We are pleased to launch our Fintech & Payments Legal Outlook 2024, where we look ahead to the key legal and regulatory developments impacting the fintech and payments landscape in 2024.
All types of entities across the financial industry – from fintechs to digital natives to established financial institutions – are riding the wave of digital innovation. They are facing challenges as they do so, including intense regulatory scrutiny, and yet the industry is proving resilient.
Fundamental growth drivers
As with most industries, fintech has been hit by coalescing disruptive forces in the past few years – including high interest rates, conflicts and geopolitical tensions – and these are set to continue in 2024. However, the sector also harbours fundamental growth opportunities. Innovators continue to develop new tech solutions to address inefficiencies and digitalise financial services products, services, and market infrastructure – all of which present investment opportunities.
Facing a more regulated future
In the crypto space – recently associated with market fluctuations and high-profile court cases – interest from institutional investors in digital asset projects is helping to bring some stability. The wind appears to be warming and some consider that a “Crypto Spring” might be nearing, buoyed by potential for US regulatory approval of a spot Bitcoin ETF. The industry is facing a more complex regulatory environment but also recognising that embracing regulation is the key to engendering trust in customer, investors and regulators.
Demand for frictionless payments – including across borders
Increasing demand for frictionless payments is driving a constant evolution of payment chains. The role of Big Tech in payments is attracting regulatory scrutiny as regulators seek to close the gap between regulated financial institutions and tech payment providers. Meanwhile work continues on developing and preparing the legal framework for various forms of blockchain based payments, in a quest to solve the instant payments and cross-border challenge.
Leveraging data in finance
Open banking is moving towards open finance – despite some challenges. Key jurisdictions have been laying the foundations for enabling the widespread adoption of open banking, with some already moving ahead with the implementation of projects that seek to apply the model to a wider range of data.
Managing increasing AI and cyber risk
The ongoing proliferation of new technologies brings with it new risks for financial institutions. Open banking, GenAI and the increase in partnerships with technology vendors offer benefits but could expose firms’ infrastructure to new vulnerabilities and cyberattacks. One of the key challenges in 2024 for financial services firms will be the evolving and risk compliance environment for GenAI. Meanwhile, operational resilience requirements are expanding, presenting another compliance challenge for regulated firms. Maintaining customer trust in this fast-moving risk environment will be a key priority for all financial services providers.
Global and regional legal outlooks
Access our report and regional outlook video content for the UK, EU, Asia: Explore the Linklaters Fintech & Payments Legal Outlook 2024.
See also our companion report on the broader Tech legal outlook: Explore the Linklaters Tech Legal Outlook 2024.
For further information, please contact:
Niranjan Arasaratnam, Partner, Linklaters
niranjan.arasaratnam@linklaters.com
