• Siobhan Byron, EVP, Universal Banking; Barry Rodrigues, EVP, Payments at Finastra , Wissam Khoury, EVP, Treasury & Capital Markets at Finastra; Andrew Bateman, EVP, Lending at Finastra


• 08.01.2025 04:00 pm
#Banking2025 #FintechInnovation

To keep pace in 2025, institutions must reimagine banking through innovative technology and ecosystems

Siobhan Byron, EVP, Universal Banking

The banking industry today is very different from just a few years ago. Fintechs, neobanks, and technological innovation have flourished worldwide, technologies are being adopted by the masses at a pace we haven’t seen before, and Open Finance is a reality. This has led to heightened demand for instant, digital, seamless, and personalized services. We are quickly moving towards a world where banking is deeply embedded within our lives. Where services are tailored for our needs and delivered where, when, and how we need them. In 2025, institutions must reimagine banking to compete in this environment. However, adopting the right technology, implemented in a way that maximizes innovation while minimizing risk, will be key.

For example, appetite for cloud worldwide is generally increasing. In many regions such as the US, UK, Germany, France, Singapore and UAE, we expect cloud and SaaS adoption to remain strong. Institutions recognize the benefits they bring in increasing agility and innovation, while reducing risk, time to market, and total cost of ownership. However, in regions where cloud adoption is growing slowly due to factors such as regulatory constraints, it may not be the best option. For these banks to remain competitive, they must invest in on-premises solutions that provide robust security, scalability, and data analytics. Ideally, solutions that can easily migrate to the cloud as and when the regulatory concerns are addressed.

We expect to see more banks choosing to transform via a flexible and modular strategy. For example, the traditional ‘rip and replace’ method to upgrade a core banking system can come with prolonged timelines, high costs, and operational disruption. Instead, more banks will adopt a Symbiosis approach, where a next-generation core banking system is deployed alongside existing infrastructure, enabling rapid innovation while minimizing costs and disruption. Additionally, through microservices architecture and APIs, specific functionality, such lending or Islamic banking services, can be seamlessly implemented at speed.

Another trend is the need for greater access to data, and the ability to use this in a meaningful way. This is where AI shines. For example, through AI-driven analytics and dashboards, banks gain rapid insights into their customers’ needs, what’s working well, and where they can transform to grow. GenAI will gain more momentum next year and beyond, with use cases such as GenAI-powered assistants, inside and outside of banks, being deployed. These tools enable enhanced productivity, instant access to information, and more informed decision making for banks, as well as their customers who can gain greater insights into how to optimize their financial situation. 

Finally, as risks of fraud and cybercrime grow, and regulations become more stringent, banks are increasingly relying on ecosystems alongside robust core banking solutions, to strengthen their security and compliance processes and enhance customer experiences. By seamlessly integrating services through APIs, banks can quickly protect themselves against risks while curating the personalized journeys that their customers expect. Ecosystems are also taking many different forms. For example, a bank can bring together the services that a homeowner needs to fit solar panels on their house – from advice on selecting the right ones, choosing the installer, applying for the grants, complying with the rules, and so on. This is an exciting example of how Open Finance is driving forward ESG initiatives and delivering holistic services that are customer-first. We can expect to see more growth in ecosystems next year and beyond, as banks look to drive growth and innovation, and to remain competitive.

As instant payment volumes grow in 2025, banks must prioritize resilience, scalability, and speed of recovery

Barry Rodrigues, EVP, Payments at Finastra 

Governments around the world are prioritizing making payments more instant, seamless, and affordable for everyone. More than 80 countries today have domestic instant payment systems, such as FedNow in the US, SEPA Instant in Europe, SIC5 in Switzerland and FAST in Singapore. As a result, we expect to see ongoing growth in global instant payment volumes next year and beyond, covering both wholesale and retail transactions. This adoption is accelerated by the ISO 20022 messaging format, which underpins many of the domestic and cross-border instant payment schemes. For example, in the US, with the Fed’s March 2025 deadline for ISO 20022 migration for domestic wires fast approaching, financial institutions need to ensure they are compliant with the new standards and consider their strategy for instant payments. 

Cross-border payments are also increasingly moving to real-time and more than 60% of banks agree this brings additional revenue opportunities. Alongside traditional players like SWIFT, we’re seeing more alternative cross-border providers enter the market, with the aim of reducing the friction and costs of moving money across borders, while enhancing transparency and speed. Further innovation is happening with Central Bank Digital Currencies (CBDCs), with 134 countries in an exploration phase. These tokenized versions of fiat currency have the potential to disrupt the cross-border market in select verticals, as we progress towards instant digital currency exchanges. 

In addition to instant payments, we expect continued improvement in the speed of delivery and volume growth in high value transactions, driven by factors such as small businesses adopting these payments in an increasingly global marketplace. Growth in mass payment volumes, such as SEPA in Europe and ACH in the US, is also expected to remain strong due to high demand and providers moving towards facilitating same day mass payments. 

As payment volumes grow and become increasingly instant, strengthening speed of recovery, scalability and resilience, including fraud risk management, will be key priorities for banks in 2025. With regulators around the world mandating increased payment availability, in some cases 99.9%, banks must upgrade their capabilities to ensure they can stay compliant and provide resilient, secure solutions for their customers. 

