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Regulation and Fintech Innovation: A Delicate Balance Shaping the Future of Finance

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11 months ago

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By Tim Popplewell, CEO, Scintilla

Fintech innovation and regulatory oversight share a complex and often uneasy correlation. Together, their relationship resembles a dance—a tango—where one leads while the other follows, each attempting to set the rhythm. Yet, the key to success lies in balance. The goal of innovation is to build products and services that solve problems, and the goal for regulators is to ensure that all stakeholders are protected, without hindering the process of innovation. Recent events, such as the $3 billion fine imposed on TD Bank for anti-money laundering (AML) failures, demonstrate this intricate interplay. For emerging fintechs, the lesson from this is clear: compliance isn’t merely a regulatory obligation—it’s a business imperative, innovating an approach to AML and compliance practices early on so fintechs can avoid costly pitfalls while simultaneously driving development forward.

The evolving dynamic between regulation and innovation underscores a broader reality: regulation serves not to stifle fintech but to align its rapid advancements with the interests of consumers, economies, and the broader financial landscape, while protecting all stakeholders in the sector. This alignment is not without challenges. Regulators must perform a delicate balancing act, weighing opportunity against risk and ensuring that fintech’s disruptive potential is harnessed for the greater good. This tango is a continuous negotiation, where each step must be carefully calibrated to ensure progress without missteps.

Innovation creates risk, regulators keep them in check

At its core, fintech innovation arises from necessity—businesses identifying gaps in the market and responding to shifting consumer demands. Whether it’s the rise of digital wallets, peer-to-peer lending platforms, or blockchain-based solutions, fintech pioneers have consistently disrupted traditional financial models to deliver faster, cheaper, and more accessible services. But this industry cycle also produces a side-effect in which risks need to be taken, when changes are being made, and regulators need to ensure that consumers, and the general public are not harmed when these risks are being taken. 

Yet, while fintech moves at the speed of innovation, regulators are motivated by a broader set of priorities. Their focus extends beyond market gaps to encompass systemic stability, consumer protection, and economic opportunity.

Regulators are tasked with safeguarding the integrity of financial systems, ensuring fair competition, and mitigating risks to global and local economies. This comprehensive approach often finds itself lagging behind innovation, understandably leaving them in a reactive position. This is not necessarily a flaw but a necessity. By observing the impact of fintech innovations in real time, regulators can craft policies that address emerging challenges without stifling creativity. The result is a regulatory framework that not only protects stakeholders but also creates an environment where fintech can thrive sustainably.

Regulation’s role in creating opportunity

While fintech is often seen as the primary driver of transformation, the real power to shape the financial landscape, in fact, lies with regulators. Their policies establish the standards and frameworks that determine how, and to what extent, innovations are adopted at scale. Far from being mere gatekeepers, regulators can act as catalysts for growth by creating conditions that encourage experimentation while minimizing risk.

Switzerland’s Crypto Valley serves as a prime example of how regulatory foresight can unlock opportunity. The Swiss Financial Market Supervisory Authority (FINMA) has worked to establish clear guidelines for blockchain and cryptocurrency projects. These frameworks have not only attracted major players like JPMorgan but have also provided smaller startups with the clarity and confidence needed to innovate. By defining the rules of engagement, FINMA has fostered a productive environment where incumbents and challengers alike can experiment with new technologies without fear of regulatory ambiguity.

The regulatory environment, when designed thoughtfully, offers a dual benefit. It paves the way for mass adoption by providing consumers and businesses with the trust and security needed to embrace new solutions. Simultaneously, it fosters competition and collaboration, encouraging fintechs to build on established innovations to create even more advanced offerings.

The regulatory objective to protecting the consumer

Amid the excitement of fintech innovation, it’s easy to overlook the most critical stakeholder: the consumer. For all its potential, fintech must ultimately serve the needs of the people who use its products and services. This imperative is central to regulatory agendas, which prioritize consumer safety and trust above all else.

