5 ways the OBBB is a game changer for financial services
The One Big Beautiful Bill (OBBB) Act changed regulations and tax rules for the financial services industry. But do those changes create more challenges — or fresh opportunities?
Banks, fintech companies, insurers and wealth managers are still working to tackle that question. And the answer will likely vary considerably depending on the niche, with crypto, banking-as-a-service (BaaS) and wealth management some of the areas that are particularly affected.
Based on recent regulatory commentary and bank leader surveys (including Wipfli’s study of 345 U.S. financial institution executives), here are five major changes that financial services and fintech should know about:
1. New clarity around how the federal government regulates crypto
Financial institutions have long felt wary of crypto due to a lack of regulatory clarity. The OBBB upended that dynamic by codifying a regulatory framework where the Commodity Futures Trading Commission (CFTC) oversees crypto commodities while the Securities and Exchange Commission regulates crypto securities.
The new framework helps make room for:
- Custody and settlement services for digital assets: This is already a growth area, with one in four banks providing at least some services in this vein.
- Stablecoin issuance and tokenized deposits: the new law aligns with ideas proposed under the Stablecoin TRUST Act, creating another growth opportunity.
- Wealth advisory in crypto: registered investment advisers now have a clear path to custody, recommending or managing crypto portfolios that meet fiduciary standards.
New opportunities also mean new safety challenges
It’s not just a green field. As financial institutions move deeper into crypto, they also face greater risk from fraud or crypto-related financial crimes. Institutions should be prepared to invest in the tech and compliance capabilities necessary to make new crypto services safe for clients and investors.
2. Regulatory changes deliver both relief and risk
The new law also made broader changes to how the financial industry is regulated. A new risk-tiered supervision model and looser rules around M&As will both drive action in the coming months.
Risk-tiered supervision model
This didn’t make the headlines, but the OBBB created a new risk-tiered supervision model. As a result, well-capitalized, well-managed banks may be able to spend significantly less time working on redundant reports.
For banks with under $10 billion in assets especially, that’s a big deal. However, the reality is more nuanced.
Regulators determining whether a financial institution is well-managed expect to see an enterprise risk management (ERM) program in place. This is a given for most institutions — Wipfli found that 76% percent of banks have an ERM. However, that number falls to only 34% of banks with under $500 million in assets.
Looser M&A rules
Consolidation is also likely to rise in the coming months. Per S&P Global Market Intelligence reports, U.S. bank deal activity is already up 18% over 2024.
Given that the OBBB loosened the rules around M&As for the financial services industry, leaders should prepare for a new push toward consolidation — especially among institutions looking for additional muscle to manage increased compliance costs.
3. Stricter regulations for BaaS and fintech
Pre-OBBB, the financial services industry had been excited about BaaS and embedded banking. However, new stricter vendor management and third-party oversite rules may lead banks to reconsider their options here.
Banks working with fintech companies in this area should prepare for:
- More rigorous onboarding and partner vetting.
- Stricter AML/KYC protocols.
- Regular operational resilience testing.
If this emphasis seems familiar, it’s because it’s similar to 2024 guidance released by the Office of the Comptroller of the Currency (OCC) that urged a “continuous monitoring” of bank-fintech partnerships.
Nearly one-third of bank executives who participated in Wipfli’s survey shared that a lack of cybersecurity readiness is hurting their plans to move into BaaS. The new rules will limit the field to only institutions that can meet a higher security standard — which also creates an opportunity to highlight that distinction to clients.
4. More wealth advisors face heightened fiduciary and transparency requirements
The OBBB expanded the fiduciary definition under ERISA and the SEC’s Regulation Best Interest (Reg BI). This means that many wealth advisors now face stiffer disclosure and conflict-of-interest requirements.
This is especially relevant because wealth advisory represents a growth area for many institutions. Based on both Wipfli’s original research and the annual wealth management survey from the American Bankers Association, wealth advisory has become one of the most commonly added service lines — a trend that may now be on shakier ground.
To meet new requirements, firms should implement stronger compliance controls, add real-time conflict monitoring capabilities and update their advisor training programs.
5. Carried interest reform could affect deal timelines
Financial services should also prepare for longer holding periods and altered deal structures brought about by changes to carried interest taxation. The new rules have led the Private Equity Growth Capital Council to project that some sectors could face reduced deal volume.
With 68% of banking leaders in Wipfli’s survey also noting that persistent net interest margin pressure is a major strategic concern, it’s clear that firms will need to create fresh models for capital allocation and transaction timing that reflect the new rules.
The financial services industry has reached an inflection point
The OBBB reset the chessboard for financial services. Think of it as a pivot point rather than a compliance task: Institutions that move quickly to tighten governance, build more resilient fintech partnerships and seize on regulatory clarity to enter emerging markets like digital assets can turn any new requirements into competitive advantages.
Regulation rarely outruns innovation — but this time, it has. Can you adjust fast enough to gain an edge?
How Wipfli can help
We help financial services firms navigate change, mitigate risk and grow. Ask us to assess your needs and advise you on how to position your firm for success. Start a conversation.
Strengthen your financial services firm
