Taylor Wessing: Why Fintech Should Be Optimistic in 2026

The new year will bring fresh optimism to the fintech sector following a turbulent 2025, according to a report by experts at global law firm Taylor Wessing.

High levels of innovation and positive regulatory developments set the industry up well for 2026, the company’s Verena Ritter-Döring and Miroslav Đurić say.

While it will come as no surprise that they tout AI as a key subject, they also believe that there is regained optimism in crypto which is sparked by a radical shift in the approach to the regulation of crypto-assets in the US. 

Another catalyst for this resurgence in the popularity of crypto-assets is also the growing interest of incumbent financial institutions in stablecoin adoption, Taylor Wessing argues.

“The industry is moving into 2026 with a reasonably high level of optimism on several fronts: from the increasing regulatory clarity on some fronts and more positive funding environment (at least for some) to pending finalisation of some key regulatory initiatives that shall open the doors for further innovation in some novelty areas,” regulatory specialists Verena and Miroslav write in the report.

Increased scrutiny from investors

The last 12 months have been challenging for the sector, says Taylor Wessing. Despite investor confidence being shaken at the beginning of 2025, the fintech industry in Europe completed the year with an overall 7% year-on-year increase in capital invested, Taylor Wessing says, with the UK being a particularly strong sector.

The reports suggests that investors will be focusing on fintech profit in 2026, driving fintech consolidation. 

Verena and Miroslav argue that the payments sector will continue to be a so-called “darling” of venture capital investors due to the increased competition amongst incumbent institutions, fintech scale-ups that are yet to prove their valuations and new entrants. 

Pending regulatory reform in the European Union combined with the increasing number of providers looking to leverage innovative technology for payment purposes (from stablecoins to agentic AI) will be some of the primary catalysts for this.

The maturing crypto ecosystem in the EU is also expected to serve as a fertile breeding ground for the growth of European fintechs operating in the crypto sectors. This is not expected to stop at the regulatory perimeter of the EU Markets in Crypto-Assets (MiCA) Regulation, they say. 

Key technical growth areas in a new ecosystem

AI and open finance will remain on the agenda for the fintech industry in 2026, but financial infrastructure is expected to become a major focus as it’s the glue that ensures the timely provision of financial information. 

This will include application programming interfaces (APIs) and cloud infrastructure, says Taylor Wessing, which are major areas of focus for communications service providers (CSPs). 

Along with other technology providers, CSPs are subject to different regulation, which allows them to participate in helping fintechs but without some of the barriers fintech themselves face.

This could lead to investor interest in technology providers like CSPs, even though they do not themselves provide financial services in most cases.

AI regulation set to evolve

Regarding AI, Taylor Wessing urges more caution for those in the fintech sector than in some other businesses. 

They acknowledge that it remains a key topic, but say that the outcome of the application of AI systems is less predictable than a year ago. 

While agentic AI shows promise, regulatory constraints are yet to be tested, Verena and Miroslav write in the report.

Market optimism grows

There is also optimism in fintech elsewhere, as the sector has grown over the last 12 months.

New data from Innovate Finance shows that global investment in fintech rebounded by more than one-fifth in the last year, taking total investment to US$53bn.

Fintech Scotland has also reported that the nation’s fintech cluster has more than doubled in size since 2021, while fintech is dominating the Turkish startup ecosystem.