The rapid evolution of digital finance—from the rise of credit and digital banking to the advent of cryptocurrencies and tokenized assets—has created both opportunities and risks for consumers. While fintechs race to capitalize on shifting demands, regulators work to ensure that consumers are not left vulnerable to exploitation or harm.

This focus has driven the development of compliance standards such as AML and know-your-customer (KYC) requirements, which hold financial institutions accountable for safeguarding consumer interests. However, these regulations do more than just protect consumers—they also spur innovation. Fintech companies are increasingly leveraging artificial intelligence (AI) and blockchain technology to streamline compliance processes, demonstrating how regulation can serve as a springboard for technological advancement.

For instance, AI-powered KYC solutions are reducing onboarding times while enhancing accuracy, and blockchain-based systems are creating tamper-proof records that bolster trust in tokenized assets. By prioritizing consumer safety, regulators not only mitigate risk but also create opportunities for fintechs to differentiate themselves through innovation.

The need to manage risk to economies and markets

While consumers are a primary concern, regulators must also consider the broader economic implications of fintech innovation. There’s a reason many new fintech companies are called ‘disruptors’; disruption is inherent to fintech’s DNA, but unchecked disruption can pose significant risks to local and global markets.

Take, for example, the rise of cryptocurrency and blockchain-based finance. By enabling near-instantaneous cross-border transactions, crypto has the potential to upend traditional banking systems. Yet, this same capability has also raised concerns about money laundering and illicit activities, prompting regulators to take a cautious approach.

In Dubai, the Virtual Assets Regulatory Authority (VARA) has established a rigorous compliance regime, not just for cross-border transactions but for fintech companies more widely and the license to operate in this region rests with these requirements. 

While the high cost of obtaining a VARA license has limited market entry for smaller players, it has incentivized collaboration within the industry. For example, Scintilla Network, a leader in tokenized real-world assets, has extended its broker-dealer license to partners, creating a collaborative ecosystem where smaller firms can innovate without bearing the full burden of regulatory compliance.

Such examples highlight a crucial dynamic: regulation may introduce challenges, but it also drives solutions. By encouraging collaboration and resource-sharing, regulatory frameworks can encourage an environment where innovation thrives despite—or perhaps because of—the constraints imposed.

Ensuring a level playing field

As fintech matures, regulators face a growing challenge: maintaining fairness in an increasingly competitive landscape. While collaboration has been a boon for the industry, the looming threat of market monopolies is a significant raison d’être for regulators who serve to cultivate equal opportunities for businesses.

Major players are rapidly consolidating their positions, leveraging their scale and resources to dominate emerging markets. But where newcomers and new entrants to the industry may have once held the upper hand with niche offerings and never-seen before USPs, the big dogs are quickly catching up, offering the same if not better services, products and user experiences to its already significant share of the market. 

Are we seeing a monopolized market in the making? Perhaps. The competitive landscape is not just an economic issue—it’s an innovation issue. Smaller fintechs are often the source of groundbreaking ideas that challenge the status quo. It will be up to regulators to re-level the playing field for smaller institutions to maintain access to its piece of the growing, global, digital asset pie.

Finding balance in the future of fintech

As fintech and regulation continue their intricate dance, the path forward will require careful coordination. Innovation must be encouraged, but not at the expense of stability or fairness. Regulation must adapt, but without stifling the creative spirit that defines fintech. This balance is not easy to achieve, but it is essential for ensuring that the benefits of fintech are shared widely and sustainably.

Regulation provides the structure, ensuring that each step is deliberate and aligned with the broader interests of society. Together, they navigate the complexities of the financial landscape, charting a course that is both dynamic and secure.

The $3 billion fine levied against TD Bank serves as a stark reminder of the stakes involved. For fintechs, the message is clear: robust compliance is not optional—it is a prerequisite for sustainable growth. By embracing regulation as a partner rather than an adversary, fintech companies can not only avoid costly missteps but also unlock new opportunities for innovation.

