Key Findings

1. Enterprise-wide risk frameworks were inadequate
   Operational staff managed their tasks appropriately but without adequate oversight or challenge. Many firms defined risk appetites using judgement rather than through business activities and failed to identify key risks related to cyber, financial crime and growth activities.
   
2. Liquidity risk management was lacking
   The FCA identified weaknesses in assessing the impact of stress events on liquidity risk, which has the potential to cause harm if not managed appropriately. Some firms relied on existing cash to mitigate liquidity risk without scenario testing to assess adequacy of resources.
   
3. Group-level risk oversight didn’t translate locally
   Parent-group frameworks often failed to reflect the specific profile and risks of each entity, something which could have an impact on financial and non-financial resources available to the regulated firm.
   
4. Wind-down plans were disconnected and untested
   Plans were disconnected from firm’s risk management framework and lacked detailed triggers, realistic timing and reliable resource modelling. Plans must consider operations, residual safeguarded funds, liquidity needs and triggers driven by the risk appetite.

Disorderly wind-downs can cause consumer and market harm, especially during tumultuous periods. As payment firms scale globally, managing risks isn’t optional but is critical to sustainable growth.

Managing Risk with RegTech

Regulatory Technology offers the perfect solution to shortcomings, as a clear and measurable action towards better risk management and wind-down planning. Taking on a bespoke suite of modules, like on the Axiol platform, can close the gaps identified by the FCA.

1. Enterprise-wide risk management
   Axiol provides a structured, real-time view of your risk landscape through comprehensive risk scoring, a transparent control framework and inherent financial impact calculations. Establish and monitor firm-wide risk appetite, set clear tolerances and ensure ongoing alignment.
   
2. Risk evaluations and control scoring
   On the Axiol platform, users can evaluate the probability and financial impact of key risks and score control effectiveness at regular, pre-defined intervals. Utilise graphs, tables and board level Management Information to monitor and track changes overtime and maintain effective risk oversight.
   
3. Risk relationship mapping
   Identify your key risks and link them to underlying risks and associated controls to effectively understand your risk relationships.
   
4. Risk ownership
   Managers can assign and user can accept ownership of a key risk, ensuring that evaluations are kept up to date.
   
5. Audit ready data
   Scoring, evaluations and regular updates create a comprehensive audit trail, with demonstrable data for regulators like the FCA.

The FCA’s expectations aren’t new. The current regulatory expectations have always been in place and firms must act. Robust frameworks build operational resilience and preserve consumer trust, maintain the ability for firms to grow. The FCA has invited firms to align their frameworks with its findings.

Discover how Axiol can help your firm manage enterprise-wide risk effectively by visiting our website and getting in contact.

The post Learnings From the FCA’s E-money and Payments Multi-firm Review appeared first on Axiol.

Safeguards Around Client Money

One of the main concerns identified by the FCA was the lack of controls to prevent the mixing of client money with its own funds and that client assets may have been accessible to third parties. Such breaches are in clear violation of the CASS framework and undermine client trust entirely.

Our integrated Risk Management Module, Axiol Risk, allows for risks to be identified in real time, giving compliance teams a comprehensive view of risk exposure. Risks are clearly linked to controls and regular control assessments can be undertaken, allowing for ongoing compliance monitoring. Control effectiveness scoring, financial impact calculations and task delegation ensure effectiveness of safeguards. When concerns do arise, Axiol Risk works hands in hand with our suite of compliance modules, enabling confidential whistleblowing and the submission of Suspicious Activity Reports (SARs), creating a comprehensive, closed loop system of risk detection and escalation.

Oversight of Appointed Representatives (ARs)

Maintaining oversight of Appointed Representatives (ARs) can be a struggle for firms. Strowz appeared not to have a structured approach for reviewing the fitness or financial stability of ARs, or the adequacy of controls. The firm also operated beyond its permissions.

