Latest news with #VibhorNarang
Finextra
4 days ago
- Business
- Finextra
How do we regulate a future not yet written?
0 This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community. This is an excerpt from The Future of European Fintech 2025: A Money20/20 Special Edition. According to the European Fintech Association, the fintech industry has attracted the largest share of all VC funding over the last five years, worth around $85 billion. This showcases the strong potential of fintech in Europe, and how the sector will be a driver for economic growth – with the industry expecting to grow more than fivefold over 2021 figures (5.5x) and be worth $190 billion by 2030. As fintech increasingly enters the social and economic fabric of Europe, the question of governance is no longer one of compliance with rules. In 2025, new rules such as PSD3, MiCA, DORA, and MiFID II are beginning to converge. Even though their real impact will be a five- to 10 year play, actually rewriting the way fintech is imagined, deployed, and depended upon will happen in real-time. As Vibhor Narang, executive director, structured solutions cash management, transaction banking, Europe, Standard Chartered, observes, 'the evolving regulatory landscape in Europe is not merely reshaping fintech. It's redefining the very foundations of financial innovation and collaboration.' Regulation will be more innovation driver than compliance tool Looking forward to beyond 2025, regulation will be less of a brake and more of an active driver of innovation. The convergence of PSD3, MiCA, DORA, and MiFID II shows a Europe which is open, transparent, and bestows data rights that are not just regulated but architected to foster competitive environments. In Julija Fescenko, head of marketing and communication, Magnetiq Bank's view, 'these combined forces will drive standardisation and foster more innovation-friendly environments, provided implementation does not stifle agility.' The industry should expect regulators stepping in to design digital infrastructure, particularly in relation to open finance. PSD3's extension into safe data portability will broaden, enabling consumers to seamlessly coordinate financial experiences between providers in the future, just like APIs do with software. Narang goes on: 'PSD3's extension into open finance […] is connecting previously siloed financial products into cohesive customer journeys. This could influence the rise of modular finance: hyper-personalised financial 17 services constructed dynamically through regulated data-sharing protocols.' Operational resilience will become a competitive differentiator By 2030, operational resilience will not be a regulatory checkbox under DORA but a market expectation. Financial institutions that can assure service continuity and cybersecurity against volatility will be more trusted. Johnnie Martin, senior associate, Augmentum Fintech, believes that 'the need for the robust back-up systems required by DORA was brough into sharp relief.' He adds: 'Fintechs are uniquely placed to deliver solutions to many of the problems that these regulations are trying to solve.' The fintech sector can expect fintech firms to create resilience-as-a-service offerings, including third-party monitoring products, stress tests managed by software, and disaster recovery solutions made in modules. With the entire fintech value chain now in the spotlight, resilience will no longer be each company's concern but a collective responsibility across the ecosystem. MiCA will unleash a tokenised finance boom MiCA's launch in 2025 is only the start. Within the next ten years, it will standardise digital asset adoption throughout Europe, opening doors to mass tokenisation of traditional assets, programmable payments, and the emergence of regulated stablecoins. This view is shared by Narang, who clarified that 'MiCA's unified framework […] is creating unprecedented opportunities for regulated innovation in digital assets.' In the future, controlled digital wallets that can deal with fiat and tokenised assets may be incorporated into mainstream banks. MiCA will prompt traditional institutions to enter Web3 finance, especially as corporate treasuries search for programmable yield-generating products. Regulation will, however, have to catch up with innovation in DeFi, which MiCA addresses only marginally at present. This suggests the introduction of MiCA II, a second, more advanced regulatory layer that addresses staking, algorithmic stablecoins, and cross-border DeFi protocols. Europe is at a fintech leadership fork While Europe once led the world in open banking, that leadership is now in question. Ahmed Badr, chief operating officer, GoCardless, explores how 'Europe led the world in open banking innovation a decade ago, but is now at risk of falling behind as other countries leapfrog ahead.' The next few years will tell whether the continent doubles down on competitive, consumer-driven innovation, or allows red tape to stifle momentum. Badr calls for 'greater ambition and support for innovators,' and that need is likely to intensify as global players, especially in Asia and the Middle East, move aggressively on embedded finance and real-time cross-border infrastructure. AI governance will define institutional trust The most uncertain, and urgent, regulatory horizon is artificial intelligence. By 2030, AI will be embedded into every tier of financial services, from real-time lending decisions to autonomous risk scoring and investor advice. But trust in this future hinges on one factor: ethical regulation. Tom Moore, head of financial services at Moore Kingston Smith, mentions that 'the risks of bias, misinformation, or system failure are very real. These will only grow as generative AI is used more and more for personalised financial