In the end, the relationship between fintech and regulation is not a battle but a partnership—a dance that, when executed with care, can lead to a future where innovation and stability coexist.

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Financial

Finastra’s Saudi Arabia Reimagine Banking Forum Spotlights Innovation, Trust, and AI in a Vision 2030 Financial Landscape

Published

3 days ago

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December 10, 2025

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A group photo of Finastra official at a brand event in Saudi Arabia

Finastra, a global leader in financial services software, brought together regulators, banks, fintechs, and technology leaders at the Saudi Arabia Reimagine Banking Forum in Riyadh to examine how the Kingdom’s financial sector can accelerate innovation while protecting trust, resilience, and customer value under Vision 2030.

The forum featured perspectives from regional and global experts, including Rudy Kawmi, Vice President for Middle East, Africa and Asia Pacific, Universal Banking at Finastra, along with senior leaders such as Abdulkarim Alsowaygh, Head of Advisory Services at TechArch, and Aymen Belhedi, Digital and Technology Transformation Leader at KPMG Middle East.

As the conversation turned to how banks can turn ideas into action, Finastra shared perspectives based on its long-standing work with financial institutions in the Kingdom, where it has supported banks since the early nineties through local expertise, established relationships and ongoing investment. The company referenced the role of modern core platforms like Essence, in supporting agility, compliance and customer-centric design. Finastra Essence was also recognized as a Leader for the 2nd consecutive time in the Gartner Magic Quadrant for Retail Core Banking Systems, Europe.

Across three panel discussions – Banking Today: Delivering delight in a hyper competitive world, Banking Tomorrow: Innovation, agility and relevance, and Practical AI: Leveraging AI for profit, safely and securely – speakers shared practical strategies to balance regulatory expectations, customer needs, and technology adoption.

Key insights from the Saudi Arabia Reimagine Banking Forum include:

Innovation anchored in trust and compliance
Panelists agreed that innovation in Saudi banking must begin with trust. Cybersecurity, regulatory alignment and security maturity were described as non-negotiables, not afterthoughts. Speakers highlighted the role of the Saudi Central Bank (SAMA) in setting clear guardrails through initiatives such as API-driven banking frameworks and the Regulatory Sandbox, enabling banks and fintechs to experiment in controlled environments while protecting consumers and financial stability.

From product proliferation to precision, lifestyle-integrated banking
The discussion underlined a shift from launching more products to delivering precise, contextual experiences. Banks in Saudi Arabia are under pressure to evolve from traditional service providers into lifestyle platforms that integrate payments, credit and everyday services into the digital journeys customers already use. With the risk of banking drifting into a utility model, where providers are interchangeable, panelists called on institutions to differentiate through relevance, immediacy and purposeful design, not just scale.

Ecosystem orchestration as the new competitive edge
Speakers stressed that no institution can innovate in isolation. Banks that act as ecosystem orchestrators, curating fintech, technology and cybersecurity partners while owning the “trust layer”, are better positioned to deliver new propositions quickly. Internal teams, advisors and partners form a single value chain. The conversation moved beyond capability lists toward how those capabilities are combined, governed and brought to market at speed.

Data and AI turning trusted information into intelligence
Data was described as a critical and often underused asset. Panelists highlighted that the real opportunity lies not in collecting more data but in converting trusted data into actionable intelligence. In this context, AI and generative AI can help banks move from reactive service models to proactive, personalized engagement, provided governance keeps pace. With the right tools and controls, small teams can now deliver improvements in productivity and customer experience that previously required much larger workforces.

Practical, ethical AI with humans firmly in the loop
The AI discussion focused heavily on ethics, explainability and human oversight. Panelists warned against black-box systems in areas such as credit decisions and collections, where AI outcomes directly affect people’s lives. They emphasized the need to identify and address bias in training data and to keep humans accountable for final decisions. AI was positioned as a powerful tool to automate repetitive tasks, assist agents and accelerate analysis, while freeing people to concentrate on higher value work.