Axiol enables structured reviews of ARs, tracking key metrics through annual attestations, allowing compliance teams to monitor changes, assign remedial tasks and undertake due diligence. These reviews are logged and securely retained in line with FCA expectation, helping firms to remain audit ready at all times. Firms can utilise customisable forms for AR onboarding, ongoing assessments and annual attestations. When risks or issues are flagged, Axiol users can assign remedial tasks and ensure accountability. Axiol is underpinned by role-based access, which protects sensitive data and information, ensuring only relevant users have access to information. Axiol turns oversight from reactive to proactive, while strengthening regulatory compliance.

Monitoring Risks in Real Time

Firms that cannot, or do not, actively monitor their risk exposure leave themselves and their client vulnerable. Strowz demonstrated this with no apparent firm-wide mechanism for tracking conduct, responsibility or risk ownership.

Axiol helps firm maintain a real-time picture of their risk landscape, from personnel risks to SMCR obligations around conduct, liability and responsibility. Axiol allows firms to monitor individual responsibility and ownership of tasks, while using the Incidents & Breaches modules to track any red flags through a centralised dashboard.

All data collected by Axiol can be generated into clear management information and board-level reports, allowing compliance to be transparent in their actions and the board to make informed decisions based on live data.

A comprehensive system like Axiol contributes to firms’ compliance monitoring plans, equipping compliance teams with the tools they need to act in the moment, not after the fact.

Meeting Regulatory Obligations

Strowz failed to meet multiple reporting obligations. The firm did not submit its REP025 returns, missed client audits between 2022 and 2024 and didn’t disclose changes to the FCA. Even after the FCA raised concerns, the firm continued to withhold information.

While Axiol does not submit returns directly to the FCA, it equips compliance teams with everything needed to meet reporting obligations on time and in full. Through the Regulatory Filings Module, firms can log, track and manage all filings and disclosures from a single dashboard, creating calendar tasks and setting reminders and alerts on the Axiol platform. Recurring tasks can be created with set due dates, reminders and escalation options. Each report or submission can be linked to supporting documents, notes and a status to ensure nothing is missed.

Custom forms can be used to collect data, and filtered dashboards give compliance teams and leadership instant visibility over what is due, what is late and what has been filed.

Lessons Learned From the Strowz Case

Strowz Ltd failed to meet even the most basic of expectations for regulated firms. The failures of the firm can only be described as systemic. From poor record keeping and inaccessible data to a culture of evasion and a breakdown in client asset protection, the firm triggered a plethora of regulatory red flags.

Failures like these were preventable. Axiol enables firms to embed robust compliance oversight and comprehensive risk management into their daily operations to reduce regulatory friction, build a transparent culture and create a demonstrable trail of evidence.

Axiol is targeted compliance by design and has been developed by market practitioners to withstand regulatory scrutiny, in an industry where compliance is not optional but a crucial part of ensuring consumer safety.

To find out more about how Axiol can enable robust risk and compliance management, visit our website or contact us at info@axiol.com for more information and to explore how we can help you achieve seamless, efficient regulatory compliance.

The post Case Study: Learning from Strowz Ltd appeared first on Axiol.

In December 2022 the UK government took significant steps to explore the potential for faster settlement. By March 2024, the Accelerated Settlement Taskforce (AST), recommended 12 critical and 26 highly recommended actions for a successful transition to T+1. The AST report was accepted by the government on 19 February 2025, committing to legislating the move to T+1 by October 2027.

The goal is to align the UK’s transition with similar efforts across the European Union, minimising costs for multi-jurisdictional firms. Q4 2027 may seem like a distant future, but firms are being prompted by the FCA to be proactive in their preparation for T+1 by following these four steps:

1. Read the AST Report
   
   The AST report is essentially the blueprint for T+1 settlement. It outlines the technical and operational changes needed for the move to T+1. Firms must review which recommendations they should take on board and implement plans accordingly.
   
