As the first quarter of 2026 comes to a close, top-of-mind trends in the financial services industry include deregulation, global adoption of artificial intelligence and recent fraud legislation in the UK.
We examine these trends below.
Deregulation
The U.S. financial services ecosystem is undergoing one of the most significant deregulatory periods since the years following the 2008 financial crisis. Driven by the current administration’s policy priorities, federal regulators have collectively moved to reduce compliance burdens, ease capital requirements, embrace digital assets, accelerate bank M&A activity and shift process-oriented supervision to a focus on “material financial risk.”
The Federal Reserve, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation are developing proposals to modify each of the four pillars of the regulatory capital framework for the largest banks: stress testing, the supplementary leverage ratio, the Basel III framework for risk-based capital requirements and the G-SIB surcharge. The proposals are expected to be published toward the end of March.
Additionally, the Securities and Exchange Commission (SEC) is pursuing multiple deregulatory initiatives:
- Project Crypto: SEC Chairman Paul Atkins stated that he expects the Commission to consider a token taxonomy, guidance on when crypto assets are or are no longer part of an investment contract, and a new framework for offerings and sales of crypto asset securities.
- Regulation S-K: Atkins directed a comprehensive review of Regulation S-K with a comment deadline of April 13, 2026. The goal is a broad disclosure-burden reduction for public companies. The review of Regulation S-K is meant to focus on material information and avoid immaterial disclosure.
- Semi-annual reporting vs. quarterly reporting: Atkins asked staff to prioritize this proposal and move toward formal rulemaking.
As federal oversight becomes less burdensome, certain state legislatures are increasing their own enforcement and rulemaking, creating a somewhat patchwork system. The states argue that the actions at the federal level may increase systemic risk and be detrimental to consumers.
In the UK, the government’s Mansion House Reforms in July 2025 encouraged regulation with the aim of spurring growth; this resulted in 50 pro-growth initiatives that are due to shape the 2026 regulatory agenda.
The removal of prudential regulation SS20/15 in the UK was a landmark decision that affects the building society sector and the streamlining of conduct-related regulation.
Despite concerns about blanket deregulation, we anticipate agencies in the U.S. and the UK will continue to preserve core prudential, consumer and financial crime prevention standards to support a robust yet competitive market.
AI adoption and risk
Banks, insurers and asset managers worldwide are accelerating investment in artificial intelligence to modernize legacy systems, unlock productivity, improve risk management and enhance customer experience.
AI spending across financial institutions globally reached an estimated $45 billion in 2024 and is projected to rise to $126 billion by 2028, according to Bloomberg. Banks account for roughly two‑thirds of that growth, with 70% of banks expecting firm‑wide deployment of generative AI within two to three years—up from 24% today.
Despite this momentum, many firms still struggle to translate experimentation into value creation. Last year, MIT found that despite soaring investment in generative AI, only 5% of pilots deliver measurable business returns. Hurdles include data quality issues, skills shortages, integration challenges and the heavy drag of legacy platforms that absorb 60 to 70% of technology budgets for many institutions.
Read more from RSM about how financial services organizations are embracing AI.
Agentic AI is emerging as the next frontier, with autonomous agents capable of performing multi‑step processes such as credit underwriting, fraud investigations or treasury operations.
Scaling agents requires re‑architecting operating models and strengthening governance to manage new categories of risk. Recent rollouts by an insurance marketplace and an adviser platform show AI agents have the potential to take work off intermediaries and advisers. New planning and automation tools point to lasting cost changes and a sharper focus on where humans add value.
AI in the UK
- In January 2026, the UK’s Financial Conduct Authority (FCA) announced a review into how AI advances will transform retail financial services. The review will focus on themes including how AI could evolve in the future, how technology developments will affect markets and firms, AI’s impact on consumers and how UK regulators will need to evolve to help financial markets adapt.
- The FCA’s AI Live Testing initiative and Supercharged Sandbox are designed to encourage innovation while mitigating risks before deployment.
- The FCA and Bank of England apply existing conduct and prudential frameworks and have not announced plans for additional AI‑specific rules or regulation, emphasizing accountability, explainability and consumer protection.
AI in the U.S.
- The U.S. has not enacted one comprehensive AI regulatory framework for financial services. Instead, federal regulators primarily oversee AI use in financial markets through existing laws—including anti-discrimination and consumer protection statutes—and agency guidance.
- In early 2025, the administration issued an executive order revoking prior AI “guardrails” put in place by the previous administration, aiming to ease federal oversight of AI.
- A patchwork of state-level laws have cropped up to address financial services implications of AI.
UK fraud legislation affecting firms globally
As the UK expands its reach in combating economic crime, the new corporate offense of failure to prevent fraud (FTPF) under the Economic Crime and Corporate Transparency Act 2023 (ECCTA) has significant implications for UK‑based organizations and global groups with any UK nexus.
As of September 2025, large organizations worldwide can be prosecuted and face unlimited fines if an employee, agent, subsidiary or other “associated person” commits a specified fraud offense intending to benefit the organization. The large organization’s only defense would be that it had reasonable fraud prevention procedures in place at the time of the offense.
Large financial services organizations should ensure their controls explicitly address how the organization could benefit from fraud and can evidence reasonable fraud prevention procedures.
The legislation defines large organizations as meeting at least two of the following three thresholds at any point in the financial year preceding the offense:
- More than 250 employees
- Turnover (revenue) over £36 million (about $48 million)
- Total assets over £18 million (about $24 million)
The defense to FTPF is available where the organization can prove it had reasonable fraud prevention procedures in place at the time of the fraud. The guidance specifies six principles that should inform an organization’s reasonable fraud prevention procedures:
- Top‑level commitment (meaning leadership prioritizing fraud prevention)
- Risk assessment
- Proportionate procedures
- Due diligence
- Communication
- Monitoring and review
The FTPF and the expansion of corporate liability under ECCTA marks a fundamental shift in how organizations should manage economic crime risk. Boards and senior leaders should assure that teams embed proportionate fraud prevention procedures and maintain clear senior manager accountability and strong governance throughout the organization.