Technology is available, but adoption remains gradual
Speakers noted that while the technology to support next-generation services is already in place, adoption timelines can vary. Some innovations introduced in pilot phases have taken time to progress to full rollout, reflecting the sector’s careful approach to implementation. The discussion highlighted opportunities for continued progress in areas such as real time, transparent cross-border payments and fully digital account opening that reduces the need for in-branch processes.

Across all sessions, there was a consistent message: Saudi Arabia is setting a high bar for responsible innovation by combining a progressive regulator, a clear national agenda and banks that are re-architecting for trust, speed and inclusion. The future of banking in the Kingdom will belong to institutions that innovate boldly, design for resilience, and earn customer trust every day.

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Rostro Group Enters UAE with New SCA Licence Amid the Country’s 20% Fintech Growth Surge

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4 days ago

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December 9, 2025

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Rostro Group Enters UAE with New SCA Licence Amid the Country’s 20% Fintech Growth Surge

Rostro Group, an international diversified fintech and financial services group, has obtained a Category 5 license from the UAE Securities and Commodities Authority (SCA), marking a significant step in its long-term commitment to shape the UAE’s future financial ecosystem.

The UAE’s fintech ecosystem continues to expand at an exceptional pace, supported by progressive regulation, rising investor appetite, and strong government initiatives. Recent industry reports from bodies such as the MENA Fintech Association and Magnitt indicate that the UAE consistently attracts over 40–45% of all fintech investments in the region, reinforcing its position as the leading fintech hub in MENA.

Looking ahead, the sector in the UAE is projected to grow at a compound annual rate of more than 20% over the next five years, driven by increasing adoption of digital payments, rapid expansion in wealth-tech and digital brokerage services, and continued regulatory enhancements from bodies such as the SCA and ADGM. With this momentum, the UAE is well-positioned to remain a regional centre of innovation, capital formation, and digital financial transformation.

With UAE Securities and Commodities Authority (SCA) strengthening oversight and raising industry standards, the approval recognizes Rostro Group as a compliant and trusted participant in the country’s expanding financial landscape. It also allows the Group to operate in line with UAE’s expectations for transparency, investor protection and responsible market engagement.

Based in the UAE, the Group is led by CEO Michael Ayres, who has long-standing experience in the region’s fintech sector. Speaking about the SCA approval, Ayres highlighted that Dubai and Abu Dhabi’s rapid evolution into a future-ready financial ecosystem is unmatched.

Ayres said, “We at Rostro Group see the UAE as one of the most forward-thinking financial centres, one that will soon rival leading centres like London, Singapore or New York. Securing this licence deepens our alignment with the country’s vision to build a tech-first, institutionally robust financial ecosystem and propels our contribution to its next phase of growth.”

Rostro Group’s multi-brand structure is built to serve diverse categories of investors through a unified global ecosystem. Its Scope Prime division supports institutional clients with industry leading trading infrastructure, while Scope Markets offers individuals streamlined access to global trading and investing opportunities.

In recent years, the product offering of Rostro Group has been widened to include access to over 60 regional CFD equities, as well as the development of proprietary CFD indices to mirror the performance of the Dubai and Abu Dhabi stock markets.

Local banking relationships have already been established. In addition, Rostro’s Scope Prime division is now ready to provide multi-asset prime brokerage services to financial institutions across the GCC, whilst the retail client-facing Scope Markets division has the ability to offer account types denominated in multiple currencies including AED and USD.

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AI gives Gulf banks the edge in managing liquidity with confidence

Published

5 days ago

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December 8, 2025

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Integrated platforms and data-driven agility will allow IFIs to meet rising expectations and shape global standards

By Matthew Nassau, Business Architect, Treasury & Capital Markets at Finastra

Markets move in cycles. Each generation experiences most of the things that previous generations have endured (bull or bear markets, natural disasters, geopolitics, …) punctuated by turning points from which the future takes a distinct path (powered flight, the transistor, The Beatles, …). These highlights are often recognized early on as important in their day and seem to appear ‘overnight’, and yet have taken years of development and formation to appear in our consciousness, while the lasting extent of their transformative power is not fully appreciated.

