Core Trends - The transition from reactive, siloed systems to proactive, integrated systems is a key trend, with AI expected to reshape various sectors by anticipating needs rather than merely responding to requests [3][9] - Digital infrastructure is becoming foundational, with real-time processes and embedded services expected to be standard rather than innovative [4][9] - Regulatory environments are maturing but remain fragmented globally, with some regions providing clearer rules while others create uncertainty [5][13] AI and Automation - AI, particularly agentic and conversational AI, is anticipated to become invisible infrastructure, embedded in decision-making processes across industries [3][7] - The importance of trust, resilience, and security is rising as new risks emerge from AI and digitization, leading to increased investment in advanced security technologies [6][9] Financial Services Landscape - The financial services landscape in 2026 will be characterized by agentic AI, digital assets like stablecoins, and divergent regulatory environments [11][12] - Embedded finance is expected to expand beyond payments, allowing non-financial companies to enter financial services profitably [12][20] Market Dynamics - The fintech sector is entering a pivotal moment of convergence and divergence, with traditional institutions and technology firms increasingly overlapping in roles and capabilities [10][8] - The stablecoin market is projected to reach $1 trillion by the end of 2026, indicating its growing importance in bridging traditional and decentralized finance [43] Regulatory Challenges - Regulatory fragmentation is expected to increase cross-border friction, complicating compliance for global fintechs and financial institutions [39][40] - Compliance will become a competitive differentiator, with firms needing to modernize their systems to meet regulatory requirements [33][34] Predictions for 2026 - Predictions indicate that 2026 will be a year of consolidation, with fewer but stronger integrated platforms emerging as experimentation gives way to established models [7][9] - The embedded finance market is forecasted to reach $7.2 trillion by 2030, highlighting the significant growth potential in this area [20]

Summary of the Evolving Landscape of Digital Money and Payments Industry Overview - The report focuses on the evolving landscape of digital payment systems, specifically examining stablecoins, central bank digital currencies (CBDCs), and public fast payment systems [2][5][6]. Key Insights Stablecoins - Stablecoins' market capitalization reached $270 billion in August, but transaction volumes remain small relative to global payments, with retail transactions accounting for only $6 billion, or 0.01% of retail payments [22][25]. - The majority of stablecoin transactions occur in international payment flows, often used for remittances and saving in stable currencies [22][30]. - The market is dominated by two issuers, Tether (USDT) and USD Coin (USDC), with over 95% of stablecoins pegged to the US dollar [23][29]. - Stablecoins provide faster and cheaper settlement than traditional systems, but their adoption is hindered by the need for on/off-ramping to traditional payment rails [13][14]. Central Bank Digital Currencies (CBDCs) - Only three countries have fully launched CBDCs: the Bahamas, Nigeria, and Jamaica, all of which have seen low adoption rates [42]. - Many central banks are researching or piloting CBDCs, but projects in countries like the US have been abandoned due to low take-up and privacy concerns [43][42]. - CBDCs do not typically pay interest and require accounts at commercial banks or payment service providers [46]. Public Fast Payment Systems - Countries like Brazil and Thailand have developed successful public fast payment systems that have quickly become the main form of non-cash payment [44][51]. - Successful systems feature widespread participation from banks and nonbanks, user-friendly interfaces, and low costs for consumers [47][62]. - The adoption of public fast payment systems in developed markets (DMs) is slower due to entrenched card networks, which provide consumers with incentives to remain on existing platforms [56][62]. Additional Important Points - The report highlights the significant network effects in the payments sector, where new technologies struggle to gain traction against established incumbents [20][62]. - The success of new payment methods in emerging markets (EMs) is attributed to less entrenched card networks, which allows for greater financial inclusion [62]. - The report emphasizes the need for new payment methods to be user-friendly, safe, and compatible with existing financial infrastructure to overcome network effects and achieve widespread adoption [62]. Conclusion - The evolving landscape of digital payments presents both opportunities and challenges, with stablecoins, CBDCs, and public fast payment systems each playing distinct roles in the future of financial transactions. The report underscores the importance of addressing network effects and fostering user-friendly solutions to drive adoption in both emerging and developed markets.