The Connector Podcast - FinanceX #18 - 2026 Outlook

Welcome to The Deep Dive. If you felt 2024 was defined by firms asking, you know, what is fintech and if we should use it, well, 2025 gave us the answer.

A pretty definitive one.

Yeah, it's just no longer optional. This past year was really when finance delivered the essential infrastructure upgrades that, frankly, the whole global economy needed. We're calling it the quiet revolution.

I like that.

Because these massive shifts, they didn't happen in some flashy press release. They happened in the implementation of regulatory bedrock, and that's Setting up what promises to be a year of just tremendous acceleration in 2026.

That's absolutely right. And for you, our mission today is really a deep distillation of a, well, a frantic year. We saw so many global financial events, so many regulatory shifts.

It was a lot to track.

It was. So we are purposely bypassing the hype cycle to focus squarely on what moved from being just an interesting experiment to becoming an absolute operational necessity. So we're talking instant payments, new forms of AI governance, and especially The gritty details of digital resilience.

Our sources, and we've looked at everything from official regulatory updates to deep industry analysis, they all point to 3 core pillars that are defining this new outlook. First, that incredibly difficult first full year of DORA.

Digital Operational Resilience Act.

Second, the definitive shift of fintech from pure disruption to something, well, system critical. And third, why securing AI through, you know, quantifiable insurance is now the single most urgent frontier for anyone in finance.

Okay, let's dig in.

Let's unpack this, starting where all the heavy lifting began, the DORA playbook.

So DORA officially became law in January 2025. And the biggest challenge, it wasn't a lack of awareness. Firms knew it was coming.

Right.

The problem was the sheer resource-intensive nature of the execution. The very first hurdle was creating this comprehensive register of information for the ICT network.

Which is basically what, a map?

It's essentially a verified map of every single piece of technology and every service provider the firm uses.

Now, when I first heard register of information, I kind of imagined a very complicated spreadsheet, but the pushback from the industry suggested it was, uh, way more painful than just inventory management. Where did all the complexity come from?

It was technical and administrative. Think of it this way. Firms had to take all their existing business logic, their servers, their apps, their third-party cloud providers, and re-express all of it into this rigid European supervisory authorities template.

Okay.

And this required alignment with the EBA data point model, specifically DPM 4.0, and these XBRL CSV technical standards.

Hang on, why does that matter? I mean, why can't they just submit their own internal reports?

Because DPM 4.0 is a rigid regulatory taxonomy. It forces banks, it forces fintechs to translate their own unique operational language into a standardized vocabulary.

Ah, so regulators can then automatically ingest and compare it.

Exactly. It's like forced to translate this sprawling organic corporate map into, say, 10,000 specific Lego pieces, each one with a mandated shape and position.

And if you were just tracking this in a spreadsheet before?

Oh, it was a nightmare. Validating and translating that data was incredibly resource-intensive and just, you know, prone to error. It forced organizations to become specialists in data modeling just to meet the requirement.

That sounds incredibly inefficient in the short term. There must be a payoff, though. What was the aha moment that came out of this, this painful compliance exercise?

The realization that the register is not a one-off annual report.

Ah.

Firms have to maintain this thing continuously. If you kept it in a static document, you face constant operational drift, unclear ownership, and the prospect of just repeating that massive effort every single year forever.

So the aha moment was realizing the goal wasn't just to comply.

It was to operationalize. Moving that data into a governed living system transforms it from a compliance burden into a vital, real-time ICT map. You can use it for ongoing risk and incident management. It shifts the focus from just checking a box to genuinely strengthening your resilience.

So, if 2025 was about dealing with that initial, really taxing data collection wave and getting the first register submitted, what's the clear mandate for 2026?

For 2026, it's all about continuous measurement and assurance. The foundation's been laid, but resilience has to be demonstrable every single day.

Right.

And on top of that, the EU has recently started designating Critical Third-Party Providers, the CTPPs.

So, companies like major cloud providers or payment processors?

Exactly. And this signals that regulators are getting ready to bring continuous oversight to these external vendors, which means firms have to have the tools ready to prove they are managing CTPP risk on an ongoing basis.

That leads us perfectly into our next section, which is this undeniable shift in fintech's identity. When regulators start calling your vendors critical, it means the era of fintech as the, you know, lovable rebel is over.

Completely finished. It's graduated. It's system-critical infrastructure now.

That narrative shift feels profound.

It is. Fintech moved from an experiment to something essential, and often firms didn't even realize the level of systemic risk they'd absorbed. We no longer have to debate its importance; we have concrete evidence of how failure creates instant financial paralysis.

Okay, so give us the examples that make this systemic shift undeniable.

