Fintech in 2025, a few obvious bets

As technology evolves and consumer preferences shift, the fintech industry is continually adapting to stay ahead. Looking forward to 2025, several key trends are expected to define the landscape. As usual, a lot of super interesting stuff (for me at least!), but here are a few obvious bets of mine.

Refining AI

As in many sectors, AI is poised to play a significant role in 2025, with a focus on fairness, transparency, and security. It goes without saying that the financial services industry is expected to explore innovative applications of AI, supported by a wave of regulatory reforms, such as those seen with the EU AI Act. By 2025, AI is predicted to advance beyond text processing to incorporate multimodal capabilities, integrating images, videos, sounds, and even robotics for physical interactions. This evolution will enable AI to perform actions on behalf of users, simplifying complex tasks and transforming human-computer interactions.

The increasing emphasis on trust and the role of new global regulations will shape how AI develops in financial contexts. Regulators are anticipated to intensify their scrutiny, focusing on fairness and security challenges posed by AI in areas such as customer onboarding and AI-driven customer service. As a result, firms will likely be required to implement robust control frameworks and risk assessments to address emerging threats and regulatory demands. IMO, looking at new entrants in this RegTech space makes a lot of sense.

Blockchain and Stablecoins

Everyone knows that I'm a huge fan of blockchain, and all the more so stablecoins. The adoption of blockchain technology continued to gain traction in 2024, setting the stage for further innovations in 2025. Initiatives leveraging blockchain are unlocking numerous use cases across adjacent industries, including training large language models like ChatGPT to boost efficiency. Stablecoins have been emerging as a transformative tool for cross-border transactions, offering advantages such as reduced volatility, faster transactions, and improved liquidity.

The growing use of stablecoins is expected to reach a tipping point in 2025, redefining how businesses and individuals conduct cross-border payments. However, realizing their full potential in wholesale payments will require infrastructure investments from traditional banks. Without such efforts, other firms may take the lead in driving momentum from retail to wholesale markets. I will keep on navigating this space as I believe we're still so far from where it will be.

ESG Reporting

Environmental, social, and governance (ESG) reporting is becoming increasingly critical in the financial industry, driven by the need for quality data and a growing focus on climate responsibility. The development of consistent and reliable ESG data remains a key challenge for 2025. This is likely to lead to the emergence of specialized platforms aimed at harmonizing data across regions and regulatory frameworks. Again, I will be monitoring new entrants in this space.

European firms are expected to lead the way in addressing complex multi-jurisdictional reporting requirements, leveraging their experience with existing regulations like the EU's Sustainable Finance Disclosure Regulation (SFDR) and the Corporate Sustainability Reporting Directive (CSRD). The expansion of CSRD will require firms, including SMEs, to disclose both financial and non-financial data about their environmental impact. This is likely to drive widespread adoption of integrated carbon tracking solutions within business platforms, enhancing transparency and accountability.

Conclusion

The year 2025 promises significant transformation for the fintech industry, driven by advancements in AI, blockchain, and ESG reporting - amongst many otheres. AI will enhance decision-making and operational efficiency, while blockchain will support innovative cross-border payment solutions. Simultaneously, ESG reporting processes will see greater standardization, with increased regulatory emphasis on data transparency.

Overall, success in 2025 will be defined by the industry's ability to innovate and adapt to technological advancements while navigating an evolving regulatory landscape. I believe that's pretty much what it has always done, anyway.

Happy New Year everyone! Hail to Fintech!