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.<\/p>\n
We examine these trends below.<\/p>\n
Deregulation<\/p>\n
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\u2019s 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 \u201cmaterial financial risk.\u201d<\/p>\n
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.<\/p>\n
Additionally, the Securities and Exchange Commission (SEC) is pursuing multiple deregulatory initiatives:<\/p>\n
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.
\nRegulation 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.
\nSemi-annual reporting vs. quarterly reporting: Atkins asked staff to prioritize this proposal and move toward formal rulemaking.<\/p>\n
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.<\/p>\n
In the UK, the government\u2019s 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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
AI adoption and risk<\/p>\n
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.<\/p>\n
AI spending across financial institutions globally reached an estimated $45 billion in 2024 and is projected to rise to $126\u202fbillion by 2028, according to Bloomberg. Banks account for roughly two\u2011thirds of that growth, with 70% of banks expecting firm\u2011wide deployment of generative AI within two to three years\u2014up from 24% today.<\/p>\n
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.<\/p>\n