Just look at the payment market infrastructure. In 2025, when a major processor like Stripe, which serves millions of businesses, had unexpected outages—

Wasn't a small problem.

It resulted in instant, large-scale failure of card payments across the EU. And even more compelling were the disruptions we saw across open banking providers like TrueLayer. When their services went down, it showed how this modern infrastructure can just freeze account-to-account payments and stall onboarding across dozens of different institutions all at once.

So, these are not isolated glitches; these are financial earthquakes. The system just can't function without them. But doesn't this mean regulation will always be playing catch-up and stifling innovation?

That's the critical point. The lag is narrowing. Regulators are moving much faster now. You can see it in frameworks like MiCA for crypto, the AI Act, the work on PSD3.

So, the competitive edge is changing?

It's no longer just innovation, it's clarity. Companies that can navigate these supervised environments, the ones that are transparent, predictable, compliant, they're the ones winning licenses and securing the deep partnerships that define critical infrastructure.

And nothing really embodies baseline infrastructure more than the mandated shift in payments, which happened almost silently in 2025. We're talking about instant payments becoming the absolute standard in Europe.

This is arguably the biggest, quietest operational shift of the year. The EU's Instant Payments Regulation mandated that starting October 9th, 2025, every single euro area payment provider offering standard euro credit transfers must now offer SEPA Instant Credit Transfer, or SCT-INST.

That sounds simple— just make payments faster. But what was the technical requirement that caused the real stress?

It wasn't just speed; it was the required continuity. SCT INST has to be offered 24/7, 365, settlement guaranteed within about 10 seconds, and this is the key part: it must be priced no higher than a standard slow next-day transfer. Wow! For legacy institutions relying on core systems designed like 30 years ago to run slow batch processes five days a week, this forced an immediate and very expensive modernization of their entire payments architecture. Real-time is just the new expectation.

A profound operational jump. Okay, now let's talk about the force that promises to define 2026: AI. We need to look at this through a dual lens: the guardrails needed for risk management and the new financial engine AI needs to transact.

The tension was palpable at events like the Singapore FinTech Festival in 2025. Everyone agreed AI was the center of gravity, but the consensus was that risk management had seriously lagged behind development.

What's the core problem there?

It's a risk mismatch. Traditional financial insurance models, they cover external attacks or clear human error. They were never designed to address the failure of a sophisticated self-learning system that produces biased results when there was no attack and no human fault.

That is a gaping hole in liability. I mean, if a complex credit scoring model gradually drifts over 6 months and starts discriminating, Who takes the liability for that regulatory breach?

That's exactly why AI assurance is the critical missing piece. It's the framework for governance. Companies are rushing to build models. We're seeing techniques like the Atlantis model that allow boards, auditors, and insurers to rigorously quantify the risk in these AI systems.

How do they do that?

Through controlled testing, simulated stress events, continuous performance scoring to create an auditable risk profile. Assurance moves governance from, you know, a gut feeling to measurable statistical evidence.

And this need for quantified assurance, it aligns perfectly with Europe's regulatory timeline, right? So it's a compliance priority, not just a risk one.

Precisely. Under the EU AI Act, many financial services models, specifically things like credit scoring, fraud detection algorithms, are classified as high risk.

Okay.

And that designation requires firms to demonstrate ongoing explainability, robust bias controls, continuous human monitoring. The legal obligations for these high-risk systems start hitting in August 2026. Governance has become the competitive constraint.

So, that's the necessary guardrail. Now, let's pivot to the engine. We have these intelligent, autonomous AI agent systems that can do research, make decisions, optimize, but they're completely handcuffed by the traditional human-speed financial system.

The system is the bottleneck. An AI agent might decide, I need to rent a compute cluster in Singapore and execute a trade. But because finance relies on human identity, manual KYC, and centralized batch approvals, that machine can't autonomously settle the payment.

So, how do we build a native financial system that can actually keep up with machine speed?

The architectural shift is decentralized finance, or DeFi. DeFi provides that open, programmable, 24/7 architecture. It replaces slow, human-mediated intermediaries with smart contracts. This lets AI agents interact directly with on-chain wallets, And execute financial operations.

And what's the currency layer that provides stability for this machine economy?

Stablecoins, of course. USDC, PYUSD— they provide that crucial combination of traditional money stability and the programmability of a digital asset. To connect the agents, standards are emerging, like Google's Agent Payment Protocol , which handles the secure authentication.

And how do we keep these autonomous agents compliant? Stop them from going rogue?

That's where internal governance systems come in, like private AI engines— QXLI as an example— which enforce spending policies. Think of it as the private internal ledger that tracks every automated decision against a predefined, board-approved policy. This combination turns AI agents into verifiable, compliant economic actors.