2. Plan Early
   
   Firms must start planning now. This involves identifying the necessary changes, evaluating current systems and making upgrades as needed. The earlier changes are made, the more efficiently firms can implement them.
   
3. Budgeting
   
   Firms should allocate resources for upgrades, system changes, advisory work and any new technologies needed. The AST recommends that firms budget in 2025 to ensure sufficient resource availability.
   
4. Act to Implement and Test Changes
   
   Firms must implement changes and test them early to ensure a seamless transition in October 2027. Internal testing and engaging with counterparties is key to addressing any potential issues.
   
   

The FCA’s Approach

The Financial Conduct Authority (FCA) will monitor progress and ensure firms meet the required standards. The regulator will provide guidance, address any barriers. and monitor market activity, being ready to intervene if necessary to ensure market integrity. Given the global nature of securities markets, international coordination is essential for a smooth transition. The FCA is learning from the experiences of markets like the US to ensure the UK’s transition is as efficient as possible.

The post Preparing For T+1 Securities Settlement appeared first on Axiol.

The FCA has launched their five year strategy “to deepen trust, rebalance risk, support growth and improve lives”. They have outlined four key goals:

• Fight financial crime by establishing a presence in the US and Asia-Pacific
• Be a smarter regulator by reforming how they regulate and rebalancing risk
• Support growth by embracing a technology first approach
• Help consumers by increasing trust through a smart data revolution

The Payment Systems Regulator Will be Abolished

The government has announced that the Payment Systems Regulator will be abolished and its remit absorbed by the Financial Conduct Authority. This news comes during the Government’s focus on growth through removal of red tape.

Shortly after the announcement, the FCA’s Chief Executive made a statement, commending the work of the PSR in making payment systems ‘safer, more competitive and increasingly innovative’.

Nikhil Rathi emphasised that the time is right to streamline regulation, with the FCA intending to work closely with the Government, PSR and Bank of England to ensure a smooth transition.

The ‘Name and Shame’ Policy Plans Will be Abandoned

Under long-standing pressure, the FCA has abandoned plans to ‘name and shame’ firms that are under investigation. Rather, the FCA will aim to balance maintaining trust in the regulator while exercising discretion.

Instead of ‘name and shame’, under which firms would have been given ten days’ notice before publication, the regulator will publish firm names only in exceptional circumstances, as is currently the case. Its final policy will be published in June.

Updates to the Consumer Duty

The FCA aims to reduce the administrative, financial and time burden of businesses following the introduction of the Consumer Duty. The regulator’s plans include:

• Retiring more than 100 pages of outdated guidance
• Withdrawing over 100 supervisory publications
• Reviewing prescriptive disclosure rules to give firms more flexibility
• Revisiting rules for businesses with customers outside of the UK

The post Financial Conduct Authority Updates – March 2025 appeared first on Axiol.

A Smarter Regulator

The focus on this key goal will be to ‘rebalance risk’. The FCA’s stance is that regulation should be about enabling informed risk, rather than eliminating it entirely. Three key risk areas have been highlighted.

Regulatory risk must be monitored and reviewed to support new entrants, which should have a positive impact on competition, innovation and prices. Market and firm risk is a balancing act of enabling innovation while preventing excessive risk. The focus here will be on technological advancement to generate efficiency while preventing volatility and market abuse. Consumer risk will be mitigated through reforms to financial advice to ensure consumers make the right choices around accepting higher risk for higher returns.

Supporting Growth

This will be achieved through changes to disclosure requirements and widening retail access to investment opportunities. In turn, this will help businesses to ‘seek capital, increase liquidity and provide investors with the prospect of higher returns’.

The FCA will support growth by emphasising technological advancement and embracing Artificial Intelligence. Where possible, the regulator will rely on existing standards to focus on outcomes rather than just on prescriptive rules. As the Payment Systems Regulator (PSR) is absorbed by the FCA, they will deliver the National Payments Vision in due course.

