Retail banking is entering a new era. Regulation, technology, and customer expectations are colliding and for the first time, compliance and innovation might actually move in step. The next phase won’t just be about keeping up with rules; it will be about embedding compliance into every customer journey while delivering meaningful value.

‍

Smart Data and Open Finance finally come to life

Open Banking has matured into the foundation for smarter, data-driven services. Over 22 million payments are now processed each month, and while that shows momentum, the next step is customer usability and relevance. Banks need to focus on what is useful to customers, not just what technology enables; ‘giving them the car, not a faster horse’. The FCA’s Smart Data Accelerator will push this forward enabling cross-sector data sharing.

‍

Mortgages and SME finance are early testbeds and an opportunity for Regtech, Fintech, PropTech and LegalTech integration, where compliance is baked in to cut paperwork and accelerate approvals. Done well, smart data could transform lending, simplify risk decisions, automate affordability checks, and create frictionless, personalised products.

‍

AI the platform for embedded finance

Finance is becoming invisible seamlessly integrated into daily life embedded finance is leveraging AI, shifting the customer relationship from transactional to continual. Regulation will accelerate this trend, requiring banks to think wider; collaborations between financial services, retail and utilities will continue to grow. The more integrated a bank is into daily life, the stickier the customer relationship.

‍

Regulators and informed tech savvy customers will demand transparency, explainability, and ethical assurance. Firms able to clearly articulate and evidence how data drives decisions will earn both regulator and customer trust. The leaders will be those who view AI not as a black box, but as an accountable partner in delivering fair outcomes. RegTech moves from support to strategy

‍

Automated GRC systems, horizon scanning, and real-time reporting are freeing compliance teams to focus on insights rather than admin. RegTech has shifted from being a supportive service to being an integrated strategic function, with customer value a positive impact to the balance sheet.

‍

Market behaviour is reflecting this demand. Vendor consolidation is accelerating with firms able to offer end-to-end compliance solutions. The market is looking at partners with multi-jurisdiction reach, AI governance, and adaptive platforms that keep pace with regulation in real time.

‍

Looking ahead to 2026

The boundaries between compliance, technology, and customer experience are converging. Banks are leaning into designing products with regulation built-in, using smart data for meaningful customer insight, and deploying responsible AI that can earn trust. Compliance is being turned into a competitive advantage for all the right reasons.