advice.' Leading institutions are already preparing for this shift. Wendy Redshaw, chief digital information officer, NatWest Group, outlines a framework based on explainability, fairness, and human oversight: 'We ensure AI systems are subject to human oversight […] that their decisions can be explained, and that they are free from unfair bias.' Standard Chartered has also formalised this approach with its Responsible Artificial Intelligence Framework, embedding 'governance, continuous oversight, and robust data privacy into every deployment. Leadership will be defined by those who not only harness the power of AI, but also set the benchmark for ethical stewardship,' says Narang. By the end of the decade, we predict a harmonised European AI regulation for financial services, likely inspired by the EU AI Act but more tailored to the risk profile of finance. This will require firms to perform continuous AI audits, maintain decision traceability, and prove non-discrimination by design. Governance will become real-time and inclusive As data quantities grow and digital services get spread across third-party platforms, strict regulation will become less suitable. Europe's governance model will be required to change towards real-time supervision that combines regtech solutions, AI-driven anomaly detection, and adaptive policy updates. This implies a future where regulators and businesses collaborate continuously and in the long term, rather than sporadically through compliance tests. Fescenko continues to say that 'fintech companies must take the initiative in self-regulation. This involves conducting regular AI audits and implementing strong governance structures.' Ultimately, regulatory agility will become as critical as business agility. Toward a new regulatory future Europe's regulation of fintech is changing from a rulebook-based approach to a co-created, principle-based approach. The successful institutions will be those that redefine compliance a constraining idea rather than as a strategic background for expansion and growth. Redshaw says 'we are focused on aligning innovation with regulation. Our priority remains on supporting customers with the best, safest and most compliant digital experiences.' Looking ahead, regulation will no longer chase innovation, it will partner with it. The governance of tomorrow will demand new capabilities: regulatory forecasting, ethical design thinking, real-time oversight, and cross-sector collaboration. As Narang aptly concludes: 'The institutions that will thrive […] will be those that view regulatory compliance not as a burden, but as a strategic enabler that builds trust, enhances service delivery, and accelerates responsible innovation.' Europe now has the opportunity to set the gold standard for fintech regulation in the digital age, not by slowing change, but by governing it wisely.
Finextra
6 days ago
- Business
- Finextra
What happens when money thinks for itself?
0 This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community. This is an excerpt from The Future of European Fintech 2025: A Money20/20 Special Edition. The evolution of financial technology is characterised by increasing levels of simplicity, efficiency, and integration. We saw this in 2016, when Europe's second Payment Services Directive (PSD2) encouraged financial institutions to open up their data and infrastructures – paving the way for banking-as-a-service and embedded finance. Fast-forward to 2025, and preparations are already being made for PSD3 – and even deeper levels of functionality and harmonisation. But the technology's development is hardly linear, and every so often innovations land that spark a deep and wide cross-industry revolution. Few would argue that artificial intelligence (AI) lacks this potential, particularly in the world of financial services and product personalisation. So, what might the dawn of AI mean for stakeholders? What happens when money thinks for itself? Enter the stage: Embedded intelligence. Standard Chartered's Vibhor Narang, executive director of structured solutions cash management, transaction banking, Europe said in an interview with Finextra: 'AI and big data are redefining the landscape of financial services, propelling the industry toward an era of hyper-personalisation and smarter client engagement. At Standard Chartered, we see AI as the engine driving a shift from generic offerings to deeply tailored financial experiences – leveraging advanced data analytics to anticipate client needs, delivering bespoke advice, and streamlining every touchpoint.' Indeed, industry data shows that AI-powered personalisation can reduce operational costs and boost customer retention considerably, underscoring its transformative impact on both efficiency and loyalty. 'Our commitment is to harness these technologies,' Narang added, 'not just for incremental improvements, but to reimagine how we build trust and relevance with every client interaction.' This level of transformation, however, will not come without challenges. The complexity and opacity of advanced AI models – along with the volume of data involved – creates heightened concerns around privacy, explainability, and bias, Narang argued. 'We believe responsible innovation is non-negotiable: robust data governance, transparency, and ethical AI frameworks must be embedded at every stage,' he said. 