Fintech Expansion AI Adoption and Regulatory Shifts in Banking

Robinhood is now a teenage rebel

The retail trading business Robinhood, which turns thirteen next month, is one of the original fintechs. With its commission-free trades and user-friendly interface it caught the interest of millennials and built a loyal following, using a model of ‘payment for user flow’ where it routed trades to market makers. Using influencers and referrals, its popularity rose forcing established trading firms to drop their fees to compete. Late last week Robinhood launched Robinhood Ventures Fund I which offers exposure to private companies such as Airwall Ex and Revolut with founder Vlad Tenev saying that opening private markets would “resolve one of the greatest longstanding inequities in capital markets”.

This week it launches a high-end credit card, looking to compete with Amex Platinum and Chase Sapphire. "We want to go after the legacy players' customers," said Deepak Rao, vice president and general manager of Robinhood Money, adding that AmEx was "obviously the benchmark", Reuters reports. "Our customers are maturing and starting to have more complex financial needs," said Abhishek Fatehpuria, Robinhood's vice president of product. "Many of our customers were first-time investors with us. And ⁠now their median age is in the mid-30s. We want to make Robinhood the place where we can serve them."

Bank customers are ahead of banks on AI

It might well be that people are way ahead of their banks when it comes to using AI. “A study of 5,000 Britons commissioned by Lloyds Banking Group late last year found that more than half of adults were using AI platforms for financial advice,” reports the FT. “As many as one in three were using the tools at least once a week for information or advice on money matters, with OpenAI’s ChatGPT the most-used platform, followed by Google’s Gemini, Microsoft’s Copilot and Meta AI integrated into WhatsApp and Facebook.” There’s several caveats though. “When Will, a 32-year-old strategy consultant, was moving back to London from the US, he was trying to understand distribution laws when it came to liquidating pensions in the US and how the UK tax authorities treat that. He says ChatGPT told him that a new approach had been adopted last year that allowed you to do this and not incur tax. But when he went to check ‘it just absolutely wasn’t the case’.” Yes, LLMs make stuff up. They also get their numbers wrong. However, many banks, wealth managers and pension advisers are looking to build their own AI tools which will give clients more specific advice on finances than what the big chatbots such as ChatGPT can provide, and they point out that as they are authorised and regulated by the Financial Conduct Authority, they have a duty of care towards clients, unlike the big tech companies.

Cross-border financial crime needs new initiatives

Online banking has been with us for several decades now but with the move online of many other services, online fraud has become a massive industry. For most people, it’s a low-level but constant hassle, whether that’s robocalls, scam texts, or authorised push payments, which are almost impossible to recover because they’ve been authorised by the victim, who has been tricked into believing it’s a legitimate payment. From individual fraudsters to private gangs to state actors, there’s a whole world of people (and robots) constantly probing your digital defences. Now the UK is setting up a dedicated online fraud crime squad.

“Launching operations in April, the Online Crime Centre will bring together specialists from the government, police, intelligence agencies, banks, mobile networks and major tech firms to drive co-ordinated action against fraud,” reports Finextra. “The centre will be charged with identifying the accounts, websites and phone numbers that organised crime groups rely on, and shut them down at scale – blocking scam texts, freezing criminal accounts, removing scam social media accounts and disrupting operations at source. Liz Ziegler, fraud prevention director at Lloyds Banking Group, says: ‘Last year alone, our technology prevented £1 billion of attempted fraud from reaching our customers. But no single sector can tackle fraud in isolation. It’s essential that industry, government, law enforcement, technology and telecoms companies work together – and are incentivised to share intelligence quickly, act decisively and disrupt the criminal networks behind the UK’s most common crime’.”

US banks look to win big on global capital rules

US banking industry insiders are briefing that regulators will soon announce news on capital rules that will be warmly greeted by US banks. Regulators will soon announce new draft rules that will reduce the capital banks must keep on hand, and reduce extra rules imposed on GSIBs, the 30 globally systemically important banks. “The overhaul marks the culmination of a years-long effort by Wall Street banks to ease rules ⁠introduced following the 2007-09 financial crisis which they and the regulators say are stymieing economic growth,” writes Reuters. “‘I share the broad expectation that it will be quite friendly to banks. There has been talk from the regulators for a long time that it would be roughly capital neutral. It's possible that it will be a bit better than that for some banks,’ said Ian Katz, managing director at Capital Alpha Partners.

Speaking at the same Monday conference, Douglas Elliott, a partner ⁠at consultancy Oliver Wyman focused on bank rules, said that U.S. GSIB capital could fall as much as 10% in coming years, depending on how other details shake out. The U.S. changes have sparked a global deregulatory race as other countries worry their banks could be put at a disadvantage. ‘That's a significant shift in competitiveness toward U.S. banks and frankly they've already been ⁠winning,’ he added.”

Revolut: rebel without a licence (no more)

Almost eleven years after its launch as a prepaid card, the UK fintech Revolut can call itself a bank after gaining a full and unrestricted UK banking licence. Along with Monzo and Starling, Revolut was one of the first UK fintechs to launched around 2015 with the promise of low FX charges for the many UK residents who regularly travelled to Europe. With the UK in the EU, a UK banking licence would offer a banking licence throughout Europe, but a yes vote in the Brexit referendum in 2016 upended that UK privilege, and sent all of the fintechs off in search of a new strategy. In 2018, Revolut gained a specialised banking licence in Lithuania which allowed it to operate throughout the EU, before getting a full Lithuanian licence in 2021.

The fintech first applied for a UK licence in 2021 but has faced a longer than usual wait and greater scrutiny in the UK after challenges including a qualified audit opinion in 2021. The fintech was granted a banking licence with restrictions in September 2024, which limited the bank to holding £50,000 in customer deposits. In the meantime, the bank continued to expand elsewhere, acquiring a banking licences in Mexico. Its valuation jumped from £4.2 billion in 2020 to $75 million in late 2025, becoming the most valuable fintech in Europe. It’s been a source of pride to UK politicians, with the Vice Chancellor trying to arrange a meeting between Revolut and the UK regulator to push forward the licence. It’s likely that full approval in the UK will encourage regulators in other jurisdictions to approve banking licence applications.

Expert in fee revenue, with a wide range of services, the UK bank will now be able to start lending and earning interest income. “That
approval opens the door for Revolut to launch a credit card in the UK, two years after it applied for a consumer credit licence in a separate move to its banking licence application,” notes the FT. “The green light from its home regulator has been seen as a gateway to winning similar approvals from watchdogs in other countries and the delay was a significant barrier to the group’s global international expansion plans.” The bank already has 13 million customers in the UK, which it will now be able to offer lending. It now operates in 48 countries, and is now well along the way with its ambitions to become a global bank.