INSIGHT

Financial Services Industry Mid-Year Outlook 2026

James Lichau • June 12, 2026

Industries: Financial Services

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Halfway through 2026, the financial services industry looks less like a sector waiting for direction and more like one actively sorting itself into winners and laggards. Capital is returning, regulatory frameworks are taking shape, and technologies that spent years on the periphery are moving into the core of how institutions operate. The second half of the year will test how durable that momentum is and how prepared companies are to act on it.

This article covers five forces shaping the landscape right now: stablecoins and digital payment rails, AI’s growing role in capital allocation, private credit expansion, fintech consolidation, and the opening of retail limited partner (LP) capital to alternative managers.

Stablecoins Are Moving from Experiment to Infrastructure

 What once looked like a crypto-native curiosity now looks like the early stages of a payment infrastructure shift, and the numbers reflect it. According to J.P. Morgan’s 2026 Fintech Sector Spotlight, stablecoin transaction volume has grown more than fourfold in under three years, with monthly volumes approaching $1 trillion. McKinsey’s April 2026 report, The Next Age of Fintech, puts dollar-denominated stablecoin issuances at $300 billion today, with industry estimates projecting total issuance of $2 to $4 trillion by 2030. 

The regulatory picture shifted meaningfully with the passage of the GENIUS Act in 2025, which established a federal framework for payment stablecoins, mandating 1:1 high-quality liquid reserves and strict anti-money-laundering standards. Federal banking regulators are expected to finalize implementing rules by July 2026, with those rules taking effect in January 2027. That’s a tight window for strategic positioning. Deloitte’s Q2 2025 North American CFO Signals survey revealed that nearly one in four CFOs surveyed nationally already expect to use cryptocurrencies within the next two years as a payment method or corporate investment, a signal of how quickly institutional demand is building. 

The more immediate opportunity may not be stablecoins at all, but tokenized deposits. Unlike stablecoins, which cannot currently pay interest under U.S. law, tokenized deposits allow corporate treasurers to earn yield on idle cash while maintaining around-the-clock programmable liquidity. JPMorgan Chase’s Kinexys platform already processes $2 to $3 billion in tokenized transaction volume per day, according to McKinsey. Institutions that understand the distinction between these instruments, and what each one can do on the balance sheet, will be better positioned when the regulatory window opens. 

AI Has Become Central to How Capital Gets Deployed

AI in financial services is no longer a feature, it’s a structural factor in how private markets operate. Private equity firms are allocating to AI-native companies and using AI internally to improve deal sourcing, underwriting, portfolio monitoring, and exit timing. Venture capital is focused on foundational models, infrastructure, and applied AI. Growth equity is backing proven platforms at scale.

The investment data makes the shift concrete. According to J.P. Morgan’s 2026 fintech research, AI-enabled fintechs now account for nearly half of all U.S. fintech deals, up from 25% just two years ago, and they command meaningfully higher valuations at the Series B and C stages. McKinsey’s April 2026 findings put total fintech industry revenue at approximately $650 billion in 2025, growing at roughly 21% year over year. That is more than three times the pace of the broader financial services sector, which expanded at about 6% annually. 

For financial institutions, the pressure is real and the timeline is short. McKinsey’s research shows that early-adopting incumbents in financial services could see up to a four-percentage point increase in return on tangible equity, while slow movers face margin compression as pricing competition intensifies. The gap between those two outcomes is widening.

Private Credit Keeps Growing but the Risks Are Getting Harder to Ignore

Private credit continues to expand at a pace that would have seemed unlikely just a few years ago. Moody’s projects assets under management above $2 trillion in 2026, with growth extending into asset-based finance, securitization, and broader retail access. For many borrowers and investors, private credit fills a genuine gap that traditional lending has left open. 

The risks, however, are building alongside the growth. Federal Reserve data and recent reporting reflect increasing regulatory scrutiny of bank exposure to private credit firms, with policymakers focused on liquidity, transparency, and the connections between private lenders and the regulated banking system. Refinancing risk is also accumulating, particularly for borrowers who accessed credit during the low-rate period and now face materially different terms.

None of this means the market is in trouble. But institutions treating private credit as a static allocation may miss what’s shifting beneath the surface. The managers navigating this environment well tend to share a few things in common: disciplined underwriting, clear visibility into their portfolios, and an honest accounting of liquidity risk at the position level.

Fintech Consolidation Is Accelerating and the Buyer Profile Has Changed

Fintech M&A hit record levels in 2025, and the momentum is carrying into 2026. According to J.P. Morgan’s Fintech Sector Spotlight, venture-backed fintech acquisitions reached an all-time high last year, with five transactions exceeding $1 billion. That’s more than the combined total from 2021 to 2024. Nearly half of all fintech acquirers in 2025 were other startups, not traditional incumbents, reflecting an ecosystem where well-capitalized fintechs are consolidating to expand product offerings and acquire talent faster. 

Crypto is driving much of the capital. Crypto-related investments represented 45% of total fintech venture dollars as of Q1 2026, per J.P. Morgan’s data. The GENIUS Act created a clearer runway for crypto-native and fintech players to offer dollar-denominated payment rails, which puts direct pressure on traditional deposit bases and is reshaping what institutions are willing to acquire.

For financial services companies evaluating M&A, the calculus has gotten more complicated. The embedded finance opportunity remains real with 91% of SaaS companies now expecting embedded payments to play a larger role in their growth strategies in 2026, according to J.P. Morgan. But any fintech acquisition today also requires modeling digital asset disruption risk alongside the more familiar financial due diligence questions.

Retail LP Capital Is Now on the Table

The year’s most significant departure from the earlier 2026 outlook involves retail capital. Initial expectations centered on institutional LP caution and continued pressure on the traditional “2 and 20” fee structure. What’s actually developed is different. SEC rule changes and the prospect of 401(k) access to alternative investments have opened an estimated $12 trillion in new capital to alternative managers willing to build the distribution infrastructure to reach it. 

That’s a meaningful structural shift. Retail investors gaining access to alternatives has been a slow-moving story for years. What changed in 2026 is that the regulatory infrastructure finally caught up to the demand. For asset managers, the question now is whether they can build or acquire the distribution capabilities required to reach this audience at scale and whether their operational infrastructure can support the volume and reporting demands that come with it.

Working With BPM

Navigating the financial services landscape in 2026 requires advisors who understand both the technical complexity and the practical implications of what’s changing, from digital asset accounting and private credit portfolio analysis to fintech M&A due diligence and regulatory positioning. BPM works with financial services clients across these areas, bringing the financial, regulatory, and operational knowledge that matters most when decisions carry real consequences.

If you’re managing through any of the shifts described in this article, contact us.