Big-Picture Financial Services Trends

According to 2026 industry projections, the financial services sector is undergoing a major “unconstrained” transition, with old barriers between banking, technology, and other businesses disappearing. The industry is transitioning from digital experimentation to “agentic,” AI-driven, “real-time” operations.

Here are the key big-picture financial services trends for 2026:

1. The Proliferation of Agentic AI 

AI has moved from generating content (Generative AI) to executing complex, multi-step tasks (Agentic AI). 

• Operational Efficiency: AI agents are being deployed to handle back-office processes, compliance, fraud detection, and customer onboarding, enabling “10x” productivity where fewer people manage larger workloads.
• Hyper-Personalization: Banks are using AI to offer personalized, real-time advice on savings, investments, and budgeting, which has become a key competitive differentiator.
• Data Foundation: Success depends on AI-ready data (accurate, timely, and secure), which is forcing modernization of legacy systems. 

2. “Banking Everywhere” (Embedded Finance)

Financial services are becoming a feature of non-financial platforms, moving away from standalone apps and branches. 

• Integrated Journeys: Financial products (payments, lending, insurance) are embedded directly into e-commerce, apps, and services, such as buying insurance while booking a flight.
• Growth Potential: The global embedded finance market is expected to surpass $138 billion in 2026, with some forecasts suggesting the market could reach $7.2 trillion by 2030. 

3. The Future of Money (Digital Assets & Real-Time)

Money is being re-engineered to be smarter, faster, and programmable. 

• Real-Time Payments (RTP): 24/7, instant settlement is becoming the new baseline, reducing dependency on bank operating hours.
• Tokenization & Stablecoins: Tokenized assets and stablecoins are moving into the mainstream, with real-world asset tokenization (RWA) projected to grow significantly.
• Programmable Money: Money can now act on its own, executing payments and optimizing liquidity automatically. 

4. Regulatory-Driven Innovation and Compliance

Regulation is increasingly acting as a driver of, rather than a barrier to, innovation. 

• Proactive Compliance: Firms are leveraging AI-driven regulatory tech (RegTech) to handle complex,,cross-border,rules automatically.
• Focus on Resilience: Stricter standards (such as DORA in Europe) are forcing financial institutions to strengthen cybersecurity and operational resilience.
• Consumer Protection: Regulators are focusing heavily on protecting retail investors, with increased scrutiny on fraud, especially with the rise of AI-enabled scams. 

5. Shift in Competition & Structural Changes

Traditional banking advantages (deposit-driven balance sheets) are under pressure, forcing a “redefinition of the bank’s edge”. 

• Private Credit Growth: Private credit is playing a larger role, with the market growing substantially, providing alternative financing options and reducing dependency on traditional bank loans.
• Rise of “Finfluencers”: Social media influencers are playing a major role in financial education, particularly among younger generations (Gen Z and Millennials), often outpacing traditional financial institutions in engagement.
• M&A Activity: Consolidation is continuing, driven by the need for scale and technology-driven transformation, with high activity in regional banking. 

6. Geopolitical and Macroeconomic Risks

Financial institutions are navigating a complex environment characterized by high-interest rates, inflation, and geopolitical conflicts. 

• Shift in Focus: The focus is moving toward “growth and competitiveness” in developed economies, diverging from the strict “safetyism” of the post-2008 era.
• ESG Tensions: Institutions are grappling with conflicting pro- and anti-ESG pressures, particularly in the US, while trying to integrate sustainability into their core strategies. 

By 2026, financial institutions that successfully blend AI with a human-centric, personalized approach will lead the market. The ability to pivot quickly to a “composer” model—where banks orchestrate ecosystems rather than just creating products—is crucial for survival.

Below, we examine 10 of the most important trends in financial services, to help you navigate the year ahead.

1. Geopolitical risks

2025 saw a ramping up of geopolitical risks for financial institutions grappling with issues such as the financial and operational impacts of military conflicts, tariff structures, international diplomatic shifts and trade rule changes. We expect this trend to continue in 2026. Banking sector exposure is multifaceted and includes direct impacts through correspondent banking and cross-border payments, as well as indirect impacts via client losses and credit impairment and operational impacts through supply chain disruption and talent mobility constraints.