When it comes to payments modernization, more banks are looking to consume smaller, standalone components that can be easily integrated through APIs. With containerized, composable microservices and cloud deployment, institutions benefit from faster deployment cycles and greater efficiencies, with scalability and agility, while reducing risks associated with large-scale migrations from monolithic systems.

GenAI will also play an important role as payments become more instant. Compelling applications include driving efficiencies in anti-money laundering (AML) compliance, sanctions screening, and fraud detection which will be ever more important with instant and irrevocable transactions. We expect to see more use cases being developed and adopted in 2025 and beyond.

Automated workflows and real-time technology will be key for financial institutions in 2025

Wissam Khoury, EVP, Treasury & Capital Markets at Finastra

Industry and societal change are occurring faster than ever, giving rise to new opportunities and risks that banks must navigate. For example, we’re seeing continued volatility in capital markets, increasingly stringent regulatory requirements, such as the upcoming deadlines for the Basel 3.1 reforms, more demand for ESG services, and pressure for banks to adopt technology safely. With these trends expected to continue into 2025, bank treasurers and investment managers must focus on enhancing productivity, data-driven decision-making, agility, and risk management. Automating trading workflows and adopting real-time technology, underpinned by broader modernization efforts, will be a key focus. 

An exciting technology that will help to drive this is GenAI. Use cases will become more developed in 2025, with promising applications for trading on the horizon. By analyzing large amounts of historical data and current events in real-time, such as policy decisions made by the Fed or ECB, or trending news articles, GenAI enables institutions to better understand sentiment and positions in the market. 

By embedding natural language capabilities within interactive workflows and GenAI-powered assistants, institutions benefit from streamlined processes and elevated user experiences. As Large Language Models (LLMs) become a popular search engine for trading and analysis, access to information will become faster, simpler, and more intuitive. Traders can, for example, retrieve real-time market data, quotes, or transaction details – such as a detailed summary of all the FX spot trades executed – and run APIs to automate tasks such as booking trades and calculating risk measures. They can make more informed decisions, quickly, about liquidity and cash management requirements, how to adapt investment strategies, including to meet ESG criteria, and mitigate risk.

Underpinning GenAI adoption and the shift to real-time treasury and trading, is a broader trend towards modernization. We expect continued growth in appetite for cloud and SaaS, with institutions recognizing the benefit they can bring in reducing risks, costs, and time to market, while increasing operational efficiency and the ability to adapt quickly to new demands. Modernization efforts are also increasingly occurring via a microservices-based environment, allowing institutions to pick and choose functionality while reducing the potential risks of a large migration from a legacy system. 

In 2025, bank treasurers and investment managers will look to partners to deliver the flexible, agile, scalable solutions that enable automation and real-time operations. Since neither banks nor technology partners can deliver all functionality by themselves, robust partnership networks and ecosystems, underpinned by the principles of Open Finance, will be crucial for success.

In 2025, lenders will focus on driving productivity and efficiency to reduce risks and increase profitability  

Andrew Bateman, EVP, Lending at Finastra

Global interest rates and loan volumes continue to fluctuate, and regulations are becoming increasingly complex. Plus, many areas of financial services are facing ‘brain drain’ due to factors such as stricter regulations, loss of knowledge as industry veterans reach retirement, and new skills required from workers as technology advances. Enhancing operational efficiency, productivity, risk management, and profitability will be front of mind for lenders in 2025. 

Banks will increasingly turn to GenAI to plug lending and technology knowledge gaps and optimize processes. With its ability to curate tailored content, the technology can be used to create personalized, interactive learning experiences to upskill teams. GenAI-powered assistants will also become more embedded within solutions. With large language models, banks can, for example, process and interpret Letters of Credit and instantly perform checks on the documents to make quicker, and potentially more informed trade finance decisions. In customer-facing applications, corporates could ask for a breakdown of their loans and ways to optimize their finances, thereby enhancing their own user experience while also reducing bank resource requirements.

Sustainable, inclusive, and responsible lending will remain high on the boardroom agenda in 2025, particularly as deadlines for Section 1071 of the Dodd-Frank Act in the US and Basel 3.1 are fast approaching. These regulations require banks to meet complex lending data reporting requirements and provide more accurate risk calculations. We’re also seeing a growing market demand for ESG solutions, such as sustainability-linked loans, bonds, and supply chain finance. Banks will need to adopt scalable, highly available, and automated solutions that support growing lending volumes, while simplifying the complexity of reporting requirements and performance tracking. Cloud and SaaS will play a big role here, providing the necessary agility to navigate this rapidly evolving market.

Another trend is the need for lenders to fast-track their modernization efforts to overcome challenges in managing their loan portfolios. For example, SMEs are pivotal to economies, and they often require credit for survival. Despite this, manual processes, siloed operations, and outdated technology can make SME lending risky, unprofitable, and challenging to comply with the regulatory requirements. This can cause high rates of ‘borrower churn.’ For banks to truly capture the market opportunity while reducing risks and costs, they must consolidate their loan portfolios onto a single, modern platform. This can help to simplify and streamline services, improve data accuracy, and reduce abandoned loan applications. 

For banks to evolve with demands, implement the latest technology and mitigate risks in 2025, partner ecosystems, underpinned by the principles of Open Finance, are crucial. By integrating value-added services through APIs, such as for automated ESG scoring, document checking or GenAI-assistants, lenders can keep pace, increase efficiency and profitability, while decreasing time to value. We expect to see more banks opting to modernize via a microservices approach, to further increase their agility while driving risks down.