Preparing for PSD3 and Beyond
Season 5, episode 3
Listen to the full episode here.
The payments landscape is going through major transformation. PSD2 has been disruptive and with the anticipated arrival of PSD3 a lot of questions are still to be answered. What does PSD3 mean for fintech businesses, banks, merchants, and consumers?
In this episode, we explore the upcoming regulatory shifts, the opportunities and challenges they present, and what the future of payments might look like beyond PSD3. Will this be an evolution or a revolution?
How will Open Banking, embedded finance, and digital walletsbe impacted? And is regulation moving too fast, or not fast enough?
With Ann Zheng, Associate at Pinsent Masons
How Financial Regulation is Evolving: Insights from the Beyond The Capital Podcast
OUT NOW: Beyond The Capital from SuperTech WM has launched a special four-part podcast series about the Financial Regulation Innovation Lab. SuperTech has partnered with Fintech Scotland for the Lab, which is an industry led collaborative research and innovation programme, helping to shape the future financial regulation in the UK.
Join presenter Hilary Smyth-Allen as speaks to a wide range of guests from across the programme exploring the impact of Consumer Duty on the financial services sector and their experiences within the FRIL programme.
First up is Lorraine Breese-Price, the Chief Customer Officer of Dudley Building Society in episode one. They discuss the challenges and opportunities that Consumer Duty poses for building societies, including: the alignment of Consumer Duty with the mutual ownership model, the challenges of legacy systems within building societies and how building societies’ focus on ethical values can attract younger customers.
Episode two sees the conversation focusing on the roles of credit unions in the context of Consumer Duty and the integration of technology to enhance services for vulnerable customers. Helen Toft, a Non-Executive Director at Advance Credit Union in Birmingham, and Elizabeth Campbell, the General Manager at Castlemilk Credit Union in Glasgow, share their experiences and insights on the challenges faced by credit unions, the importance of collaboration with FinTech’s, and the need for innovative solutions to improve customer journeys. They emphasise the intrinsic alignment of consumer duty with credit union values and the potential for technology to enhance accessibility and support vulnerable members.
In episode three we are joined by experts Ben Hampton, CEO of Wealth Wizards, and Professor John Finch of Glasgow University, where John is the lead for the Financial Regulation Innovation Lab project. They explore how the Consumer Duty aims to improve customer outcomes, the challenges faced by consumers in accessing financial advice, and the importance of engaging younger generations like Gen Z. They also discuss the potential for innovation within the regulatory framework and the impact of technology, including AI, on the future of financial services.
Concluding with episode four, Rachel McGowan, CTO of Moneyline, discusses the impact of Consumer Duty on Community Development Finance Institutions (CDFIs) – how the role of CDFIs in providing financial services to low-income households, the alignment with Consumer Duty regulations, and the importance of collaboration with FinTech’s to improve customer outcomes. Rachel shares insights on the challenges faced by financially excluded customers and the innovative solutions being developed to address their needs.
Listen to the full series here.
Navigating Regulatory Risk Trends in 2025: Key Insights from Pinsent Masons
As we step into 2025, the financial services landscape faces a year of transformation, with regulators aiming to balance economic growth with robust consumer protection. In the latest edition of Pinsent Masons’ Financial Services Regulatory Risk Trends update, our strategic partner focusses on critical regulatory developments shaping the industry.
The Financial Conduct Authority’s (FCA) recently released a five-year strategy with a clear focus on resilience—both for consumers and financial institutions. This edition of Financial Services Regulatory Risk Trends explores the key regulatory shifts that firms should be aware of, particularly in relation to consumer and operational resilience.
Consumer Resilience: A Stronger Framework for Protection
The UK Government’s recent Call for Input on closer collaboration between the FCA and the Financial Ombudsman Service (FOS) marks a significant development in consumer protection. This initiative comes at a time when mass redress events—such as undisclosed motor finance commissions—are drawing considerable attention from both regulators and courts.
Additionally, firms must navigate the FCA’s evolving stance on the advice/guidance boundary and targeted consumer support, especially in light of rising customer complaints and the continued embedding of the Consumer Duty framework.
Operational Resilience: Strengthening Financial Infrastructure
Beyond consumer-focused regulation, 2025 will also see increased scrutiny of ‘critical third parties’—a move that introduces further regulatory requirements for firms reliant on outsourced services. These new measures will likely reshape the contractual landscape between financial institutions and their key service providers, reinforcing the need for robust operational resilience strategies.