In order to manage these risks, firms need to track developments, coordinate responses and plan across multiple time horizons. Practical steps that financial services firms should consider include stress-testing client portfolios, reviewing correspondent banking relationships, preparing for increasing sanctions regime complexity and developing hedging strategies. Firms that proactively transform regulatory change into competitive advantage – rather than viewing it as a penalty to avoid – can gain edge.

2. Deregulation and simplified/proportionate regulation

The move towards deregulation and simplified regulation in financial services is becoming a global policy trend as governments and regulators seek to boost their economies and become more competitive. The result is increased fragmentation as differences emerge between jurisdictions, presenting compliance challenges for firms. Across the world, approaches are diverging in areas such as AI, cryptoassets and sustainability. The Basel consensus on capital requirements appears to be eroding, with jurisdictions pursuing locally competitive frameworks rather than harmonised standards.

Cross-border issuance in equity and debt capital markets is becoming more complex. Firms benefit from consistency rather than divergence. In order to succeed in this increasingly confusing international environment, they need to position themselves as regulatory navigators – understanding and managing the differences between local regimes, adapting to regulatory change and taking advantage of new opportunities as they emerge. At the same time, as governments encourage retail savers to transition into becoming investors as part of broader growth investment and agendas, the quest for more retail participation creates tensions between the desire to encourage more risk-taking and the need to protect consumers.

3. Retailisation

The proportion of private market assets held in retail accounts is growing. The trend links to other market dynamics, such as the rise of the secondaries market, which allows liquidity and exit mechanisms, the growth of private credit as a retail-accessible alternative to public bonds, and capital-intensive AI infrastructure projects seeking diverse investor bases to absorb risk. Regulatory reforms in the US, UK and Europe intended to increase access to investments in private capital are also increasing retailisation and are expected to continue in 2026.

Read Also: The Rise of Decentralized Finance (DeFi)

Large retail platforms are well positioned to capture capital freed up by regulatory reforms, while PC firms are exploring collaborations with banks to access their customer networks. The illiquid and long-term nature of private market investments can create a mismatch with retail investor expectations, however, and PC firms must be prepared to navigate new onboarding and other regulatory obligations as their investor base becomes more diverse.

4. Private credit

Private credit has grown substantially in recent years, benefiting corporate borrowers through expanded financing options and reducing the dependence on bank intermediation. However, this rapid growth and interlinkages with the traditional financial sector have drawn the attention of regulators around the world, who are concerned about the implications for financial stability and are increasing their scrutiny of private credit funds’ governance, fee structures and liquidity risk management.

Enhanced data collection and transparency requirements may follow as regulators seek to gather more information from funds to understand the risks. For financial services firms, the opportunity lies in structuring their business to comply with any new regulation without inhibiting innovation, providing institutional and retail distribution capabilities and managing the regulatory interface between banks (as funding sources) and PC funds (as users of capital).

5. Cybersecurity and operational resilience

Financial institutions increasingly rely on third-party service providers for mission-critical functions. The AWS outage in 2025 highlighted the systemic importance of cloud and third-party infrastructure. The EU’s Digital Operational Resilience Act and equivalent frameworks require firms to conduct ongoing risk assessments, establish incident response procedures and maintain resilience testing schedules, as well as manage third-party dependencies.

Meanwhile, cybersecurity incidents are on the rise and do not respect borders; ransomware attacks and data breaches affect institutions across jurisdictions with increasing frequency. Regulatory expectations now require coordinated threat intelligence sharing, incident reporting timelines and business continuity planning. The regulatory environment is tightening, and firms should expect more prescriptive requirements for critical services.

Firms need to understand how different regimes interact and design efficient compliance programmes that can satisfy multiple requirements simultaneously. Firms should periodically assess their programmes and update them as needed. In addition to designing and testing robust frameworks, firms also need to respond effectively when incidents occur.

6. Digital assets and tokenisation

Stablecoins are on the rise around the world, thanks in no small part to encouragement from the current US administration and the GENIUS Act. In the EU, the Markets in Crypto-Assets Regulation has been in effect since 2024, introducing licensing requirements for crypto-asset service providers, market abuse prevention rules and anti-money laundering controls. Other jurisdictions like the UK are still in the process of formulating their regulatory regimes. More broadly, tokenisation is being rolled out across a wide range of applications from payments and deposits to bonds and funds.