Generative AI (GenAI) fits the model described above, poised as it is to revolutionize treasury and capital markets by markedly altering decision-making processes for market professionals. From conversational finance to predictive analytics, AI is evolving from a mere assistant to becoming a crucial decision-making tool. In Gulf Cooperation Council (GCC) countries, GenAI could add between USD 21 billion and 35 billion each year, on top of roughly USD 150 billion that existing AI technologies are expected to contribute. That represents about 1.7 to 2.8% of the region’s current non-oil GDP.

To deliver on this potential, it is essential that financial institutions have access to high-quality data, upon which GenAI can infer connections, deliver insights and enable actions.

Data has never looked so good

Data has long been treated as one of the most important assets in financial services. Vendors have built major businesses supplying real-time market feeds, and institutions invest heavily to safeguard customer information in every form. The value is clear. What is changing is how much more that value can grow as GenAI gains access to richer and more precise datasets. Large language models can spot relationships and trends that were previously buried, turning raw information into forecasts, alerts and actions that support commercial and risk decisions.

Unlocking that potential requires broader access to the information that treasury teams already rely on. Data lakes and warehouses form part of the picture, but they rarely capture everything. Treasury management systems are a prime example. Their reporting evolves constantly and plays a central role in liquidity decisions, yet much of it remains confined within the system. By making these reporting histories available to GenAI, banks can reveal patterns over time, flag emerging opportunities or risks and prompt timely intervention.

Timing is everything

To show how quickly things have shifted, consider a discussion I had with a major European bank a few years ago. The team was exploring how to treat treasury and capital markets data as a strategic asset without forcing everything into one central system. Their vision was a unified data layer where information could stay within existing applications yet still be accessed, combined and analyzed by staff using low code tools. The goal was to shift toward more data-driven decision making across the business and to uncover new sources of commercial value.

The concept was sound, but the technology required to deliver it at scale was simply too expensive and complex at the time. The bank had to narrow its ambitions and proceed with smaller, tactical initiatives. Artificial intelligence was not even part of the conversation. It felt experimental and far removed from daily operations.

Looking back, the idea wasn’t premature in strategy, only in timing. GenAI now makes this kind of agile, distributed data insight far more realistic.

‘Go big or go home’ – not any more

Expectations have moved on as technology has matured and become easier to access. The old way of classifying data projects as either short-term tactical fixes or long-term strategic overhauls no longer applies. GenAI changes the conversation. It shifts focus from where data lives to how much value it can generate. Deploying AI in specific functions like operations, the front office or reconciliation isn’t a stopgap. It’s a practical way to unlock intelligence quickly.

What will determine success is an institution’s ability to surface a wide range of data, ensure its accuracy and let AI learn from it. This doesn’t require a massive transformation program from day one. Starting with focused use cases can improve efficiency, reduce manual work and reveal valuable insights straight away. As more processes become AI-enabled, those individual wins begin to connect, creating a stronger and more intelligent foundation across the entire organization.

Outcomes lead to incomes

When a technology is still emerging, no one can predict with certainty how far its influence will reach. The best indicators often come from those willing to adopt early and test ideas in the real world. Many concepts compete for relevance, and only a few will ultimately reshape how people work.

The organizations that benefit most are the ones comfortable experimenting, moving quickly and learning as they go. GenAI encourages exactly that mindset. It allows teams to explore and refine new approaches by tapping into the data they already hold. The results show up in lower costs, stronger client value and healthier margins.

This shift is not about replacing existing business models but enhancing them. Each step forward can deliver outsized returns for firms confident enough to start now.

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