Helping Consumers

‘A smart data revolution’ will help consumers navigate their financial lives. By increasing the pace of change, the FCA aims to deliver innovation and competition, alongside flexibility, tailored services and lower costs. Developing account to account payments, Variable Recurring Payments and lower processing fees for businesses are all pledges the FCA has made.

In order to do this, Open Banking needs to be prioritised and made commercially sustainable, while protecting its free to access model. The right regulatory framework will allow the FCA to open up the data generated by consumers to financial services providers, increasing choice and personalised support. Within the next year, the FCA will publish an Open Finance Roadmap.

Fighting Financial Crime

The UK is a global financial hub, the world’s largest net exporter of financial services. The FCA aims to work with the government to maintain and improve that position. This means that the FCA will also have to meet international standards to deepen trust and take a leading role in working with global counterparts on common issues. The FCA wants to play a global role in encouraging openness and collaboration by working with other jurisdictions on specific issues and establishing a permanent presence in the US and Asia-Pacific.

Axiol’s Perspective

Given the newly outlined strategy, firms will need to maintain comprehensive oversight of their risk and compliance landscape as regulatory changes are made. A centralised Regulatory Technology solution, like Axiol, could make staying on top of regulatory changes more streamlined, seamless and efficient. Automated monitoring of risks ensures objectivity and enables timeliness while providing a single source of truth for oversight and management.

Discover how Axiol can transform your compliance processes by booking a demo today. Visit our website or contact us at info@axiol.com for more information and to explore how we can help you achieve seamless, efficient regulatory compliance.

The post Overview of the Financial Conduct Authority’s New Five Year Strategy appeared first on Axiol.

For startups, managing every business function comprehensively can be overwhelming – especially in the complex landscape of financial services regulation. For resource limited teams, it’s inevitable that some business areas receive more attention than others, in some cases it’s the risk and compliance functions that get left behind. Unfortunately, the consequences of neglecting these areas are serious. A prominent example is Starling Bank. The challenger bank grew from 43,000 customers in 2017 to 3.6 million in 2023 but couldn’t keep up with Anti-Money Laundering (AML) requirements. As a result, the Financial Conduct Authority fined the bank £29 million for inadequate financial crime controls. Fortunately, mistakes like this are avoidable. By prioritising risk and compliance, regulatory risks can be reduced, trust can be built and sustainable growth achieved. This article will explore the key considerations for startups, essential risk and compliance best practices and how Axiol’s Regulatory Technology (RegTech) solution simplifies both functions.

Key Considerations

Understand Your Obligations

This may seem obvious but being fully aware of your obligations to the FCA, as a regulated firm and the Prudential Regulation Authority (PRA), as a dual regulated firm, will allow compliance to be established and maintained. Understanding and staying up to date with all relevant regulations, from the Consumer Duty and GDPR to Transaction Reporting and AML requirements is crucial. 

Know Your Risks

A comprehensive understanding of your risk landscape is a strategic asset that’ll prepare your firm for growth. Risk types are diverse, including legal, financial, operational and reputational risks. To stay on top of evolving risks know your key risks, their underlying risks and the relationship between risks.

Prepare for Growth

With growth comes new regulatory challenges. It can be difficult to fully prepare for growth but a lack of scalable systems will lead to bottlenecks, operational inefficiencies and potential exposure to financial penalties. Designing frameworks and systems for scale from day one ensures agility with expansion.

Ensure Proper Legal Documentation

Demonstrable compliance hinges on well-documented policy and procedure documents. Having all legal documents in order enables startups to demonstrate compliance and withstand regulatory scrutiny. 

Consider Your Culture

A strong culture starts at the top. Establishing a culture of compliance can embed it into daily operations, meaning that as a firm grows, compliance remains a top priority, rather than an afterthought. 

Best Practices

Start as You Mean to go on

Integrating compliance from day one prevents potentially costly missteps and allows startups to scale with ease. Proactive risk management is easier and cheaper than reactive fixes. Prepare for new challenges, without the need for firefighting. 

