How new FinTech regulations strengthen the future of global finance

Global FinTech is on the cusp of transformation, driven by new regulations designed to enhance security, accessibility, and competition. Recent regulatory measures are laying the groundwork for a more robust and innovative financial ecosystem worldwide.

These changes come at a pivotal time for the industry, as 2024 presented both challenges and opportunities for FinTech markets in established and emerging economies alike.

The FinTech market in 2024

In 2024, FinTech faced significant challenges, particularly in the United States and other major markets. Traditional banks and established companies like PayPal dominated these regions, leaving little room for startups to grow. In emerging markets such as the Middle East and Latin America, the potential for advancements like digital payments and real-time transactions was hindered by concerns about fraud and accessibility.

To address these issues, regulators are introducing frameworks designed to create a more secure and equitable financial ecosystem in terms of open banking and enhanced Know Your Customer (KYC) requirements and anti-money laundering (AML) measures. The goal is to allow for stronger competition between financial providers while tightening controls on cash transactions and cryptocurrency dealings and building trust among consumers and investors alike. These efforts, spanning multiple continents, aim to solve the issues that hindered FinTech growth in 2024.

Open banking

Several new regulations center around the concept of open banking. Open banking lets banks securely share customer financial information with other companies, like apps or FinTech services, but only with your permission. This makes it easier to access tools that help you manage money, get loans, or save smarter.

In the United States, for example, the Consumer Financial Protection Bureau (CFPB) is spearheading efforts to establish open banking frameworks. The CFPB’s newly finalised “Personal Financial Data Rights” rule, set to roll out in phases starting with the largest financial institutions, mandates that consumers have the right to access and share their financial data. This initiative lets consumers switch providers easily and adopt services better suited to their needs.

Similarly, in the Gulf Cooperation Council (GCC) region, open banking is gaining significant traction. Countries like the United Arab Emirates (UAE), Saudi Arabia, and Bahrain have already published regulatory frameworks for open finance.

Additionally, the UAE’s eight major banks are set to implement open finance initiatives similar to those in the United Kingdom and Europe later this year. Many private-sector companies have been instrumental in this transition. Lean Technologies, for instance, provides a platform that enables banks and FinTechs in the region to integrate open banking services quickly and just finished its Series B funding round with the help of the U.S.-based General Catalyst investment company.

KYC and fraud protection

The other major trends in today’s FinTech regulations are Know Your Customer (KYC) and fraud protection. KYC is a regulatory process that helps financial institutions verify the identity of their customers. Today’s Know Your Customer (KYC) regulations go beyond traditional ID checks, leveraging advanced technologies like AI, machine learning, and biometric verification to enhance security and efficiency. These measures now apply across a broader range of industries, including FinTech startups and cryptocurrency platforms, addressing modern risks like cross-border fraud and cryptocurrency misuse.

In particular, the European Union has recently adopted stricter rules to combat money laundering and terrorist financing through KYC principles. These measures include a cap on cash transactions and mandatory registration for entities dealing in cryptocurrencies. In Australia, fraud and scam prevention is taking center stage with the proposed Scams Prevention Framework. This draft legislation, set to roll out soon, would require banks, telecommunications companies, and even social media platforms to adopt stronger measures against scams.

Just like with open finance, the private sector, in the form of PayTech companies and investment funds like Shorooq, has been quick to help emerging regions comply with new regulations and prevent fraud as well. For example, NymCard offers modern card-issuing and payment options tailored for the MENA region, allowing banks and FinTech startups to meet new regulatory requirements. Mozn.ai is another well-known MENA company that uses an AI platform called FOCAL to help monitor for, detect, and defend against fraud in financial systems. In Latin America, Pix is a paytech leader that has helped companies stay compliant with local regulations.

The road ahead for global FinTech

With open banking frameworks, enhanced KYC measures, and robust fraud protection reshaping financial systems worldwide, the global FinTech ecosystem is entering a pivotal moment. These regulations and the companies supporting them are not just about addressing today’s challenges—they are setting the stage for a future where innovation thrives, consumer trust deepens, and financial services become more accessible to all. As 2025 approaches, the industry is poised to unlock new opportunities, bridging gaps between established markets and emerging economies and redefining what’s possible in global finance.