As we step into 2025, the question remains, what’s next for the Banking and Financial Services (BFS) sector? There are shoots of growth and innovation, however the sector remains cautiously optimistic, as our team have discussed in this latest blog.
As the banking and financial services (BFS) sector moves into 2025, it does so with a mixture of excitement and trepidation…
Insights from Everest Group’s survey of over 220 global enterprises, has revealed that opportunities for growth and budget expansions are there, yet the challenges of 2024—regulatory pressures, economic uncertainties, and the demand for greater operational agility—remains persistent.
To navigate this complex landscape, firms in BFS sector are prioritizing business resiliency, driving investments in modernization, cybersecurity, artificial intelligence (AI), and Financial Crime and Compliance (FCC) initiatives.
The future of BFS products and services: connected, intelligent, and real-time
The BFS sector is evolving rapidly, and the future of its products and services will revolve around three key attributes: connectedness, intelligence, and real-time capabilities.
Artificial intelligence and machine learning are at the heart of this transformation, enabling personalized customer experiences, predictive analytics, and automated decision-making.
Corporate banking clients, for instance, are demanding tighter integration of banking products with Enterprise Resource Planning (ERP), sales, and commerce platforms to streamline operations and enhance efficiency.
Similarly, payments and lending firms are prioritizing real-time credit solutions at the point of sale, meeting customer expectations for immediate financial services. Banks such as HSBC are integrating AI with Customer Experience Management (CXM) and Customer Relationship Management (CRM) tools to offer tailored financial solutions.
Furthermore, payments and lending platforms are prioritizing real-time credit solutions at the point of sale, a shift reflected in the growth of Buy-Now-Pay-Later (BNPL) models.
These advancements not only improve customer satisfaction but also position BFS organizations in order to stay competitive in a digital-first landscape.
Modernization and cybersecurity take center stage
The rising costs of mainframe software and hardware, coupled with the potential of Generative AI (gen AI) to simplify modernization efforts, have reignited mainframe transformation as a priority for Chief Information Officers (CIOs). Core banking modernization projects, once deprioritized, are now being revisited as their critical role in ensuring business continuity becomes increasingly evident.
Cybersecurity, meanwhile, has emerged as the fastest-growing segment in BFS Information Technology (IT) infrastructure services, second only to cloud transformation. With the sophistication of cyber threats on the rise, firms are ramping up investments in advanced technologies and frameworks to protect sensitive data and safeguard operations.
Recently, Capital One and USAA have invested in Tidal Cyber to further enhance its enterprise Thread-informed Defense platform. This dual focus on modernization and cybersecurity underscores the sector’s commitment to addressing both technological and security challenges head-on.
Mid-sized BFSI enterprises embrace offshoring
Mid-sized BFSI enterprises are accelerating their offshoring strategies to reduce costs, access specialized talent, and enhance operational efficiency. Offshoring critical processes such as risk management, compliance monitoring, data analytics, and financial reporting allows these firms to focus on strategic growth initiatives while achieving scalability and agility.
Mid-market firms have similar goals to large enterprises. However, they depend on providers for access to skilled talent, unlike larger enterprises that often manage these resources in-house.
This trend reflects a strategic shift, as mid-sized firms look to stay competitive in a dynamic market by leveraging global talent and optimizing operations through offshoring.
Generative AI: from concept to execution
Gen AI is transitioning from a conceptual idea to practical execution. AI agents are now learning and executing business tasks, while collaborating with other agents to automate complex workflows.
BFSI firms are channeling investments in gen AI to enhance both customer and employee experiences, while mid- and back-office processes remain largely untapped opportunities for service providers.
Gen AI’s potential extends far beyond automation. It is now also being used to drive significant operational improvements across BFS organizations:
- Asset servicing: Streamlining workflows for securities processing and other financial assets
- Transfer agency: Enhancing accuracy and efficiency in managing shareholder records
As adoption matures, service providers are poised to unlock efficiencies in these traditionally in-house processes, gen AI is helping BFS firms reimagine their operational models and focus on higher-value activities. Among banks, JPMC and Capital One are one of the fastest investors in both AI tech and talent. Leadership in JPMC also expects to soon realize benefits up to $ 2 billion on AI related investments.
The rise of gen AI also coincides with a surge in demand for Business Process Outsourcing (BPO) in the BFS sector. Enterprises are increasingly outsourcing traditionally in-house tasks, in order to unlock new efficiencies and streamline operations, signaling a broader shift in how businesses manage their processes.
Advanced technologies to meet regulatory demands
With regulatory scrutiny intensifying, banks are leveraging advanced technologies like AI and machine learning, to strengthen fraud detection, optimize compliance workflows, and enhance real-time monitoring capabilities.
Quantum computing, though still in its early stages, is being explored for its potential to revolutionize financial crime prevention. By enabling more precise and efficient detection and mitigation of complex fraudulent activities, quantum computing could transform how financial institutions approach compliance and risk management.
Currently banks like JP Morgan and Chase, the Bank of Japan, HSBC and BNP Paribas. have already invested in firms developing quantum computing capabilities.
Financial crime and compliance services: the power of integration
The convergence of Operations, Technology, and Advisory is transforming the financial crime and compliance services business. By integrating robust operational frameworks, advanced technologies such as AI and blockchain, and strategic advisory expertise, BFSI firms can deliver comprehensive solutions to combat financial crime.
This synergy enhances risk detection and mitigation while ensuring compliance with increasingly complex regulatory requirements. It also positions service providers as critical partners in fostering trust, innovation, and resilience within the financial ecosystem.
For example, AI-driven solutions are being used to analyze massive datasets in real time, identifying anomalies that could signal fraudulent activity. Blockchain technology is also being adopted to create secure, immutable transaction records, further strengthening compliance measures.
The path forward for BFS in 2025
As the BFS sector continues its journey into 2025, the focus remains on balancing innovation with resilience. Modernization, cybersecurity, gen AI, and financial crime compliance will be critical investment areas, helping organizations navigate challenges and seize opportunities.
By embracing advanced technologies and fostering strategic collaborations, BFS organizations can future proof their operations, enhance customer experiences, and position themselves for sustained growth in an increasingly competitive landscape.
The road ahead is filled with both challenges and opportunities, but one thing is certain: the BFS sector is poised to thrive through connected, intelligent, and real-time solutions that redefine the financial ecosystem.
If you found this blog interesting, check out our blog focusing on Agentic Artificial Intelligence (AI): The Next Growth Frontier – Can It Drive Business Success For Banking & Financial Services (BFS) Enterprises? | Blog – Everest Group, which delves deeper into another topic relating to the BFSI service line.
To discuss these 2025 predictions and other insights from our research on current and future BFSI trends and evolutions, please reach out to Ronak Doshi ([email protected]), Pranati Dave ([email protected]), Suman Upardrasta ([email protected]) and Srawesh Subba ([email protected])
