We see three major shifts heading into 2025 that will have a marked impact on the global Financial Services Industry, particularly for Banks, Capital Markets, and Investment / Wealth Management.
Here’s my latest thinking on the dynamics to plan for in 2025 and what you can do to stay ahead of change.
Untamed inflation
In the major developed and developing economies, inflation could continue trending upward if populism and protectionism drive the policies, leading to increased labor costs, tariffs, and fiscal policy expansion.
Slower rate cuts
Slower-than-expected rate cuts keep borrowing interest rates high, which, in turn, creates credit availability constraints. These limitations act as business growth barriers and create personal financial vulnerabilities for the economy.
Regulatory shifts
Many governments are moving towards global regulations and local deregulation. Relaxing national business regulations while rolling out stifling regulations on international businesses is a major risk. This policy approach creates complexities in managing customer information security and difficulties in achieving the benefits of scaled adoption of emerging technologies such as artificial intelligence (AI).
Above broader social, economic, and geopolitical shifts will shape the following industry-specific trends, implications, and pressures on the Financial Services industry at large. As always, the winners will proactively respond by prioritizing their investments in the right capabilities that will deliver strategic results efficiently and effectively.
Key Trends & Pressures
Personalized products and service to customers everywhere
Customers demand ready-to-access, personalized banking and financial services products that are relevant to their situational needs. This results in continued momentum and expansion of products and channels such as mobile-only, digital-first, embedded, and as-a-service offerings. The industry is expected to invest more in capabilities such as core systems modernization, expanding omni-channel experiences, pre-integrated partnership ecosystem, 360-degree customer views, real-time analytics, and robo-advisory for personalized and embedded product offerings.
The rise of AI-powered Super Apps is emerging to provide personalized financial products, on-demand, to customers through a unified platform. According to Gartner, over 50% of the world’s population will use multiple super apps by 2027, while Statista reports 66% of users in Australia, Germany, the UK, and the US favor super apps for convenience, 61% for security benefits, and 54% for better coordination between services.
Smarter, safer money movement
Customers need their money to be moved instantaneously, safely, and at lower costs when they receive or make payments. Initial pushback by Banks to regulatory Open Banking mandates is waning as customer preference is pressuring them to deliver unique and personalized experiences. Real-time payments through open banking are becoming the norm. The rollout of Central Bank Digital Currencies (CBDC) and the adoption of DeFi (Decentralized Finance) by Banks and payment carriers will continue to increase. Currently, 150 CBDC trials taking place worldwide, with payment values via CBDCs are expected to reach $213 billion a year by 2030, up from just $100 million in 2023.
Strengthening of operational resilience against risks
Basel 3 and 3.1 regulations in the UK and EU continue to evolve and will move from solvency monitoring and reporting to board governance and accountability. Global regulators and controllers across the world are rolling out regulations and directives (DORA, Operational Resilience, Sec. 1033, FiDA, etc.) to address operational threats and disruptions in the areas of digital, Shadow IT, third-party services, personal data privacy (GDPR, CCPA), Cyber Security and AI. In a significant market structure shift, the SEC’s new Treasury Repo clearing mandate requires clearing of eligible Treasury securities transactions through qualified clearing agencies. Covered clearing agencies (CCAs) must implement enhanced practices, including risk management, margin, and customer asset protection. By December 31, 2025, direct participants of Covered Clearing Agencies must clear eligible cash secondary market transactions.
Additionally, cross-border and real-time payment directives are becoming more stringent, exemplified by the Open Banking (US) and Authorized Push Payment Fraud (UK) initiatives. While the new administration in the US might water down the regulations’ commitment, the industry still needs to continue its regulatory compliance investments to reduce costs and mitigate risk.
Securing Innovation and Managing Disruption in AI/ML
The considerable leap in Generative AI (Gen AI) technology is shuffling leaders and laggards in the race to improve accuracy while reducing costs for the initiatives. Finally, what started as a Gen AI fad has developed into a plethora of opportunities with practical applications ranging from front-office agents and middle-office document extraction models, to back-office risk assessment models in KYC & AML domains.
However, advancements in AI also bring increased threats such as fraud and financial crime by using synthetic data and realistic deep-fakes. The financial services industry must outsmart the bad actors with continuous training and deployment of cybersecurity and forensic models to build resilience from disruptions. Emerging technology also provides both opportunity and disruption in terms of future skills that are required in technology discovery, development, testing, implementation, and maintenance from program coding to prompt engineering,
Investment Priorities Outlook
During the last two years of conservative spending in the high-yield regime, the financial services industry has focused primarily on run-the-business initiatives while also testing the waters in incremental modernization through automation technologies and small-scale AI adoption.
The major shifts above and the learning from the incremental modernization create opportunities for the industry to accelerate its investments in customer-centric transformation and innovation with a focus in the following areas:
Customer-Centric transformation
To win loyal customers today and in the future requires personalization that goes beyond digital channels – it demands building a platform that takes a 360-degree customer view to anticipate their changing needs. Investment will increase in unified technology stacks that combine customer intelligence, real-time analytics, intentional partner ecosystems, and AI-powered cognitive capabilities that deliver personalized experiences everywhere.
Omni-channel experiences mandate breaking silos and building well-integrated customer journeys by connecting digital, branch, and contact centers seamlessly together. These investments enable context-driven financial products through traditional and emerging channels such as super apps and embedded finance offerings. Hyperpersonalization can be made possible by investing in customer intelligence and agentic capabilities to support the personal bankers and wealth managers complimenting low-touch Robo advisory services.