Establish Processes and Frameworks

Developing processes, procedures and policies that are clear and accessible lays the groundwork for long-term compliance and good risk management that will pay dividends in the future. Have a transparent reporting process, a clear chain of command and robust risk monitoring.

Automation Over Manual Processes

Spreadsheets and fragmented data tracking are inefficient, error-prone and time-consuming, leaving firms with a vague idea of their risk landscape and regulatory obligations. In the digital age, it only makes sense to embrace an automated, technology first approach. 

Data-Driven Decision Making

Through automation and technology comes data. Compliance is about making strategic decisions, backed by data. With the right systems valuable, meaningful and insightful data can be leveraged in decision making to keep firms on the right path and avoid enforcement action.

Utilise Experts

Regulation is complex and requires the relevant expertise. Risk and compliance professionals are essential to navigate regulations effectively. Whether that is in house or outsourced help, dedicated risk and compliance managers can prevent costly mistakes. 

Leveraging Regulatory Technology

Knowing what’s needed to remain compliant and manage risk is a good start, but firms also need to know how. That comes in the form of Axiol, a RegTech solution developed by risk and compliance experts for financial institutions. Designed to unify risk and compliance functions into one intuitive, automated and scalable platform. Axiol eliminates manual processes, inefficiencies and ensures accuracy through data-driven insights on a cost-effective platform.  

Regulatory scrutiny has intensified since 2008. Spreadsheets, siloed data and subjective risk ratings are no longer adequate. A clear, transparent and intuitive process is needed to enable your risk and compliance function to stay ahead of regulatory requirements, changes and deadlines. Axiol provides that through a risk management offering and an extensive suite of compliance modules. 

The consequences of neglecting risk and complince can be severe. The best approach is proactive, scalable and technology driven. By embedding strong risk management practices, leveraging automation and employing expert advice, startups can navigate regulation seamlessly and build a strong foundation for growth.  

Want to simplify compliance and risk management? Discover how by booking a demo today. Explore Axiol on our website or contact us at info@axiol.com for more information. 

The post Risk and Compliance Best Practices for Startups appeared first on Axiol.

The FCA has confirmed that they no longer expect firms to have a Consumer Duty Board Champion, giving firms greater flexibility in their ongoing governance arrangements. Firms are free to retain the role of Board Champion if they wish.

FCA Supports T+1 Settlement

The UK government has approved the shortened securities settlement from T+2 to T+1. This means that trades must be settled one business day after the transaction. The change will take place in October 2027 and the FCA advises firms to read the AST report.

FCA and PSR on Big Tech and Digital Wallets

Following the joint call for information, the FCA and PSR have published a feedback statement. The FCA and PSR believe there is opportunity for the expansion of digital wallets but they pose some risks and challenges that are already being considered in other jurisdictions.

FCA Multi-Firm Review Findings

The FCA conducted a review of the 22 largest advice firms in February 2022 and has concluded that financial advisers can charge consumers for ongoing advice and related services provided that they relate to previous recommendations provided by the firm.

The post Financial Conduct Authority Updates – February 2025 appeared first on Axiol.

According to the letter, there were improvements in some firms’ risk assessments but the FCA is concerned that firms were underestimating their risk of exposure to money laundering. The FCA identified weakness in how firms conduct business-wide risk assessment. Some firms lack a business-wide risk assessment altogether, while others have assessments that fail to comprehensively evaluate risks. Additionally, some firms struggle to appropriately risk-rate their clients and transactions, leading to gaps in due diligence and heightened exposure to financial crime risks.

While a strong culture is essential for good conduct, it must be complemented by robust controls to detect and prevent harm. The FCA has stressed the need for firms to maintain effective and comprehensive control oversight – an integral part of any functioning risk management framework. Without proper oversight, firms may fail to prevent misconduct and financial crime within their operations. Firms must proactively oversee conduct and implement disciplinary measures where necessary.

