UK fintech sector urged to adopt next-generation payments technology

The UK government has unveiled a sweeping package of reforms aimed at preparing the country’s payments sector for the next wave of financial innovation, as ministers seek to cement Britain’s position as a global fintech leader.

Announced during UK Fintech Week in London, the measures are designed to modernise payments regulation, encourage innovation and strengthen consumer protections in an increasingly digital financial landscape.

City Minister Lucy Rigby is set to promote the initiative throughout the week, positioning the UK as the premier destination for fintech firms to start, scale and succeed.

At the heart of the package is a plan to overhaul the regulatory framework governing payments and electronic money. The government intends to integrate existing rules into a single, more coherent system that accommodates both traditional payment methods and emerging technologies such as tokenised assets and stablecoins.

Under the proposals, stablecoins used for payments will be formally regulated once new legislation on their issuance comes into force. The government is also exploring how rules may need to evolve to address payments conducted by AI agents, signalling a forward-looking approach to technological change.

The Financial Conduct Authority will be granted enhanced powers to oversee the future development of Open Banking, including new commercial payment schemes. In parallel, legislation is expected to reduce administrative burdens for companies offering stablecoin-based services.

A key appointment accompanies the reforms, with Chris Woolard named as the UK’s first Wholesale Digital Markets Champion. Currently a partner at EY and former interim CEO of the FCA, Woolard will lead efforts to develop a more competitive, tokenised wholesale financial system. Further support for the sector includes an additional £1 million in funding for the Centre for Finance, Innovation and Technology to continue its work fostering collaboration and tackling industry challenges. The government also confirmed plans to streamline oversight by integrating the Payment Systems Regulator into the FCA, a move intended to simplify regulation and improve efficiency.

Together, the measures reflect a broader strategy to ensure the UK’s financial services framework keeps pace with rapid innovation while maintaining trust and stability.

Economic Secretary to the Treasury, Lucy Rigby, said: “Fintech is true British success story, and we are backing the industry to maintain its competitive edge and go even further and faster in driving growth. Today’s package is our latest stake in the ground as we build a payments ecosystem that is secure, competitive and fully equipped to harness the opportunities created by rapid technological change. I also welcome our new Wholesale Digital Markets Champion, Chris Woolard CBE, who will help the government drive tokenisation in our markets – a critical shift for the next “digital big bang” for the UK sector.”

Chris Woolard CBE, Wholesale Digital Markets Champion, said: “It’s an honour to be appointed Digital Markets Champion for the UK’s Wholesale Financial Markets Digital Strategy. As financial markets increasingly move away from manual processes to digital, tokenised systems, collaboration and an open two-way dialogue between the private and public sectors will best support the Strategy’s success, and will ultimately enhance the UK’s global competitiveness as a leader in digital markets. UK fintech benefits from Britain’s world leading financial services sector offering a thriving start-up ecosystem, global banks and insurers, leading universities, and a regulator that engages with innovation early so firms can test, learn and scale responsibly.”