexit, even as outward foreign direct investment surged into EU centres like Germany and the Netherlands. Deeper co-operation between regulators and trade bodies could help amplify UK financial services’ global brand, especially in emerging fields such as green finance, digital assets, and environmental, social, and governance-aligned investment.
In conclusion, the FCA’s evolving role is designed to drive sustainable, innovation-led financial sector growth internationally by combining forward-looking technology and data initiatives with strengthened governance and consumer protection frameworks. Achieving this balance amid emerging regulatory and technological challenges remains central to its success.
- The FCA is addressing specific risks associated with fintech institutions as they carry tail risks not fully stress tested by current regulation.
- Through collaboration with over 110 stakeholders, the FCA is developing data-sharing use cases that promote financial wellbeing, growth, and resilience.
- The FCA is launching a Smart Data Accelerator to test impactful use cases and facilitate agile policy development, aiming to sustainably grow the sector.
- The FCA's role in simplifying cross-border investment approvals and improving the environment for international listings can attract investment and talent.
- Research has shown that financial regulation, when aligned with the UK’s growth mission, can actively contribute to a more productive, resilient, and inclusive economy.
- A smarter, more agile regulatory environment that recognises the interplay between innovation, competition, and systemic resilience is central to the UK's growth mission.
- Deeper co-operation between regulators and trade bodies could help amplify UK financial services’ global brand in emerging fields such as green finance, digital assets, and ESG-aligned investment.
