As we enter 2025, financial institutions—from banks to fintechs—must be ready to adapt to changes, particularly when it comes to regulations and technology. The geopolitical landscape remains turbulent, a new administration is preparing to take the helm in the U.S., and regulatory changes related to shifts in governments and governmental strategies will drive wider changes for the industry.
At the same time, advancing artificial intelligence capabilities will create new opportunities, new regulatory challenges, and new compliance requirements. As economic uncertainty continues, banks and fintechs will seek to derive the most value possible from their existing technology investments to grow their business.
Fintechs Will Focus on Value Creation
The fintech space has evolved through several stages, from initially being just one link in the value chain to adding services to compete with banks. However, competing with traditional, established banks proved to be difficult, and we recently saw fintechs pivot back toward solving specific challenges. Based on this pattern, we expect to see fintechs expand their offerings again in the year ahead, but with a sharper focus on value creation and a path to profitability rather than on growth just for the sake of growth.
AI is helping fintechs add capabilities by leveraging data and driving operational efficiencies, with several companies already taking the leap and implementing these technologies. For example, one shop-now-pay-later service provider recently implemented AI capabilities that better assist shoppers. Instead of spending hours searching for and comparing items, consumers can now chat with an AI assistant about what they’re searching for and receive research-backed recommendations, resulting in quicker and easier shopping experiences.
In 2025, fintechs will apply generative AI capabilities to support innovations in payments, especially blockchain and digital currency payments. There’s also room for fintechs to use AI to create personal financial advisory tools that can help individuals optimize their day-to-day spending decisions to reach their longer-term financial goals, as well as corporate use cases related to blockchain transactions—all with an eye toward meeting investors’ expectations for profitability.
AI and Automation Will Enable More Value-Creation
Expect banks as well as fintechs to explore more ways to use AI for efficiency and to support growth in the year ahead. For example, AI customer service agents can augment rather than replace employees by quickly handling rote inquiries and tasks, so customer service representatives can focus on more complex or higher value activities.
In fact, one global wealth report found that 49% of wealth management firms were already using AI for some applications in 2024. Generative AI can help these organizations analyze customer data to deliver “superior client experiences” like highly personalized interactions with high-net-worth clients. Internally, AI can also allow banks to update their IT infrastructure, which tends to lag behind other industries, by taking over basic coding tasks to free up team members for other projects.
Any FI using AI must develop policies to address employee training, data security, and compliance. The issues of bias and privacy in training datasets and AI-generated results have already prompted regulatory advisories from federal agencies in the U.S. and legislation in the EU. FIs will also need to address AI-related sustainability issues like climate impacts, because AI computing requires more data centers that need more energy and water to function.
Wealth Management Services and Family Offices Will Grow
Fee-for-service wealth management and family office services are poised for growth in 2025. That’s due to an increase in the number of wealthy individuals—and more wealth in their holdings. Globally, high net worth individuals’ wealth increased by an average of 4.7% this year, with ultra-high net worth individuals (those with more than $30 million in investments) seeing the largest gains.
Managing complex asset mixes and a variety of risks requires a comprehensive set of specialized services for these wealthy clients. 78% of ultra wealthy individuals surveyed for the report “consider value-added services essential to wealth management firm relationships.” Firms that can offer one-stop guidance on a variety of investment and wealth options—as well as family office services dedicated to managing specific families’ holdings—can earn and cultivate valuable long-term customer relationships.
ESG Strategies Will Adapt to New Conditions
The importance and visibility of corporate ESG (environment, sustainability, and governance) strategies already differ between the US and the EU. With an incoming US administration that’s less supportive of ESG initiatives, US-based financial institutions will need to prepare for changes in priorities that challenge their ability to please all stakeholders and remain globally competitive in these areas of investment.
For example, if federal policies and financial incentives shift back toward fossil fuel extraction and away from renewables, will banks follow that lead? Or will they remain committed to their existing ESG investments (on track to be worth $50 trillion by 2030) to meet the expectations of their clients, investors and customers? Potentially thorny dilemmas like this have raised the likelihood that we’ll see a rise in so-called “greenhushing” in the year ahead, as US FIs try to avoid calling attention to ESG investments on which shareholders expect returns, but which also might draw criticism from other quarters.
The financial sector will be a dynamic space in 2025, as organizations focus on technology and strategy adaptations to maximize value creation, improve customer offerings and services, and balance the sometimes-competing needs of stakeholders in an era of changing oversight and regulations. Banks, wealth management firms, and fintechs that plan their AI, ESG, and customer service strategies to be responsive to changing conditions will be in the best position to create real value in the year ahead.
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