Sector-Specific Interventions: Motor Insurance and Capital Markets in Focus
The motor insurance market is set for a period of regulatory intervention, with the launch of a competition market study and the establishment of a motor insurance taskforce. These initiatives aim to address concerns surrounding fair pricing and market competition.
Meanwhile, capital markets also face transformation with the arrival of PISCES, a new trading platform set to modernise the sector and enhance market efficiency. With regulators seeking to foster competitiveness while upholding market integrity, firms should anticipate further updates in this space.
Read the full report here.
Systems in the Making: the Role of Companies in Implementing Sustainability Policy and Reporting
This paper focuses on the implementation of corporate sustainability, or Environment, Social and Governance, reporting. The introduction from 2023 of mandatory reporting is a key milestone in sustainability.
Adopting a comparative case method, we identify as related case studies Materiality (in reporting), Transition (in corporate strategy), and Stewardship (in fund management). We compare these by applying the theory-led themes of system openness, the agency or power of coalitions in producing and acting upon reports, contests in the qualification of key data, and through business exchanges related to or enabled by sustainability reports.
Drawing on a two-year applied project, we elaborate upon policy, regulation, business and industrial markets, and business relationships. We find that Materiality is the most stable and well-framed system. It produces key outcomes in depicting a reporting company’s sustainability risks and opportunities. Transition is the most open, influenced by global and jurisdiction task forces, for example tasked with achieving net zero policy obligations.
Stewardship in the UK articulates a set of principles, which guide fund managers in engaging with investee companies. We conclude that sustainability policy is at the same time setting in progress the forming of three systems, corresponding to this paper’s three case studies. Each has its own development, function and sets of facts, though each is beginning to achieve its function through interactions and exchanges with the other two.
Consumer Duty and Beyond
Season 5, episode 2
Listen to the full episode here.
In this episode, we explore the complex challenges and opportunities that organisations face in delivering greater transparency, fairness, and accountability.
As the industry evolves, both fintechs and established financial institutions must navigate these demands to not only meet regulatory requirements but also to exceed them through innovation, ethical practices, and customer-centric strategies.
With Sajedah Karim – Partner at PwC. Sajedah
Joseph Twigg – CEO at Scottish fintech Aveni
John Finch – Professor of Marketing (B2B) at the University of Glasgow’s Adam Smith Business School, and Associate Dean (East Asia) at the University of Glasgow’s College of Social Sciences.
Tackling Messaging Fraud
Season 5, episode 1
Listen to the full episode here.
Join us for the second episode of the FinTech Scotland Podcast’s special series on financial crime, produced in collaboration with our strategic partner BT. This episode looks into the growing and sophisticated threat of messaging fraud, a pressing issue in the financial sector.
Charlotte Moir from BT is joined by Kevin Britt, Product Manager for Messaging at BT, and Paul Maskall, Strategic Fraud Prevention and Behavioural Lead Principal at UK Finance. Together, they unpack why messaging fraud is surging, explore why individuals and businesses continue to fall victim despite increased awareness, and reveal innovative measures being developed to stay ahead of the fraudsters.
We also speak about the exciting work happening in FinTech Scotland’s Financial Regulation Innovation Lab in Glasgow. With major financial institutions like Morgan Stanley, HSBC, and Virgin Money setting challenges, fintechs and tech innovators from around the globe are stepping up to collaborate and tackle financial crime.
15 firms selected to tackle financial crime
We’re thrilled to announce the 15 innovative firms selected to progress to the next stage of our Innovation Call on Financial Crime. These firms will work hand-in-hand with industry partners and academic experts to tackle challenges of financial crime head-on.
Each firm brings a unique perspective and solution to the table, showcasing the power of diverse collaboration in tackling one of the most significant issues facing the financial sector today.
In this blog, we spotlight each of these firms, showcasing their vision, solutions, and the impact they’re set to make as they join us in shaping a safer financial future.
Amiqus – amiqus.co
Amiqus is the UK’s most trusted compliance and onboarding platform supporting more than 500 organisations of all size and sectors; including the UK Government, The NHS and FNZ. Over 2.5 million people have been through Amiqus checks to date, and currently in the region of 74,000 checks are run monthly by our clients. We do this through offering a singular platform that can perform the whole ID Verification and onboarding process, end to end.
