UK Fintech Backed to Embrace Future Payments Technology

WHY THIS MATTERS: This announcement from the UK government marks a definitive commitment to building a future-proof regulatory framework for the financial sector, moving beyond incremental updates to establish structural change. The core significance lies in the explicit integration of nascent trends—specifically tokenisation and the rise of AI-driven payments—into the foundational rulebook. By proposing a single, coherent structure for both traditional and digital assets, including stablecoins, the UK is attempting to cement its competitive edge as a primary global hub for digital finance. Furthermore, placing agentic commerce on the regulatory radar acknowledges that payments will soon be orchestrated autonomously by AI, demanding preemptive rules around liability and governance. For industry leaders, this package is a crucial signal that investment in digital assets and next-generation Open Banking models is supported by a clear path to commercialisation and scale.

The UK’s payments sector is to be equipped for the future of rapid financial innovation through a new package announced today during Fintech Week in London.

The measures will help the UK remain at the cutting edge by promoting innovation and trust within the payments sector to drive growth. This means delivering a more agile and streamlined regulatory framework and ensuring regulation can keep pace with rapid technological change whilst maintaining strong consumer protections.

City Minister Lucy Rigby will attend events during Fintech Week to promote the government’s efforts in maintaining the UK as the leading destination for fintechs to start, scale and succeed. The full package includes:

• The government is today setting out further detail on how the government intends to modernise payment services regulation and update it to support new innovations in money and payments, ahead of soon publishing a consultation inviting the payments sector to feedback. This includes:
  • Improving the regulation of payment services and electronic money by integrating it with the UK’s core regulatory approach for financial services. This will mean establishing a single, coherent framework for both traditional and tokenised payments, including both stablecoins and tokenised deposits.
  • Regulating stablecoins for their use in payments, where these stablecoins have been issued under the forthcoming new regulated activity for stablecoin issuance in the UK.
  • Exploring how the regulation of payments services should adapt to payments conducted by AI agents.
  • Providing the FCA with new powers to regulate the future of Open Banking that will include underpinning the development of new Open Banking payments within commercial schemes.
• Bringing forward legislation to cut administrative burdens for companies wanting to provide stablecoin payments, cementing the UK as a world-leading destination for digital assets while maintaining safeguards.
• The appointment of Chris Woolard CBE as the government’s new Wholesale Digital Markets Champion. Woolard is a partner at EY and former interim CEO of the FCA. He will lead the government’s work to deliver a more efficient and competitive financial sector by building a tokenised wholesale financial markets system.
• An additional £1 million in funding for the Centre for Finance, Innovation and Technology (CFIT) from April to continue the Centre’s work facilitating collaboration and solving pressing issues across the Fintech sector.
• Streamlining regulation by setting out the government’s response to its consultation to bring the Payments Systems Regulator (PSR) into the Financial Conduct Authority (FCA)

Economic Secretary to the Treasury, Lucy Rigby, said: Fintech is true British success story, and we are backing the industry to maintain its competitive edge and go even further and faster in driving growth.

Today’s package is our latest stake in the ground as we build a payments ecosystem that is secure, competitive and fully equipped to harness the opportunities created by rapid technological change.

I also welcome our new Wholesale Digital Markets Champion, Chris Woolard CBE, who will help the government drive tokenisation in our markets – a critical shift for the next “digital big bang” for the UK sector.

Chris Woolard CBE, Wholesale Digital Markets Champion, said: It’s an honour to be appointed Digital Markets Champion for the UK’s Wholesale Financial Markets Digital Strategy. As financial markets increasingly move away from manual processes to digital, tokenised systems, collaboration and an open two-way dialogue between the private and public sectors will best support the Strategy’s success, and will ultimately enhance the UK’s global competitiveness as a leader in digital markets.

UK fintech benefits from Britain’s world leading financial services sector offering a thriving start-up ecosystem, global banks and insurers, leading universities, and a regulator that engages with innovation early so firms can test, learn and scale responsibly.

Over 3,000 fintech firms support tens of thousands of skilled jobs across the country, attracting over £2.6 billion in investment last year that is second only to the United States.

The government recognises the transformative potential of digital assets and blockchain technologies. These developments have the potential to fundamentally reshape how consumers and businesses interact with financial services, and the UK is well placed to be at the forefront of that transformation.

We will soon consult on how to reform the regulation of payment services and electronic money, ensuring the framework is ready to support tokenised payments such as stablecoins, unlock the full potential of Open Banking, and explore how to enable the safe adoption of AI agents to conduct payments on behalf of consumers and businesses

Through the Financial Services Growth and Competitiveness Strategy, known as the Leeds Reforms, announced last summer as part of the Chancellor’s Mansion House speech, the government set out its ten-year plan for the UK to be the world’s centre of choice for financial services investment over the next ten years. These reforms included measures to streamline the regulatory environment and make the UK the best place for fintechs to start, scale, list, and stay.

Stakeholder quotes:

Janine Hirt, CEO, Innovate Finance said: The UK has all the ingredients to be a global superpower in fintech, payments and capital markets by leading in open banking, digital assets and stablecoin, and agentic AI. Unleashing innovators and championing transformation in markets is critical. We look forward to mobilising industry to work with Chris Woolard, Government and regulators to drive this strategic ambition and deliver at pace.

Philip Belamant, Co-Founder and CEO, Zilch said: AI will fundamentally change how people interact with money, shifting payments from something consumers actively manage to something that is intelligently managed and optimised in the background. As this becomes a reality, it’s critical that regulation evolves to support innovation while maintaining strong consumer protections.

We welcome the government’s focus on adapting payment regulation for AI-driven transactions. The UK has a real opportunity to lead globally in enabling agentic finance, helping consumers benefit from smarter, more efficient ways to manage their money.”

FF NEWS TAKE: This regulatory package unequivocally moves the needle for the UK’s global competitiveness. By explicitly tackling agentic commerce and building out the legal rails for stablecoins and enhanced Open Banking, the government is future-proofing the payments landscape. However, success hinges on swift and clear execution of the upcoming consultations. We must now watch closely for the detailed regulatory proposals, particularly how the FCA defines accountability for AI-initiated transactions and the specific mechanisms for accelerating wholesale tokenisation.