As we peer into 2025 looking for signs of what’s to come, one thing is certain – the global banking industry will continue its evolution.
Historically, banks have responded to change more slowly; the industry’s risk-averse culture drives a calculated and measured approach. However, the volatility, uncertainty, and challenges of the past few years are pushing banking out of its comfort zone.
Agility and adaptability are the new keys to survival. Competitive pressure and rapid technological innovations are forcing the industry to adapt faster, and leading banks are investing heavily in AI-fueled business transformation to deliver a new vision for the future.
Let’s take a sneak peek at three of the major trends driving the pace of change in 2025, the opportunities they present, and the challenges that will require vigilance and adaptability.
Trend 1: The pivot: Practical application of AI in banking
Gone are the days when AI was just a futuristic concept, now AI is a reality that demands significant attention. In 2023 and 2024, banks were swept up in the worldwide fever pitch of excitement to leverage AI which often resulted in chaotic adoption and many failed implementations. Moving into 2025, banks are embracing AI in tangible ways that enhance their operations across the front, middle, and back offices.
2025 represents a significant pivot as the entire industry and leading banks work to build a more cohesive AI strategy that sits atop a foundational data and governance framework. This pivot will support banks’ efforts to align their AI strategies with core business strategy, develop clear criteria for use case selection, and further their efforts to build a more customized AI tech stack that integrates with an enterprise intelligence architecture.
As banks mature in their AI adoption and implementation, they must remain vigilant to ensure ethical and trustworthy applications by removing bias, promoting fairness, and providing transparency to regulators, shareholders, and customers.
Trend 2: The double-edged sword: AI accelerates fraud and financial crimes
While AI offers massive transformation potential, it’s also a double-edged sword. As banks use AI to improve their fraud detection capabilities, fraudsters are similarly using these advanced technologies to perpetrate crime – and they’re winning.
The rise of AI-driven cyberattacks and fraud schemes is alarming, with malicious actors using AI technologies to create sophisticated phishing scams, push through fraudulent transactions, and mimic user behaviors — all of which pose unprecedented challenges for banks and threaten traditional security measures. The impact is significant and profound with estimates of global fraud losses topping more than $500 billion. As a result, banks are investing heavily in AI-fueled fraud detection systems that learn and adapt in real time.
However, simply implementing these technologies isn't enough. A continual evolution of AI-powered solutions to detect and combat fraud is required. Additionally, banks must also do more to foster a culture of heightened awareness among employees and emphasize unwavering vigilance in spotting suspicious activity. Banks cannot stop internal efforts across the organization if they hope to truly tamp down and reduce fraud impacts. They must also do more to continually educate and support their customers as fraud awareness and identification become a job for everyone.
Trend 3: Risky business: Vigilance in risk management
In 2025, the banking landscape will remain fraught with risks, escalating the need to transform risk management processes and technologies. The traditional risk areas — financial and operational — will continue to expand in scope as a result of numerous shifting dynamics.
In addition to these traditional risk focus areas, risk managers will contend with evolving and emerging risks, including the adoption of technologies like AI, increasing threats like climate change, and emerging or unknown threats, such as global pandemics and other Black Swan events. These expanding and emerging threats are forcing banks to advance their risk modeling and scenario analysis capabilities to ensure they’re planning appropriately to promptly manage and mitigate any potential problems.
Regulatory pressure also will continue to intensify as regulatory authorities become more attuned to the rapidly changing financial environment and technological innovations and work to solidify regulation that protects economies, markets, and consumers.
Driving toward the future of banking
As we head into 2025, the global banking sector stands at a crossroads and requires a decisive pivot. While banking continues to maintain resilience in the face of near-constant volatility and change, there is a future state, creeping ever closer, where the traditional banking value chain dissolves. Competition, emerging technologies, and rising consumer expectations are driving industry-wide efforts toward significant transformation.
Which banks will come out on top? The ones that evolve their operations, put the customer at the heart of every decision, and invest in AI-fueled solutions that provide strategic growth opportunities to deliver the future of banking.