Amiqus was announced in Deloitte’s annual Fast 50 awards as the fastest-growing technology company in Scotland, the 20th fastest-growing in the UK and the 5th fastest-growing fintech in the UK. This growth has meant that we have the ability to continuously reinvest back into the product and innovate the ID Verification process. We are dedicated to continuous improvement and innovation in this area and would relish the opportunity to do this in conjunction with FRIL and the challenge sponsors.
Argus Pro – https://arguspro.co.uk/
Argus Pro offers the comprehensive FinCrime HealthCheck™, which evaluates the effectiveness of all aspects of anti-financia
l crime (AFC) policies, procedures, processes, controls, and compliance culture, going far beyond traditional assessments. The FinCrime HealthCheck™ identifies gaps across teams, functions, geographies and leadership, aligns with leading regulatory frameworks and best practices outlined in the FCA’s Handbook and Financial Crime Guide, JMLSG, and the Wolfsberg Group’s Principles for Auditing for Effectiveness, and provides tailored recommendations to enhance effectiveness.
Our proposed platform, delivered as part of this Innovation Call, will combine this assessment with cutting-edge tools to deliver bespoke interpretations of current LRG updates, detail specific obligations, and anticipate future regulatory requirements, ensuring firms stay ahead of risks.
Barrier – https://www.barriernetworks.com/
At Barrier, our mission is to help our customers build cyber resilience and develop strategies to defend against cyber-attacks. We are a cyber security service provider and are proud to be associated with 2 global leading identity solution vendors in responding to this innovation challenge:
-V-Key, an end-to-end innovative proposition designed to revolutionize identity authentication and authorisation processes, enhancing both security, efficiency & privacy
-Sumsub, a global identity verification provider, leverages cutting-edge technologies to provide a seamless end-to-end secure identity verification experience.
In participating in FRIL, we will seek to validate our collaborative proposition and its potential to transform the identity verification and authentication landscape with partners engaged in the programme.
Datavillage – https://www.datavillage.ai/
Datavillage empowers organizations to combat financial crime by enabling secure data collaboration and access to fraud cases, flagged companies, suspicious accounts, devices, and more. This approach enhances the detection of fraud patterns, enables the fine-tuning of AI models, and supports advanced analytics for more effective prevention and response.
Through participating in the Financial Regulation Innovation Lab, we would like to leverage insights and feedback from industry partners to refine and scale solutions for broader commercial deployment.
DX Compliance – http://dxcompliance.com/
Our proposed solution uses Generative AI that offers a unique opportunity to address these challenges by automating the repetitive aspects of alert reviews, enhancing the decision-making process, and providing more nuanced risk assessments. The core proposition involves developing an AI-powered system that leverages large language models (LLMs), deep learning, and natural language processing (NLP) to support and augment human decision-making not only along the KYC processes.
We look forward to working with partners across the Financial Regulation Innovation Lab to deepening our understanding across the challenge statements and broader financial crime domain.
Encompass – https://www.encompasscorporation.com/
Encompass enables fast, accurate identity validation and verification of corporate customers and a gold standard approach to KYC. Our award-winning corporate digital identity (CDI) platform incorporates real time data and documents from authoritative global public data sources and private customer information to create and maintain digital risk profiles.
With encompass the world’s leading banks improve customer experience and increase business opportunities through consistent regulatory compliance and risk mitigation.
Through close collaboration with FRIL partners, we want to explore how our existing corporate identity platform can develop further to benefit organisations and their specific requirements for their Know Your Business onboarding and maintenance processes.
Haelo – https://haelo.io/
HAELO is a RegTech innovator transforming Governance, Risk, and Compliance in
Financial Services. Our Horizon Scanning solution, REGENESIS, delivers instant access
to regulatory updates at a glance providing early detection of changes and empowering management to mitigate risk and avoid costly breaches.
Our IO (Intelligence Overlay) platform is at functional prototype stage and is designed to work in concert with REGENESIS to create a golden thread connecting regulation with obligations, controls and personal accountabilities. Through the FRIL programme, we would like to work with industry partners to develop our approach in the application of this platform and its role in the financial crime domain.
