Three strategies for fintechs, banks and BaaS providers to navigate the changing regulatory environment

Fintechs (finance technology companies) consistently push boundaries and disrupt traditional financial services models, driving innovation and enhancing the customer experience. Despite the Trump administration’s trend of deregulation, which has eased certain regulations like crypto enforcement, fintechs must continue to focus on compliance and traditional financial institutions must ensure their fintech partners are focusing on compliance. Core areas such as anti-money laundering (AML), cybersecurity and consumer protection remain tightly regulated. To remain competitive, fintechs need to consider the requirements of a highly regulated industry and navigate an ever-evolving compliance landscape to continue their increasing relationship with traditional financial institutions.

The regulatory landscape for fintechs is expected to continue evolving in the coming years, shaped by several potential trends and developments. As bank and fintech partnerships continue to grow, regulators are expected to increase scrutiny around product control, compliance management and bank oversight, potentially shaping the future landscape of fintech innovation and bank operations.

Possible trends and developments include:

• Increased standardization of banking-as-a-service (BaaS) regulations across different jurisdictions could provide greater clarity and consistency for companies operating in multiple markets.
• Regulators are scrutinizing the relationship between banks and their fintech partners, particularly around product control, compliance management and bank oversight. The continued development of open banking initiatives will likely further impact data sharing practices and create new opportunities and challenges for fintech's leveraging BaaS.
• Evolving regulations around digital assets, including stablecoins and cryptocurrencies and their intersection with BaaS offerings
• A continued strong focus on consumer protection and data privacy in the digital finance space is anticipated, potentially leading to more stringent requirements in these areas. New and stricter state-level privacy laws are taking effect, granting consumers more rights and imposing tougher requirements on businesses. As of May 2025, 20 U.S. states have comprehensive state-level consumer data privacy laws.
• The increasing adoption of technological advancements like AI in financial services will likely prompt regulators to further refine frameworks for their responsible use in areas like compliance and fraud prevention.