As the Financial Conduct Authority (FCA) prepares to take over full responsibility for regulating UK payments, new research from Equals Money reveals that combating fraud and tackling widespread delays are top priorities for higher-risk players in the industry. 

A Censuswide survey of 500 senior leaders in the UK’s money service sectors with elevated risk profiles - including wealth management firms, crypto and gaming firms - found that nearly half (48 per cent) say fraud is their biggest challenge, with two in five (43 per cent) citing it as a direct blocker to innovation.  

Meanwhile, a third of firms surveyed (33 per cent) have experienced direct revenue loss due to recent banking outages, and nearly all (96 per cent) report service disruption affecting customer or supplier payments. 

“Money services firms operate in complex, fast-moving environments. They can’t afford long waits, fraud exposure or clunky compliance,” said Ian Campbell, Director of Solutions at Equals Money, the fast-growing spend management platform, combining multi-currency accounts, international payment and embedded finance solutions.  

“This is especially important for sectors that have challenges integrating with traditional banking, such as wealth, gaming and crypto” he continues. “These businesses value customer protection: the FCA needs to make it as easy as possible for them to make and receive payments compliantly, while leaving space for innovation.”    

New technologies gathering pace 

The research also reveals that adoption of technologies like open banking (54%) and digital currencies (49%) is gathering pace in the sector, with a growing number of firms also now using and AI analytics (34%), blockchain (32%), embedded finance (26%) and stablecoins (20%). 

“Open banking offers a big opportunity to combat fraud: if we can share more data across the industry, we’ll be able to identify risks before they become an issue for customers.” says Cambell. “Meanwhile, digital currencies, blockchain and stablecoins all offer significant potential for more secure transfers, both domestically and across borders." 

“The EU is leading the charge on payments innovation,” Campbell added. “If the UK wants to remain competitive, the FCA must ensure regulation enables, not inhibits, this progress.” 

Views of the regulator 

The findings come following a government move to disband the Payments Services Regulator (PSR).  

Over half (53 per cent) have a positive view of the PSR, saying that recent regulations have accelerated innovation. A similar number of businesses have invested in compliance technology (52 per cent) or internal capacity (51 per cent) in response.  

Beyond fraud, more than half of respondents (57 per cent) said faster, more efficient payments should be a key focus for the new regulator, alongside consumer protection (49 per cent). 

The FCA has work to do to win over the rest of the cohort: almost one in three see the administrative burden of compliance as too high (30 per cent). A quarter say that the regulator doesn’t understand industry needs (28 per cent) or has slowed or halted progress (25 per cent).  

“Money service businesses no longer need to do all the heavy lifting when it comes to regulation,” continues Campbell. “With the flexibility provided by APIs and embedded finance, B2B payment providers can now manage licences and compliance on their behalf. This enables ideas to get to market faster, companies to retain customer value and transfers to be made through a diversity of secure, tier-one payment rails.”