Lasting Asset – https://lastingasset.com/
LastingAsset is a Trust-tech on a mission to stop fraud. Our core solution is a cryptographic device-to-device encryption protocol that tackles the growing menace of impersonation fraud. By combining advanced cryptography with decentralised identity management, it enables individuals and organisations to authenticate counterparties with unparalleled accuracy and privacy.
During the programme we will also pursue our innovation on fraud information sharing via a decentralised fully homomorphic encrypted network.
Pytilia – https://pytilia.io/
Pytilia propose to address the ‘strengthening operational efficiencies in alert dispositioning’ challenge to optimise the manual review of KYC-related alerts, powered by our “always learning” feedback loop engine. We have successfully used a solution blueprint combining rules-based & AI-powered logic to identify anomalies/alerts and present these for inspection & action by human analysts in our:
•winning pitch for FRIL’s inaugural Innovation call on “Simplifying Compliance”;
•PoC solution for the FCA’s recent Market Abuse TechSprint;
•Innovate UK-funded Cyber-AI Hub project (demonstrating its cross-domain applicability)
During the FRIL programme, guided by this previous experience, we propose to focus on the feedback loop aspect of such hybrid systems. We look forward to working with partners to demonstrate KYC alert filtering, prioritisation and reinforcement learning using scenarios/data relating to the alert review process.
SenGuard – https://senguard.co.uk/
SENGUARD protects older adults from financial fraud by using real-time data analysis to detect and prevent scams before they happen.
SENGUARD’s innovative approach to financial crime prevention combines cutting-edge technology with a deep understanding of vulnerable users’ needs. Our solution not only addresses current financial crime patterns but is designed to evolve and adapt as new threats emerge.
With support from partners in the FRIL programme, we can enhance our capabilities and scale our impact in protecting vulnerable users from financial crime.
Serene – https://www.myserene.io/
Serene leverages AI-driven insights to identify vulnerable consumers at heightened risk of scams, helping financial institutions prevent financial crime proactively. By using real-time detection, tailored interventions, and scalable integrations, we align with regulatory frameworks like FCA Consumer Duty and PSR reimbursement requirements, ensuring compliance while enhancing customer protection.
Through participating in the Financial Regulation Innovation Lab, we would like to collaborate with partners and validate Serene’s predictive model for identifying scams through Vulnerable Characteristics.
Sopra Steria – https://www.soprasteria.co.uk/
Our innovative solution called the Optimised Decision Engine (ODE), leverages our unique and patent pending AI engine to generate and optimise human-interpretable rulesets for business decisioning, particularly in detecting fraud, scams, and money laundering. Unlike traditional black-box AI solutions that often lack explainability, ODE prioritises transparency, trustworthiness, and auditability, ensuring that its outputs are clear and comprehensible.
Through participating in the Financial Regulation Innovation Lab, we look forward to working with partners to exploring the calibration of the tool with a wide range of data volumes and types, understanding the optimal configuration for each dataset.
Swordbreaker – https://www.swordbreaker.co.uk/
Ingenious protection against ransomware with minimal access to the systems and no access to the data it protects. The product we are building doesn’t just raise the alarm; it actively disrupts cyber criminals as they try to steal your data and sabotage your systems.
Swordbreaker’s solution can protect any operating system, including legacy and Operational Technology (OT) from bulk data theft and file encryption. It works on its own or alongside existing security tools to reduce your risk from ransomware.
We would like to work with FRIL partners to deepen our understanding of their risks in financial crime and their regulatory requirements to help us shape our first solution and design Swordbreaker’s product suite for the future.
Threat Fabric – https://www.threatfabric.com/
ThreatFabric enables safe & frictionless online customer journeys by integrating industry-leading threat intel, behavioural analytics, advanced device intelligence and over 10.000 adaptive fraud indicators. We will be seeking to progress two propositions centred around 1) Data-driven, Digital Fraud and Scam Detection and 2) Proactive Mobile Threat Intelligence (MTI).
As part of the FRIL programme, we would like to explore whether new data sources can be used to provide further coverage for the hardest-to-detect fraud and work with partners across data such as telecommunications, smshing and location data.
