The Financial Conduct Authority has published its innovation insights report which is part of the FCA’s Strategy 2025–2030.
The fintech market
The global fintech market is substantial. In 2025, over 4,500 deals were conducted worldwide, with roughly 2,600 disclosed transactions accounting for more than $130 billion of deployed capital. Venture capital made nearly two thirds of transactions (63%) but corporate and private equity investors contributed more capital per deal. The UK is the second-largest destination for fintech investment after the US, attracting 445 deals and $15 billion in disclosed deal value.
Types of fintech applications
Payments and digital assets accounted for 35% of FCA applications to the Regulatory Sandbox and Innovation Pathwaysin 2025, followed by consumer investments (21%) and wholesale financial markets (11%). 31% of applications involved artificial intelligence, 18% used distributed ledger technology, and 11% deployed open banking or open finance capabilities.
Digital assets and AI
Digital assets attracted significant investment in 2025 and the FCA has started cohort-based testing of stablecoin models through the Regulatory Sandbox.
AI is increasingly embedded across the fintech landscape. Advances in AI and distributed ledger technology are enabling more efficient development and testing, accelerating the path to market. The FCA has expanded its AI Lab offering through the Supercharged Sandbox and the AI Lab Supercharged Academy. Market activity also showed strong investor interest in RegTech solutions, with RegTech firms attracting notable domestic funding.
Open finance
The UK strengthened its position in open finance in 2025 through the launch of the FCA’s Smart Data Accelerator, which included sprints focused on SME lending and mortgages. The FCA anticipates that these developments will inform its approach to widening access to loans, improving customer journeys and supporting resilience to financial shocks. Global activity in open finance remains limited, and the FCA appears to see this as both a risk and an opportunity. It suggests that greater regulatory support and clarity could unlock increased investment worldwide.
The regulatory perimeter
The FCA highlights recurring themes in its informal guidance, including the circumstances in which a technology provider may require authorisation. It notes that authorisation depends on the nature of the arrangements and the activities undertaken. In consumer credit and retail lending, its steers have emphasised clarity, fairness and compliance, including expectations under the Consumer Duty, financial promotions rules and permissions relating to debt-related consumer credit activities.
The 2026–27 outlook: what to expect
The FCA has signalled several priorities for the period ahead:
- Developing clearer testing criteria and using more group-based testing to help build comparable evidence on how policy proposals work in practice. The FCA will also continue to share insights with the market.
- Encouraging greater engagement from established firms, particularly in wholesale markets and general insurance.
- Launching the Scale-up Unit for a wider range of solo-regulated firms.
- Working more closely with HM Treasury and the Department for Business and Trade through the Office for Investment: Financial Services model to support UK competitiveness and international growth.
It is clear that the government and FCA are aligned in their desire to achieve growth, which includes supporting the fintech sector to innovate, develop and grow. Significant investment and resources are being allocated to this and firms developing new products and models should take advantage of the various ways in which they can engage early with the FCA to achieve the best commercial and regulatory outcomes.