Future-ready payment infrastructure
Banks that have already started investing in payment capabilities, starting as cost-centers for compliance, are only accelerating their investment in real-time capabilities to expand and retain customers. Providing well-secured and real-time open banking and open finance APIs, instant payments, cross-border payments, and multi-rail capabilities are at the top of the investment. The multi-threaded approach opens up the end points to increase transactional volume for better monetization and greater insights from payment data.
Industry tested the use of digital currencies, digital ledgers, and decentralized finance last year and found it can be deployed at scale with security while saving cost. Central Banks are also jumping into the fray, as they see investment in Digital Assets and money will continue to increase multi-fold. The open and real-time payment ecosystem has also created a mandate to invest in cybersecurity intelligence capabilities to protect the customer against fraud, whether through regulators or self-managed.
Fully integrated risk and resilience
Rather than looking at operational resilience as a cost, leading institutions are investing to turn regulatory compliance into a competitive advantage. While some countries may water down their regulatory mandates, investment focusing on digital operations will continue to reduce costs and risks. Institutions are investing in building intelligent monitoring, reporting, and remediation to recover from business disruptions. Additionally, there’s a keen focus on managing third-party risks, catastrophic crises, security incidents, cyber breaches, and natural disasters to ensure business continuity. As the world becomes more interconnected, the various threat vectors and sophistication will only increase as emerging technologies become more accessible and affordable.
Enterprise foundation to effectively operationalize AI
The years of test-and-learn are over. Now that financial services enterprises have found where the real value for AI/ML–including Gen AI–can be pinpointed, industry leaders are planning to accelerate investments in purpose-driven AI.
Due to hype, changes in the technology landscape, and high borrowing costs in the past year, true innovation budgets were allocated to run-the-business innovation. Now institutions are moving beyond experimentation with clarity towards change-the-business innovation that will pay dividends. Key areas of investments are co-pilot in IT automation, intelligent document processing, customer insights from non-traditional data (a.k.a. bigger data), using AI against threats from AI, and automating deterministic processes that can bring measurable cost savings from efficiency to support the growth.
Practical guidance to win
As mentioned in the beginning, higher inflation and yield will continue to exert cost pressure on the investments in the above strategic programs. The win ratio in large-scale transformation programs is abysmal: 30%.
The top three reasons are the gap in communication from vision to execution, the lack of measurable performance indicators, and business-IT priority conflicts. Consistent winners have delivered successful programs with measurable benefits by applying the following approaches for strategic planning and execution.
Critical success factors would be:
Creating balanced scorecards
Capturing both business and technology metrics ensures the program outcomes align with the executive-level vision, and makes it easier to translate them into the program-level objectives and outcomes. This also helps in setting expectations on the intended outcome and time to value so that each iteration of incremental value towards the strategic value is clearly realized by the leadership chain.
For example, rolling out a web-based customer onboarding process for personal lending as a standalone initiative using point-to-point automation can appear more affordable at first. However, building this way will lead to multiple siloed, disconnected journeys. While a quick initial win, the approach doesn’t fit the business vision to build multi-product and channel journeys to expand its market share. This ultimately leads to higher IT costs in the long term and lowers customer conversions. Instead, organizations should evaluate comprehensive metrics at IT costs for customer acquisition revenue to guide platform capabilities and investments in a more holistic and future-proof way.
Ensuring tight collaboration between Business and IT teams
Aligning strategy and execution is key not just at the start of an initiative, but extends throughout the entire program lifecycle. This requires defining clear standards for the business to capture comprehensive requirements, working with enterprise architects to convert them into modular designs, handing technology teams clear guidance for delivery, and signing off from the business before rolling it out to customers. Providing end-to-end visibility of the process using open standards helps simplify the lifecycle and protects IP from talent turnover. Moreover, it alleviates the change management risks and smooths the adoption of the new capabilities at scale.
Ensuring business and IT collaboration also warrants implementing role-based process visibility to iteratively optimize the journeys and processes that the transformation program supports. This will, in turn, lead to better customer and employee experiences, which are becoming table stakes for loyalty. In the personal lending process example, business and IT collaboration can help identify opportunities for improving straight-through processing by continuously monitoring and optimizing the decision management capability based on the risk appetite without disrupting existing business in the pipeline.
Building for enterprise scale
Modern transformation programs require a composable, modular architecture that maximizes reusability and avoids functional redundancy and tech obsolescence – two hallmarks of increasingly rapid change of emerging technology. Reimagining the processes and capabilities as Lego blocks will help to construct the deterministic processes and decisions, while remaining flexible to incorporate custom capabilities such as AI-driven risk models to improve accuracy.
This approach maximizes use across domains and lines of business. In the personal lending example, other lines of business, such as auto lending, are able to leverage and customize the proven core lending processes to their needs without impacting existing workflows. They’re ultimately able to roll out their transformation program faster, accelerate, reduce risk of change, and lower costs. Designing the process and platform as Lego blocks will help each lending team to develop and deploy their own risk-based underwriting models using AI / ML, trained on bigger, non-traditional datasets while being able to test and implement new products with clear explainability and control.
I am looking forward to collaborating with the industry cohort to continue scaling innovation and pushing the win rate of the transformation programs up in 2025. In 2026, I hope to report back on the outcome of these programs and their impact on customer experience, cost optimization, growth, and operational resilience.
Learn more
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References
- World Economic Forum Annual Meeting
- World Economic Outlook (WEO)
- Top 10 Trends For Banking In 2025 – The Future Is Back – Forbes
- Banking: The future is back | Trends shaping the industry in 2025 and beyond – Accenture
- Top retail banking trends 2025 – Capgemini
- Retail Banking 2025 and Beyond – pwc
- 2025 Financial Services regulatory priorities
- Top 10: Fintech Predictions for 2025
- Losing from day one: Why even successful transformations fall short
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