UK To Ease Licensing Rules As Global Regulators Warm Up To Fintechs

The UK is preparing to introduce a new licensing system to make it easier for fintech companies to operate, as regulators increasingly acknowledge the sector’s growing importance in modern financial services. The move aims to cut red tape that has long slowed down fintech innovation.

Under the proposed system, financial services firms will be allowed to carry out certain regulated activities for up to 18 months under a provisional licence while they work toward full authorisation. The plan follows years of complaints from UK fintechs about the high cost and long timelines involved in securing a full licence. It also fits into wider government efforts to support economic growth by encouraging digital financial services.

Similar discussions are taking place in the United States. Federal Reserve Governor Christopher Waller recently suggested that payment companies should be able to obtain a limited or “skinny” master account directly with the Fed. Right now, only licensed banks can access these accounts, forcing fintechs to depend on partner banks to run their payment services.

Both initiatives reflect a global shift in regulatory thinking. Authorities increasingly recognise that fintechs are central to open banking—where customers control their financial data and banks use APIs to deliver more innovative services. Open banking has expanded more quickly in the UK, but the model is steadily gaining ground worldwide.

“The idea of having open access via APIs to data and to accounts is not going to go away,” said James Wester, Co-Head of Payments at Javelin Strategy & Research. He added that businesses of all sizes want this level of access, and regulation is now gradually moving to support it.