This convergence of DeFi, stablecoins, and agent protocols really is the construction of the financial infrastructure for the AI age. And it brings us to operational maturity. After spending 2025 focused on regulated infrastructure DORA, AI Standards finance teams finally started regaining time by killing what you called the Excel grind.

The feedback from finance leaders was brutal. Highly paid analysts were wasting up to 20 hours a week, half their working week, on manual tasks. Formatting reports, reconciling spreadsheets, preparing board decks— that's just pure expensive inefficiency. This is where the Finance Factory concept took hold.

Where did we see the most immediate gains in that automation push?

In high-volume external communications, specifically automated customer reports, or CX reports. The old way was a generic invoice. The new way uses systems to burst individualized, hyper-personalized reports.

So, a SaaS customer gets a detailed breakdown of their usage, for example?

Exactly. And that transparency alone helped reduce involuntary churn by a staggering 40%. and cut days sales outstanding by nearly a month because customers immediately understood and trusted the charges.

That's not just efficiency, that's a core strategic win. But what about for internal stakeholders? The board? Regulators? They need high-assurance, non-changing data.

Exactly. For them, the focus shifted to premium reports. Dashboards are great for exploration, but board members and regulators need a static, immutable PDF, a verified snapshot in time. This focus on auditability, which aligns perfectly with DORA, eliminated that frantic cycle week panic where teams worried if their numbers matched the ERP system.

That kind of operational excellence is also being applied to rewrite how data moves in really old, clunky sectors, and the UK property market is a perfect example.

Property data is historically chaotic. Analysts call it a spaghetti junction. Different systems represent the same key piece of data, like an address, in entirely different ways. This fragmentation leads to massive duplication, errors, and delays that could add weeks to a mortgage.

So, how does the industry standardize that chaos?

The Open Property Data Association, OPDA, is creating a shared digital language. It's a Property Data Trust Framework. This includes a standard data dictionary, a JSON schema, and a standard API specification. This lets different systems finally trust the structure and origin of the data they receive.

What's fascinating here is that, unlike open banking, which was regulator-forced, Open Property is voluntary. Why are these competing lenders working together on this?

Because the efficiency gains are immediate and undeniable. Standardized, trustworthy data allows lenders to drastically cut friction, lower error rates, and shave weeks off the mortgage process. Major UK lenders like Lloyds, HSBC, Santander— they've all joined because the benefits align perfectly with their own operational goals.

Finally, let's quickly touch on a few global accelerators that defined the year outside of the major financial centers.

In Asia Pacific, we saw a quiet surge in digital identity infrastructure. GAEI, the Global Legal Entity Identifier Foundation, is expanding rapidly there, and that's driven by the fact that 6 of the world's 8 qualified VLEI issuers are now headquartered in APAC.

So they have a strategic lead in verifiable organizational identity.

Big one. And in India, you're seeing a strategic leveraging of regulatory shifts. The convergence of India's advanced digital infrastructure APIs, biometrics, and their new Digital Personal Data Protection Act is creating this exponential privacy arbitrage. By building privacy capabilities that exceed global standards, payment providers can treat privacy as a differentiator, reducing compliance costs while unlocking premium markets.

And tucked away in the Baltics, Latvia is cementing its status as a high-productivity launchpad for the EU.

Latvia is definitely no longer emerging. With over 149 fintech companies, it combines direct EU single-market access with incredibly favorable operating conditions. Companies like Jeff App and Mintos, which is Europe's largest retail loan marketplace, show Latvia's success as a capital-efficient hub.

That brings us to our final synthesis. It's clear that 2025 was fundamentally about building a resilient rules-based foundation across Dorara, instant payments, and AI assurance. So, what is the critical path for the winners in 2026?

The key to victory in 2026 is execution maturity. The winners will be the firms who treat compliance not as a burden but as a core product feature. They will invest in resilient, AI-literate operational teams and ensure interoperability across all modern payment rails—cards, account-to-account, and stablecoins.

So, the foundational work is complete.

It is. Real-time payments work, regulatory clarity exists. Now, it is purely a race on who can execute better and faster.

It may feel like an overwhelming pace of change, but you should take comfort in knowing that the foundation is finally solid. The rules are written, the infrastructure is ready, and the ability to process data has been exponentially improved.

And that operational stability leads directly to a provocative final thought for you to explore. If the infrastructure is built and the rules are written, The financial system is no longer constrained by human speed or manual processes. The critical question for you to explore is this: when AI begins to manage and optimize this new, regulated infrastructure autonomously, who will own the responsibility of proving continuous resilience when human oversight is increasingly removed from the transaction path?