Fintech Power 50: Anticipating 2025 trends

Key trends that shaped fintech in 2024

Our general consensus? As we looked ahead to 2025, we agreed that the finance landscape is now more than ever, poised for some transformative shifts that will redefine how businesses operate and grow.

From the rise of embedded finance to the game-changing potential of AI and sustainability-driven finance practices to the rapid evolution of blockchain technologies, we started by highlighting trends that have already surfaced and will continue to demand further agility and innovation from a competitive fintech market.

Here’s a closer look at the key developments of 2024:

1. Embedded finance and digital transformation

The continued rise of embedded finance has been a standout trend. Companies are increasingly integrating financial services into software platforms, creating more seamless and interconnected financial experiences for businesses and consumers.

2. Artificial intelligence: A game-changing force

AI has moved from a buzzword to a strategic imperative. From fraud detection to customer service, AI is reshaping how fintech companies operate. Notably, companies like Klarna have already begun leveraging AI to optimise operations, with some even replacing traditional customer support functions.

3. Sustainable finance

Environmental, Social, and Governance (ESG) considerations are gaining prominence. More companies are pursuing B Corp certification, focusing on carbon footprint calculation and offsetting, signalling a shift towards more responsible business practices.

4. Blockchain and tokenisation

The institutional adoption of blockchain technologies continues to grow. With Bitcoin ETFs and increasing interest in stable coins and Central Bank Digital Currencies (CBDCs), the blockchain ecosystem is evolving rapidly.

Challenges and lessons learned

As any scaleup professional knows, innovation is not without challenges. Here are the three challenges we agreed were the biggest in 2024:

1. Regulatory readiness
The past year highlighted the importance of regulatory compliance. Companies like Payhawk obtained digital money institution (DMI) licences, underscoring the need for robust regulatory frameworks.

2. Focus on profitability
After years of growth-at-all-costs strategies, fintechs are increasingly prioritising sustainable business models. Companies are balancing innovation with financial prudence, demonstrating more mature approaches to scaling.

3. Partnerships and collaboration
Collaboration emerged as a key theme. Strategic partnerships, such as Payhawk's collaborations with Visa and JP Morgan, demonstrate the power of ecosystem thinking in fintech.

Looking ahead: Predictions for 2025

As 2025 approaches, the finance industry is set to undergo transformative changes driven by cutting-edge technology and evolving consumer demands.

From the rapid adoption of AI-driven innovations to the continued rise of embedded finance and real-time personalised services, the future promises a smarter, more connected financial ecosystem. Here’s what we predict will define the next chapter in financial services.

1. AI-Driven innovation
Expect more companies to develop AI-specific strategies, with AI-powered products launching across wealth tech, education tech, and financial services. Machine learning algorithms will become increasingly sophisticated, enabling more nuanced decision-making and predictive capabilities across industries.

But of course, there will be challenges. And Governments worldwide are already preparing more comprehensive legislative frameworks to govern AI and data usage in financial services. These emerging regulations will likely require financial institutions to demonstrate not just compliance, but also ethical AI deployment, with transparent algorithms and robust data protection mechanisms.

2. Digital banking and embedded finance
The trend towards digital banking will continue, with predictions suggesting over 50% of global consumers will engage with digital banking platforms. Financial institutions will increasingly integrate banking services directly into non-financial apps and platforms, creating seamless, contextual financial experiences for users.

The case for sophisticated fraud prevention: As financial technologies become more complex, fraudsters are developing increasingly advanced techniques to exploit system vulnerabilities. Banks and fintech companies will need to invest heavily in machine learning and behavioral analytics to create predictive, real-time fraud detection mechanisms that can adapt faster than criminal strategies.

3. Real-time, personalised services
The future of financial services lies in real-time, personalised experiences. Consumers will demand more tailored, seamless financial interactions. Advanced data analytics and AI will enable hyper-personalised financial products, with recommendations and services dynamically adjusted to individual user behaviours, preferences, and life stages.

Ensuring fintech's forward momentum

Our final discussion point? Uncovering how our industry can continue to thrive while still staying aligned with consumer needs and regulatory landscapes. From fostering ecosystem collaboration to prioritising financial inclusion and trust, we explored how fintech can maintain its forward momentum.

Here’s a quick look at the strategies we discussed for driving sustainable growth and innovation in the coming year:

• Maintaining collaborative ecosystem approaches: Successful fintech companies are recognising the power of cross-industry collaboration and open innovation platforms. By creating interconnected networks that allow knowledge sharing and joint problem-solving, these organisations can accelerate technological advancements and create more comprehensive financial solutions.
• Continuous dialogue with regulators: Proactive engagement with regulatory bodies will become crucial in shaping future financial technology landscapes. By maintaining transparent, constructive communications, fintech companies can help develop regulations that protect consumers while still allowing room for technological innovation.
• Investing in emerging technologies: Strategic investments in cutting-edge technologies like quantum computing, advanced machine learning, and decentralised finance will be critical for maintaining competitive advantage. These investments will not just improve existing services but potentially create entirely new financial product categories.
• Focusing on financial inclusion: Fintech has a unique opportunity to address global economic disparities by developing technologies that provide financial services to underbanked and unbanked populations. This involves creating user-friendly, low-cost solutions that can be accessed through mobile technologies in regions with limited traditional banking infrastructure.
• Prioritising consumer trust and transparency: As financial technologies become more sophisticated, maintaining clear, honest communication with consumers will be paramount in building and preserving trust. Companies will need to develop robust mechanisms for explaining complex financial technologies in accessible language and demonstrating a genuine commitment to user privacy and data protection.

Conclusion

As we head into 2025, the fintech industry is more dynamic and full of potential than ever. By harnessing new technologies, staying ahead of regulatory demands, and focusing on solving real-world user challenges, we can keep driving meaningful financial change.

At Payhawk, we take innovation very seriously. We constantly improve and grow the product for our customers in over 32+ countries; read more about our new features and benefits.

Disclaimer: Insights derived from the Power 50 webinar featuring Pedro Batista (Payhawk), Kamran Hedjri (PXP Financial), and Jeff Parker (Paymentology).