'As financial institutions, our true competitive edge will be measured not just by how smart our algorithms are, but by how deeply we earn and sustain client trust in a digital world.' So, by balancing cutting-edge innovation with unwavering stewardship of data and privacy, Standard Chartered is hoping to set a robust standard for the future of personalised finance. Conor McNamara, EMEA CRO at Stripe, emphasised the need for balance of personalisation and security, stating that businesses need to manage the complexity of checkouts carefully, 'to strike the optimal balance between fraud prevention and conversion; doing it poorly introduces needless friction, and causes legitimate sales to be blocked or abandoned.' A spokesperson from NatWest was in alignment on the utility of AI for personalisation, as well as the surrounding data and ethical issues: 'AI is undoubtedly a key enabler of our ambitions and is quietly reinventing how we operate – freeing up our colleagues and helping them to provide the service our customers expect. As we increasingly use AI to support personalised interactions, such as with our AI-powered chatbot Cora, which provides everyday banking support, we are seeing real improvements in customer satisfaction and colleagues' productivity. At the same time, we are taking a considered and measured approach to make sure any AI usage is managed responsibly. 'That's why we've developed a set of ethical AI and data principles to ensure our systems are subject to human oversight, technically robust, free from unfair bias or discrimination. Privacy is a critical focus, particularly in light of [the European Union's General Data Protection Regulation (GDPR)] regulation, and our robust code of conduct ensures we evolve with new regulations while maintaining trust and transparency.' BNY Mellon's Carl Slabicki, executive platform owner, treasury services, added that for treasury clients, AI and big data can help deliver personalised cash management strategies, predictive analytics for liquidity forecasting, and customised risk management solutions. However, Slabicki stressed that achieving this requires 'careful consideration of key challenges, including data privacy and security, regulatory compliance (such as GDPR), and maintaining consumer trust through transparent and ethical AI practices.' It would seem that striking the balance between innovation and these critical factors will be essential for the widespread adoption of AI-driven treasury services across the market, in the short to mid-term. Ahmed Badr, chief operating officer, GoCardless, said that 'the combination of large language models (LLMs) and machine learning (ML) means that it's now possible to deliver personalisation at scale. ML is stronger when it comes to mining structured data for the deep insights that are needed for truly personalised offerings, and AI provides the automation and efficiency to help organisations manage a myriad of personalised offerings.' Used in the right way, these technologies can be a powerful combination, though Badr also acknowledged the need for institutions to tread carefully: 'The 'watch-out' is knowing where to draw the line when it comes to using personal or identifiable data which would rightly be viewed suspiciously by customers. Financial organisations have access to vast amounts of data which can be anonymised and used to power personalisation models, without breaching confidentiality and trust. This approach allows for highly personalised interactions with AI agents that can respond in natural language, giving customers greater control and a more intuitive, tailored experience.' McNamara highlighted the potential of agentic AI to proactively act on behalf of the user in ecommerce spaces, something that Stripe is currently developing: 'Our new AI Agent SDK and Order Intents API enable AI agents to independently perform actions like purchasing products and finalising transactions based on natural language instructions from users, with security measures comparable to traditional mobile payments. Imagine instructing a digital assistant to secure travel insurance, instantly receiving optimal policy options, directly completing the payment, and immediately receiving documentation—all without manual intervention.' The arena of payments was underlined by Magnetiq Bank's Julija Fescenko, head of marketing and communication, as a key area for the AI's use case within financial services: 'Predictive analytics and AI are poised to revolutionise the future of payments, significantly enhancing fraud detection, personalising user experiences, and improving risk scoring. This development will make solutions like Buy Now Pay Later (BNPL) more accessible and secure for both businesses and consumers. 'The integration of AI and big data will transform how financial services are tailored to individual needs,' Fescenko continued. 'Imagine hyper-personalised credit scoring, customised financial advice, and real-time product recommendations that anticipate customer needs even before they are expressed. While this level of personalisation is promising, it brings forth essential considerations around privacy. Our challenge is to design systems that embrace innovative personalisation while upholding privacy-by-design principles and ensuring full GDPR compliance.' Transparency, data minimisation, and user control will be vital in maintaining a harmonious balance between pioneering advancements and consumer trust, concluded Fescenko. Tom Moore, head of financial services at Moore Kingston Smith, underlined that smarter data will be pivotal. He pointed to three ways firms can use data more wisely: 1. For tailored product recommendations and customer experience improvements; 2. To gain a competitive advantage by analysing and predicting customer behaviour; and 3. To improve fraud detection and risk management. If firms can achieve this, Moore argued, they will be 'better able to innovate and stand out in a crowded sector.' However, he caveated that using AI can be expensive and not everyone will have the resources and talent to implement it. Perhaps an even bigger challenge is 'balancing innovation with the essential privacy and compliance requirements,' Moore continued. 