The convergence of regulatory clarity, institutional adoption and technical maturity presents opportunities to build tokenised asset platforms, custody solutions, trading infrastructure and distribution channels. However, regulatory surveillance is also intensifying around market manipulation, information asymmetries and cross-asset contagion. Interoperability risks are also emerging as tokenised money market funds become stablecoin reserve assets, raising new challenges for market integrity and investor protection.

7. FIG M&A

Global financial services deal values in 2025 reflected a market concentrating on fewer, larger strategic transactions. While regulators desire consolidation, cross-border M&A faces political headwinds. Additionally, regulated deals are significantly more complex than M&A in other industries, with protracted regulatory approval timelines, integration challenges and cultural differences between legacy and acquired entities. As a result, in-market consolidation within the banking sector is more likely than transformative cross-border transactions in the near term.

Meanwhile, fintech is poised for consolidation as stronger fintech players acquire smaller firms, particularly those with differentiated AI capabilities. Payments sector consolidation is also accelerating, with firms seeking scale to compete in a tech-driven environment. In the asset management space, traditional and alternative managers are scaling through organic growth and M&A.

Private equity is increasingly active, setting up holding structures to acquire wealth management and asset managers to find synergies. Tie-ups between asset managers and insurers are also rising, particularly in Asia, and asset-intensive reinsurance is gaining traction in Japan. Expect a busy 2026.

8. AI

AI is now deeply integrated across financial institutions – not only to improve efficiency and reduce costs, but also to transform customer engagement, risk management and revenue generation. Agentic AI, which enables autonomous decision-making and complex task execution, is rapidly gaining traction, with some firms piloting and deploying it in areas such as fraud prevention, compliance and customer engagement and services. Regulatory responses vary across jurisdictions. Some have introduced dedicated AI legislation, while others are adapting existing frameworks.

Common themes include consumer protection and governance of AI, particularly its role in strategic and financial decision-making. Regulators also highlight systemic risks – such as financial stability concerns if firms rely on similar AI models – and the possibility of collusive trading and other activities, between algorithms.

Alongside a strong focus on financial crime, regulators are increasingly focused on the risk that bad actors will exploit AI vulnerabilities, using advanced methods to perpetrate fraud faster than firms can adapt systems to detect and prevent it. Firms therefore face a dual challenge: harnessing rapidly evolving AI effectively, while navigating emerging risks and evolving regulatory expectations.

9. ESG and sustainable finance

Divergent approaches to sustainable finance regimes continue to be heavily influenced by the political environment. Although many cash-strapped governments are rowing back or slowing down on net zero policies, ESG considerations remain important for firms outside the US, both in designing and marketing investments to investors (who are increasingly scrutinising ESG claims in their investment decisions) and in meeting regulatory expectations for long term risk management.

Firms need to ensure that claims and commitments around ESG factors are accurate, not misleading and can be backed up by evidence of commercial benefit for clients, especially in the US in light of the administration’s approach to ESG commitments. Litigation and enforcement risk is increasing for FS firms that fail to handle the risks effectively, but firms can also benefit strategically and differentiate themselves from competitors by incorporating ESG considerations into business planning.

10. Market misconduct

There is a renewed focus of regulators on tackling insider dealing and market manipulation, partly driven by the need to enhance the reputation of financial markets in the context of increased competition between global financial centres. In the UK, the FCA is investigating more market abuse cases involving market professionals and using better tech to analyse market data. Despite this, the FCA found that 38–40% of UK corporate takeovers were leaked to the media from April 2024 to May 2025, so it has been looking hard at insider dealing around market announcements.

The FCA has asked firms to consider information leaks, market soundings and the risks of organised crime and is also considering innovative products (cryptoassets), which indicate issues they have identified in their investigation caseload. Other regulators in Asia and the US are focusing investigations and enforcement on similar issues, so firms should redouble their efforts around detecting and preventing market abuse to mitigate enforcement risk.