Financial ServicesChallenges 2026
A comprehensive overview of the key challenges facing financial services organisations and their customers — sourced from leading research firms.
🏢 Top Organisation Challenges
View all →AI & Technology Transformation
Key Issues
- ›Scaling generative AI from pilots to production
- ›Legacy system modernisation blocking digital transformation
- ›Building responsible AI governance frameworks
- ›Talent shortage for AI/ML engineering roles
Impact
Firms spending $50B+ on AI in 2026 but struggling with ROI measurement. Legacy core banking systems (avg age 25+ years) create integration bottlenecks. Regulatory uncertainty around AI decision-making in lending and insurance.
Deloitte 2026 Banking Outlook, McKinsey Global AI Survey 2025
Cybersecurity & Operational Resilience
Key Issues
- ›Ransomware attacks targeting financial infrastructure
- ›Third-party/supply chain risk management
- ›Operational resilience regulations (DORA, CPS 230)
- ›Quantum computing threats to encryption
Impact
Average cost of a financial data breach: $6.1M (2025). APRA CPS 230 enforcement begins July 2025, requiring demonstrated operational resilience. 62% of FSOs report increased third-party cyber incidents.
IBM Cost of Data Breach 2025, APRA CPS 230, Forrester Security Survey
Regulatory Complexity & Compliance
Key Issues
- ›Anti-money laundering (AML) reform and transaction monitoring
- ›Consumer Data Right (CDR) / Open Banking expansion
- ›Climate risk disclosure mandates (ISSB, TCFD)
- ›Cross-border regulatory fragmentation
Impact
Compliance costs consume 6–10% of revenue for major banks. New AML/CTF Act reforms in Australia require real-time transaction monitoring. ESG reporting requirements expanding across APAC jurisdictions.
EY Global Regulatory Outlook 2026, AUSTRAC guidance
👤 Top Customer Challenges
View all →Digital Access & Financial Inclusion
Key Issues
- ›Digital-only services excluding older and rural populations
- ›Complex onboarding and identity verification
- ›Language barriers in financial products
- ›Accessibility gaps in mobile banking apps
Impact
1.4 billion adults globally remain unbanked. 23% of Australians over 65 struggle with digital banking. Average account opening takes 12 minutes digitally vs 3 minutes at neo-banks.
World Bank Global Findex 2025, Australian Banking Association
Cost of Living & Financial Stress
Key Issues
- ›Rising interest rates impacting mortgage holders
- ›Fee transparency and hidden charges
- ›Insurance affordability crisis (esp. home, health)
- ›Debt trap from buy-now-pay-later services
Impact
Average Australian mortgage repayment increased 42% since 2022. 35% of BNPL users missed payments in 2025. Home insurance premiums rose 28% in climate-affected regions. Financial hardship applications up 60%.
RBA Financial Stability Review 2025, ASIC BNPL Review, ACCC Insurance Inquiry
Data Privacy & Security Concerns
Key Issues
- ›Fear of data breaches after high-profile incidents
- ›Unclear consent mechanisms for data sharing
- ›Scam and fraud sophistication (deepfake, AI-powered)
- ›Limited control over personal financial data
Impact
Australians lost $3.1B to scams in 2025 (up from $2.7B in 2024). 68% of consumers concerned about banks sharing data under Open Banking. AI-powered scams now account for 40% of financial fraud.
ACCC Scamwatch 2025, OAIC Privacy Report, CBA Fraud Intelligence