'Legislation needs to be understood – balancing the risks and ethical issues that are inherent in AI's [commercial use]. It's not always cheap to build AI into a business or to provide the right resources and talent to implement it. The sheer amount of personal data that needs to be managed and then scaled will pose a big challenge.' As we have seen in the UK recently, holding a large amount of sensitive or personal information can make financial services players a prime target for cybercrimes. According to one Telegraph article, 65% of financial services firms were hit with ransomware attacks in 2024. This was up from 34% in 2021 and marked the third successive annual rise. Clearly, this is an issue that is not going away. 'So much to do with financial services, including the decisions customers make, hinges on trust,' Moore concluded. 'Boards have got to actively commit to using smart data to transform their businesses – and be transparent about how they use it.' The application of AI: Ensuring access and affordability A debate around the ethics of AI's roll-out would be incomplete without touching on the underserved and unbanked. With fintech services becoming increasingly AI-driven, what steps can be taken to ensure individuals in emerging markets also benefit from easy and affordable access? BNY's Slabicki told Finextra that 'by providing innovative solutions to our clients, we believe we can play a significant role in bridging the gap between governments and corporates, and the underbanked communities with whom they need to transact.' Slabicki highlighted BNY's alliance with MoCaFi, which aims to provide equitable financial services to unbanked and underbanked communities across the United States: 'Our alliance offers digital disbursement services, including prepaid and reloadable debit cards, accessible through a mobile app. These services provide secure and seamless access to funds, financial literacy tools, and Federal Deposit Insurance Corporation (FDIC)-insured accounts. By leveraging MoCaFi's expertise in benefit disbursement and program management, the alliance helps distribute payments efficiently, empowering individuals with limited access to traditional banking services.' Magnetiq Bank's Fescenko echoed the importance of making AI-driven fintech accessible and affordable for underserved communities: 'We envision creating inclusive algorithms that actively work to eliminate bias, while also developing mobile-first and low-data solutions specifically designed for users in emerging markets. By collaborating with local fintech companies and non-governmental organisations (NGOs), we can effectively bridge the digital divide.' Fescenko added that integrating financial literacy programmes, maintaining transparent fee structures, and offering multi-lingual support should help ensure that innovation 'uplifts rather than exacerbates inequality.' How is AI making wealth accessible? McNamara stated that Stripe has turned to stablecoin as an opportunity to expand global access to financial markets, explaining: 'Migrants use stablecoins instead of traditional financial services to avoid high fees and delays. Turkish Grand Bazaar merchants prefer them for supplier payments due to speed. In inflation-prone countries with dollar shortages, many adopt stablecoins as savings vehicles. This matters tremendously when approximately 1.3 billion people live in countries with average inflation rates exceeding 10%. Connecting a large part of the world's population to a faster and cheaper payment method directly benefits emerging markets.' In alignment with stablecoin's potential, Stripe has acquired Bridge, a platform for businesses that want to build with stablecoins, that works with fintech companies that facilitate payments in Latin America such as DolarApp and Airtm. McNamara added: 'Throughout history, improvements in how money moves have expanded economic opportunity. From coins to banknotes, from gold to fiat currency, and from paper to digital payments - each transition has made commerce more efficient and inclusive. It is from this vantage point that we see promise in stablecoins.' On the topic of inclusivity, NatWest confirmed that it is prioritising bank-wide simplification to become more efficient and effective, making it easier for its customers to do business with them: 'A key part of this is supporting more inclusive innovation. For example, we have made a minority investment in Serene, an early-stage AI platform dedicated to tackling financial vulnerability. Through real-time customer insights driven by AI and behavioural science, Serene helps identify early signs of financial distress and predicts risks to help institutions deliver personalised support at scale. This builds on our long-term commitment to improving access to affordable credit and financial resilience to vulnerable groups.' 'What I've found with clients,' Moore added, 'is that these innovations help unlock financial tools that were once out of reach for many. For example, robo advisers are making wealth management more accessible and affordable, which allows a wider audience to access high-quality financial advice without the cost. With the trend for global expansion, fintech firms can strategically target growth markets in Asia, Africa, and Latin America, where digital financial services are even more in demand. From what we've seen, the convergence of this global outreach with AI-driven affordability points towards an industry movement to better serve these underserved populations.' The question of whether AI, big data, and embedded thinking, can transform the financial services sector has been answered: it already is. Equally easy to answer is the question of how AI should be applied – and how individuals can best be protected. Putting these values into practice, however, may take some work.
