Episode 11: Digital Banking in 2025: Our Predictions
Transcription:
Hi, welcome to Speedtalks, the podcast about everything tech in the financial services industry. Today’s episode is all about digital banking in 2024 and our trends predictions for 2025.
Every year around this time, my news feeds, inboxes, and conversations are flooded with predictions for the coming year. Naturally, I want to contribute my own predictions. But before diving into the future, I’ll start by summarising what happened in the market this year. What innovations were introduced? What trends emerged in 2024? My insights come from conferences, client discussions, and broader market observations.
Once we’ve covered the highlights of 2024, I’ll discuss what we can expect for 2025, focusing on development directions and technology advancements from a tech perspective. I hope you enjoy learning about these trends as much as I do. Let’s make this one of our most insightful episodes yet.
2024 in Review
Let’s kick off with a summary of 2024. The number one topic? AI.
Yes, AI took center stage this year. In 2024, many banks began integrating AI and machine learning into their processes. Most of these applications were back-office processes, largely due to regulatory concerns and the readiness of the technology. While AI hasn’t yet been fully adopted for mission-critical functions, it’s clear that financial institutions are investing heavily.
According to EY’s research, around 45% of financial institutions had already implemented AI solutions by 2024, and 55% planned to do so. The primary drivers? Improved productivity, better customer service quality, and—most notably—enhanced sales through the automation of processes. AI proved particularly useful in automating time-consuming, repetitive, and labor-intensive tasks, such as those in back-office operations.
That said, the “AI hype train” seems to be slowing down. There’s still a lot of buzz, but it’s increasingly important to align expectations with what the technology can actually deliver. Managing these expectations has been a recurring challenge.
Trend #2: Integrations and APIs
Another big trend in 2024 was integrations. Banks increasingly partnered with external third parties through APIs to meet evolving customer demands. Collaboration between traditional banks and fintechs, insurance companies, and even e-commerce platforms surged this year.
The banking-as-a-service model, embedded finance, and open banking gained momentum. Banks worked with partners across industries—such as Buy Now, Pay Later (BNPL) providers and other value-added services—to expand their offerings. This trend shows no sign of slowing down.
Trend #3: Customer Experience in Digital Channels
Improving customer experience in digital channels was a significant focus in 2024. Banks invested heavily in simplifying processes and enhancing existing features. While digital channels became more popular, many clients still valued in-person, brick-and-mortar services for complex transactions.
Mobile banking stood out, especially among younger users and corporate clients. Banks prioritised hyper-personalisation, using data to adapt services to individual user habits. For example, some apps allowed users to create customised banking experiences tailored to their preferences—an approach that resonated particularly well with Gen Z customers.
Trend #4: Biometrics and Security
Biometrics took a leap forward in 2024, especially in combating fraud, streamlining Know Your Customer (KYC) processes, and enhancing Anti-Money Laundering (AML) efforts. Biometric technologies were increasingly used for login authentication, transaction approvals, and overall security enhancements.
Interestingly, biometrics are now extending into payment systems. Pioneering projects, such as those using iris recognition for payments, are already in testing phases. Could we soon be paying at convenience stores with a simple glance? While the thought might feel a bit futuristic (and even unsettling to some), it’s a glimpse into what’s possible.
Trend #5: Green Transformation and Sustainable Banking
Finally, sustainability became a major theme. Banks, especially in Western Europe, ramped up their efforts to finance green projects and support energy transformations. Numerous initiatives were launched to help customers achieve climate goals, such as financing renewable energy and promoting climate-neutral solutions.
Predictions for 2025
Moving on to 2025, here’s what I foresee:
1. Advanced Automation and AI
AI’s role will continue to grow, expanding from back-office tasks to customer-facing applications. I expect to see significant advances in AI for customer support, risk management, and the development of new financial products.
For example, routine tasks like transaction processing, data entry, compliance monitoring, and fraud detection will increasingly be automated, leading to greater efficiency and reduced operational costs.
In the U.S., we might even see scenarios where speaking to a human bank representative becomes a premium service, with AI handling most customer interactions.
2. Compliance and Risk Management
In Europe, compliance and risk management will dominate the agenda. Regulations such as the AI Act, PSD2, PSD3, DORA and NIS2 will require banks to adapt their services and operations. This will drive investments in compliance, auditing, and risk management tools, particularly in areas like credit risk and regulatory planning.
While this focus on compliance might seem less glamorous, it’s a necessary reality for banks operating in heavily regulated markets like the EU.
3. Central Bank Digital Currencies (CBDCs)
I expect CBDCs to gain more traction in 2025. Countries like China (with the digital yuan), Brazil, Thailand, and the Eurozone will continue experimenting with these digital currencies, reflecting a shift toward a more digital and global financial system.
4. Super Apps in Europe
While we may not see WeChat-like super apps in Europe, banks are moving toward creating “wannabe” super apps. These apps aim to integrate services beyond traditional banking, such as mobility solutions, shopping, and real estate. This approach allows banks to capture new market segments and offer a one-stop solution for customers’ everyday needs.
Final Thoughts
To summarise:
- AI, customer experience, integrations, biometrics, and sustainability were major trends in 2024.
- In 2025, AI and compliance will likely dominate, alongside advancements in super apps and CBDCs.
While regulatory pressures may seem like a challenge, they also present opportunities for innovation. Banks that adapt successfully can emerge stronger and more competitive.
Thank you for tuning in to this episode of Speedtalks. See you next time!