Moreover, firms must review their risk management frameworks to ensure they adequately assess liquidity risks and have contingency plans in place for stress scenarios. The FCA has emphasised the need for stronger financial resilience, including stress testing, liquidity risk reviews, and the establishment of robust wind-down plans.

The FCA’s multi-firm assessment highlighted ongoing gaps in money laundering risk management, particularly in relation to money laundering through the markets (MLTM). Many firms still fail to recognise and address MLTM including the interplay with market abuse regulation, leaving them exposed to potential regulatory enforcement.

The FCA has set a deadline of March 2025 for firms to review the letter, discuss it at Board level, and agree on next steps. Firms that fail to take corrective action may face increased regulatory scrutiny, including potential enforcement measures.

Axiol’s Perspective:

Firm’s may struggle with maintaining a comprehensive understanding of their risk landscape, due to insufficient oversight, use of spreadsheets and subjective assessments, leading to inconsistencies. A centralised Regulatory Technology solution can standardise risk assessments – allowing for real-time monitoring of risks, ensuring objectivity and timeliness while providing a single source of truth for oversight and management.

Effective control oversight can be a competitive advantage rather than a burden. Platforms like Axiol streamline control evaluations, track changes over time, and provide a clear view of risk relationships, helping firms strengthen oversight with minimal effort. By adopting automation, predictive analytics, and real-time monitoring, firms can meet regulatory expectations while improving efficiency. In addition, Axiol allows you to monitor and manage risks against regulatory capital requirements, ensyring any breachs of capital adequacy are identified almost immediately.

For wholesale brokers, the challenge is clear: strengthen risk oversight or face regulatory intervention. Axiol provides the tools firms need to navigate this evolving landscape with confidence. Discover how Axiol can transform your compliance processes by booking a demo today.

Visit our website or contact us at info@axiol.com for more information and to explore how we can help you achieve seamless, efficient regulatory compliance.

The post Key Takeaways: the FCA’s Dear CEO Letter to Wholesale Brokers appeared first on Axiol.

However, with such rapid advancements come significant challenges, especially surrounding the secure and responsible use of AI. In this article, we’ll explore how AI can be effectively integrated into RegTech. Along the way, we’ll address the crucial questions of when and why to use AI, and whether we are truly better off with it.

Why Are We Using AI?

Before delving into the NCSC guidelines, it is essential to ask: why are we using AI? For Jason Maude at Starling Bank “We’re using AI where it makes sense to use AI”¹. But what does this actually mean? It could be that it reflects a growing realisation that AI should not be adopted any which way but should be treated like a tool and used where appropriate to solve specific problems and improve efficiency.

Traditionally, financial institutions have been data rich but not necessarily data centric. This shift towards data-driven decision making is where AI becomes transformative. With mountains of regulatory data, and the need to meet complex standards, AI helps make sense of this information more effectively and efficiently than the human brain could.

However, it’s worth noting that not all AI implementations are successful. AI models require the best data engineers to utilise the most accurate pseudo data for a useful model to be created. Unfortunately, this isn’t always the case with 8 out of 10 AI platforms failing, due to poor planning, lack of data quality or insufficient integration with business processes. It is for these reasons that AI needs to be carefully considered before being adopted in RegTech.

Do We Need to Use AI?

While AI offers benefits, we must also ask: Do we need to use AI for every regulatory task? The answer is not always straightforward. There are scenarios where traditional methods and simpler technologies will suffice. For any compliance process that involved nuanced human judgement, empathy, or complex ethical considerations may not be ideal for AI automation.

There is also the behavioural science perspective. There are distinct differences between human to human and human to AI interactions. Humans respond more positively to empathetic, human led interventions compared to interactions with AI. The emotional intelligence and adaptability of human compliance officers cannot be replicated by AI. AI excels at automating repetitive, data-heavy tasks, but it cannot replace the human element. A study showed that humans interacting with AI are much more likely to lie, with 62% lying to an AI bot, compared to 12% lying to a human.