VeriFoxx – https://verifoxx.com/
Verifoxx enables financial institutions to share verified intelligence, to tackle financial crime and fraud, but without any data ever leaving its owner, reducing privacy and commercial risks. Leveraging Privacy Enhancing Technologies such as Zero Knowledge Proofs (ZKPs), Multi-Party Computation (MPC) and Trusted Execution Environments (TEEs), Verifoxx addresses the critical challenge of how different companies can collaborate and connect data points, but without ever exposing their data.
Through the Financial Regulation Innovation Lab, we would like to explore with partners how the financial services and telco sectors could exchange intelligence to investigate or even stop a scam from happening.
Promoting Fairness and Exploring Algorithmic Discrimination in Financial Decision Making Through Explainable Artificial Intelligence
In this white paper a comprehensive toolbox is developed, grounded in an ethical “rights to
explanation” framework, deploying state-of-the-art machine learning/artificial intelligence models,
through the lens of explainability.
Harnessing these explainable artificial intelligence algorithms within the toolbox, we propose implementing an ensemble of model-agnostic techniques, to improve fairness in financial decision making, with a particular focus on US home mortgage loan applications with a granular public dataset.
We also highlight variability in these techniques, imposing various pragmatic scenarios that explore real-world decision making, alongside equality of opportunity and equality of outcome conditions. We highlight potential pitfalls, nuances, and possible innovations in applying these techniques, while providing the ability to simultaneously assess the impact of any specific variable in decision making, and a model’s performance in such decision making, with established machine learning criteria.
Furthermore, we showcase the trade-off between fairness and model performance optimization with a protected characteristic (age) that might form the basis of plausibly discriminatory practices in such a context. Our study aims to be in the spirit of Agarwal, Muckley, & Neelakantan (2023), Kelley, Ovchinnikov, Hardoon, & Heinrich, (2022), Kozodoi, Jacob, & Lessmann (2022), and Kim & Routledge (2022), among others. We lastly identify areas for future research.
Fairness and Discrimination in Lending Decisions: Multiple Protected Characteristics Analysis
We build upon the comprehensive toolbox developed in Jain, Bowden and Cummins
(2024), extending its applicability to multiple protected characteristics.
We explore a way in which several characteristics can be simultaneously considered for multi-dimensional fairness promotion and potential mitigation of plausibly discriminatory practices. In the spirit of Jain, Bowden and Cummins (2024), once again we do this with a particular focus on US home
mortgage loan applications with a granular public dataset.
Finally, we address a prior deficiency, namely a worse overall model accuracy/performance as measured by Area Under the Curve (AUC). The improved AUC can be attributed to a better True Positive Rate of correctly classified loan acceptances, which is achieved with the aid of hyperparameter tuning.
Specifically, we use Stratified K-Fold Cross-Validation combined with overfitting- robust hyperparameter tuning facilitated with the aid of a Grid Search. These were discussed but not explicitly implemented in the use case of Jain, Bowden and Cummins (2024). We document that even a narrow set and range of hyperparameters (mitigating the computational cost of employing the Grid Search) is sufficient to elicit these improvements.
Lastly, we provide recommendations on the implications of our results including where a
human-in-the-loop
Enhancing Financial Crime Detection By Implementing End-to-end AI Frameworks
Economic crime, encompassing money laundering, fraud, scams, and various other
illegal financial activities, continues to evolve with the emergence of sophisticated Artificial
Intelligence (AI) technologies.
This white paper explores the dual-edged nature of AI in the financial sector. While AI tools are increasingly being exploited by criminals to commit financial crimes, they also hold the key to more robust and effective detection and prevention strategies.
This paper delves into the array of AI techniques currently leveraged by malicious criminals, including deepfake technologies, phishing and spear phishing, automated social engineering, credential stuffing, synthetic identity fraud and others.
Furthermore, it provides a comprehensive analysis of AI techniques capable of countering
these threats. Key focus areas include Neural Networks for unusual patterns and behaviours,
gradient boosting algorithms for risk assessment, reinforcement learning for optimisation of
decision making, Markov chains for temporal patterns and anomalies over time, Naïve Bayes
for real-time classification and decision trees for interpretable detection.
The culmination of this paper is the presentation of a state-of-the-art end-to-end AI-driven solution that integrates AI technology to offer a holistic and dynamically adaptable approach to financial crime detection and prevention. By implementing this framework, financial institutions can significantly enhance their capabilities to identify, mitigate, and prevent financial crimes, ensuring a more secure financial ecosystem.