2025 has been a transformative year for the UK financial services sector, with fintech and payments at the centre of significant regulatory changes. Instead of incremental adjustments, this year has seen structural policy shifts that could redefine how innovation and growth occur across the industry.  

From introducing a regulatory framework for stablecoins to modernising payments infrastructure and implementing the sweeping Mansion House reforms, the government’s agenda is clear: promote competitiveness and growth while safeguarding financial stability.  

ClearBank advocated for several of the pro-fintech initiatives, and we are grateful that many of these were adopted in support of the fintech sector. These measures are not just technical updates; they represent the government’s strategic aim to position the UK as a global leader in digital finance. For ClearBank and other fintech firms, this change in direction from risk to growth will create new opportunities for scaling and product development. 

The Chancellor’s Mansion House speech in July signalled a significant shift in the UK’s approach to financial services regulation, with Reeves emphasising that rules should enable growth, not just manage risk. 

 “The UK has been regulating for risk, but not regulating for growth. So while maintaining important consumer protections, now is also the moment to rebalance our approach and take forward the next stage of reforms needed to drive growth, competitiveness and investment”  - Rachel Reeves, Chancellor of the Exchequer, 15 July 2025  

This was more than rhetoric; it set the tone for a regulatory environment designed to foster agility and innovation in which the payments and fintech sector can prosper. For our business, one of the most notable announcements was the creation of an FCA/PRA Fintech Scale-Up Unit, tasked with helping high-growth firms navigate complex compliance requirements and accelerate expansion. We called for this support, noting that after the start-up phase, many high-growth firms stall due to further authorisation delays and regulatory uncertainty in developing new services. The unit will offer tailored guidance, faster authorisations, and a direct line to regulators, addressing long-standing friction for firms moving from startup to scaleup. 

Other measures included a concierge service for inward investment, aimed at attracting global fintech players, and prudential reforms such as adjustments to Basel 3.1 timelines and MREL thresholds to free up capital for lending and innovation. The government also reaffirmed its commitment to sandbox environments for digital securities and stablecoins, enabling firms to test new models under regulatory oversight. 

The UK is actively creating the conditions for fintech to thrive. However, turning ambition into reality will require sustained effort and close collaboration between regulators and industry to ensure delivery matches intent.  

Stablecoins, digital tokens pegged to traditional fiat currencies, moved from niche to mainstream in 2025. Global assets surged from £160 billion to £293 billion between January and September, reflecting rapid growth. Yet, adoption for everyday payments and product innovation remains limited, a gap expected to close as regulatory clarity drives commercial rollout and institutional uptake. 

We believe that stablecoins will become a standard option for high-friction use cases, particularly in cross-border transactions, merchant settlement, subscriptions, and embedded finance. Their role in mainstream payments will only continue to grow, and for the UK, the pace of implementing a robust framework will determine whether the UK emerges as a global leader in digital money or cedes ground to faster-moving jurisdictions. 

We welcome the Bank of England and the FCA regulatory framework proposals, announced this year, to bring stablecoins under UK oversight, with further work planned for 2026. However, the rules for wholesale use and for bank issuance remain absent. Excluding banks from the regime bifurcates old and new forms of money and financial services. 

A complete and comprehensive rule set is required to create a level playing field for all UK participants and for the UK to remain internationally competitive. In the near future, customers will expect banks and payment firms to provide seamless services for fiat and stablecoins. 

In 2025 we saw work begin in earnest to replace the Faster Payments and Bacs schemes with a next-generation retail payment system. Guided by the National Payments Vision, the Retail Payments Infrastructure Board (RPIB), a governance body chaired by the Bank of England, will oversee the design and delivery of infrastructure that will set a new global benchmark for speed, resilience, and innovation. 

The RPIB brings together regulators, banks, and fintech leaders to establish the design parameters, as required to meet the needs of a diverse payment ecosystem. Emma Hagan, ClearBank’s UK CEO, serves on the board to represent ClearBank and its 250 financial institution customers, helping to ensure that the new infrastructure delivers for all types of firms.  

Delivering a truly modern payments system will require infrastructure that is inclusive, resilient, and built to adapt. If done right, the new system will enable account-to-account payments, with programmable features, and interoperability with emerging forms of money such as stablecoins, creating a multi-money ecosystem that future-proofs UK payments. This will likely adopt a modular architecture to support innovation while maintaining security and resilience.  

Ultimately, success will hinge on execution and whether the new structure can turn vision into reality. 

This transformation in infrastructure is being matched by a shift in the regulatory landscape. The Payment Systems Regulator (PSR) is being folded into the FCA to simplify oversight. This means fewer regulatory hoops and less complexity for firms.  

Alongside this, HM Treasury is expected to resume its review of EU-based payment regulations with a view to updating and ultimately transferring rules into the FCA Handbook. Together, these changes signal a more coherent regulatory environment that encourages growth and competitiveness in the payments landscape. 

Supporting growth and innovation in the banking sector remains a priority for policymakers and regulators. In 2025, significant steps were taken to ensure challenger banks can compete on a more equal footing with established institutions. 

A key development was the Bank of England’s increase to the threshold at which banks need to hold resolution capital in July, providing growing banks with additional breathing space. This measure, combined with the Financial Policy Committee’s recent reduction in common equity tier 1 capital requirements, is designed to free up resources for lending and product development. 

While the PRA’s New Banks regime, launched in 2016, laid the foundation for market entry, the sector is now consolidating, and further action is needed to sustain momentum. Regulators have acknowledged that capital requirements can disproportionately impact smaller, high-growth banks.  

Addressing these challenges will be critical to enabling challenger banks to scale, innovate, and provide consumers greater choice in a competitive market. 

2025 will be remembered as the year the UK set the foundations for a new phase in financial services. Mansion House reforms, payments infrastructure modernisation, and the emerging stablecoin framework have created opportunities for innovation, but their impact will depend on effective implementation, regulatory clarity, and industry engagement.  

ClearBank celebrates the renewed focus on fintech as an engine for growth and innovation, as well as the tremendous outreach from government and regulators to bring onstream, from 2026, new forms of money and the rules and systems required to support them. 

Betsy Dorudi – Global Head of Public Policy and David Mintz – Public Policy Adviser