Are We Better Off Using AI?

The final question we must grapple with is, are we better off using AI? To answer this, it’s important to weigh AI’s advantages against its potential drawbacks. AI has proven to be transformative in automating regulatory processes, reducing human error, and handling tasks at scale. It can also learn from data, making it highly adaptable to an organisations unique workflows and regulatory requirements.

However, AI also comes with significant risks. One of the most pressing concerns is data quality. AI models are only as good as the data they are trained on, the input directly translates to the output. If the data is flawed, biased, or incomplete, the AI’s outputs will be problematic. Ensuring high-quality, unbiased data is crucial, but it is also resource-intensive and requires continuous monitoring and oversight.

There are also ethical considerations. The risk of AI models learning harmful behaviours from external data, such as the Twitter bot, serves as a cautionary tale. RegTech AI systems must be designed and monitored to prevent such failures. Overreliance on AI poses risks, as human judgment and oversight are essential in interpreting regulations.

Despite these concerns, there are many areas where AI has excelled is making it easier to detect fraudulent activities and manage compliance in real time. The question of whether we are truly better off hinges on how well AI is integrated into the broader risk management strategy and whether its use aligns with long-term goals.

A Delicate Balance

The responsible use of AI in RegTech and beyond requires a delicate balance between innovation, efficiency and caution. Firms must be thoughtful in their application of AI, using it where it adds genuine value. However, they should remain vigilant about the technology’s limitations, particularly in areas requiring high data quality, transparency and human oversight.

Ultimately, the decision to use AI should be driven by a strategic assessment of whether it genuinely improves outcomes or simply adds complexity. As AI continues to evolve, continuous evaluation and responsible governance are paramount.

Discover how Axiol can transform your compliance processes by booking a demo today. Visit our website or contact us at info@axiol.com for more information and to explore how we can help you achieve seamless, efficient regulatory compliance.¹ Jason Maude, Chief Technology Advocate, Starling Bank, speaking at FinTech London 2024

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Operational resilience has become a top priority for financial institutions, ensuring their ability to prevent, respond to and recover from disruptions. The focus on this trend has been driven by rising cyber threats, increased reliance on digital systems, and regulatory developments. For example, the implementation of the EU’s Digital Operational Resilience Act – DORA – will be the first challenge of the year, with a compliance deadline of 17^th January 2025, underscoring the focus on operational resilience.  

Robust regulations like DORA mandate frameworks for ICT risk management, incident reporting and operational continuity. RegTech solutions are essential in ensuring compliance by enabling real-time monitoring, automating incident reporting to regulators and stress-testing systems to evaluate resilience against cyberattacks and system failures. 

Cloud-based RegTech solutions, like Axiol, centralise compliance workflows and incident management, helping financial institutions efficiently meet DORA’s stringent requirements.

Cryptocurrency and Digital Assets

The rapid expansion of cryptocurrency and digital assets continues to challenge traditional regulatory frameworks. This trend is accelerating due to growing adoption of crypto by institutions and retail users, alongside increasing regulatory pressure to mitigate financial crime and ensure transparency.  

Governments and regulatory bodies are stepping in to provide clarity, with frameworks like the EU’s Markets in Crypto-Assets regulation (MiCA) introducing classification, disclosure and compliance standards for crypto firms. Similarly, the UK government is developing a classification framework for digital assets to define clear regulatory obligations.  

RegTech solutions are at the forefront of these efforts, offering blockchain analytics tools for transaction monitoring, wallet screening and AML compliance. Decentralised finance (DeFi) platforms further support transparency and security with smart contract auditing and risk assessment. As regulations evolve, RegTech will play a crucial role in helping institutions build compliant crypto ecosystems. 

Regulation of AI

Artificial Intelligence (AI) has become integral to financial services, driving efficiencies in areas like credit scoring, fraud detection and trading. However, the rise of AI has led to increased scrutiny, with frameworks like the EU AI Act set to regulate its use.  

RegTech tools help institutions ensure compliance by monitoring adherence to ethical and regulatory standards. Platforms may also audit AI models to detect and mitigate bias, ensuring fairness and transparency. 

RegTech solutions may track the explainability and fairness of AI models used in automated decision making, such as in trading algorithms. Some advanced RegTech tools also incorporate predictive modules that simulate potential disasters or operational disruptions, offering the best responses to mitigate risks. By anticipating challenges, institutions can improve preparedness and reduce operational vulnerabilities. 

Data Privacy and Protection

Data privacy remains a critical concern for financial institutions as the volume of sensitive customer data continues to grow. This trend is being driven by stringent regulations such as GDPR and MiFID II that impose strict requirements for data protection, retention and reporting.  

RegTech solutions enhance data privacy and protection by classifying information that is within scope of GDPR and providing risk and compliance professionals with a comprehensive data landscape from which to process and protect sensitive data. 

By leveraging these tools, institutions enhance trust, reduce data breach risks and improve compliance efficiency, positioning themselves as leaders in data security and regulatory adherence.  

Rise in cloud-based RegTech solutions

Cloud-based RegTech solutions, like Axiol, are becoming the norm due to their scalability, cost-effectiveness, and ability to meet the demands of modern compliance. This trend is driven by the increasing adoption of hybrid work models, growing pressure for real-time compliance and the need for agile solutions that reduce infrastructure costs.  

For instance, cloud-hosted platforms streamline AML and KYC compliance processes, while AI-driven transaction monitoring systems operate securely in cloud environments. These solutions enable faster deployment, cost efficiency and scalability to meet evolving regulatory requirements. 

As financial institutions seek to adapt to dynamic regulatory demands, cloud-based RegTech will provide the flexibility and speed needed to stay compliant. 

Global Regulatory Harmonisation

The financial services industry is increasingly global. However, the fragmentation of regulatory frameworks, especially since Brexit, poses a significant challenge for financial institutions operating across borders. Harmonising compliance efforts across jurisdictions is becoming increasingly important and increasingly difficult, driving the need for harmonisation. 

RegTech platforms play a key role by centralising compliance monitoring and reporting for multiple jurisdictions. Additionally, AI tools can identify overlaps and discrepancies in global regulations, enabling institutions to adapt seamlessly to varying requirements.  

RegTech as a Service

RegTech as a Service (RaaS) is emerging as a trend in 2025 due to the growing need for affordable, accessible compliance solutions. Smaller financial institutions face significant challenges in meeting regulatory requirements due to their limited budgets and resources. 

RaaS offers subscription-based access to sophisticated compliance tools without the need for significant upfront investments. These solutions include fraud detection, AML compliance and automated reporting systems tailored to institutions of all sizes. 

By adopting RaaS, smaller players can enhance their regulatory coverage and compete more effectively with larger firms, creating a more level playing field across the financial services sector.

Responsible use of AI 

The use of AI in compliance remained a double-edged sword in 2024 – a trend that looks set to continue in 2025. While AI-powered tools offer unprecedented efficiency in risk identification and automation, concerns remain over bias, accountability, and data misuse. AI tools must maintain public trust and meet regulatory expectations. A stark reminder of how AI can go wrong was the launch of the Twitter chatbot “Tay” which quickly devolved into generating offensive content due to poor safeguards – underlining the need for rigorous oversight. On the flip side, updates to GDPR introduced stricter guidelines for processing personal data using AI, emphasising transparency and fairness.  

RegTech tools can support AI by ensuring the models are explainable, unbiased and aligned with ethical principles. RegTech providers, such as Axiol, are continuing to monitor the use of AI in compliance, seeing it as offering a distinct competitive advantage when used in a controlled and monitored environment, backed by a depth of high-quality data. 

The post 2025 Financial Services Trends and the Role of RegTech appeared first on Axiol.