“Backbase Report: The Future of Banking in 2025 – Six Key Market Trends to Watch”
The future of banking is rapidly evolving, with technological advancements and market trends shaping the industry in unprecedented ways. Backbase, a leading digital banking platform provider, has recently released a report outlining six significant trends predicted to impact the banking sector by 2025.
One of the key trends highlighted in the report is the potential for traditional banks to lose up to 30% of market share to digital competitors unless they undergo substantial technological transformation. This transformation is expected to be driven by advancements in artificial intelligence, open finance, and other innovative technologies, with a projected USD $1 trillion transformation within the banking sector.
AI-driven recommendation engines are anticipated to play a crucial role in personalizing customer engagements and enhancing the overall banking experience. Banks that embrace these AI-powered solutions could see significant revenue growth, with Glassbox estimating up to USD $300 million in additional revenue per USD $100 billion in assets. However, this growth is contingent upon transitioning from legacy systems to more unified platform models.
Agentic AI, or AI-powered customer service assistants, are also predicted to become increasingly prevalent in the banking industry. These AI agents aim to improve operational efficiency and customer experience by offering proactive engagement without significant human oversight. Thomas Fuss, Chief Technology Officer at Backbase, emphasized the potential of agentic AI in shaping the future of financial services by offering hyper-personalized experiences and optimizing complex workflows.
Open finance, evolving from open banking, is expected to see rapid growth and development, driven by regulatory shifts and rising consumer demands. This trend is seen as inevitable, with global open banking payments predicted to increase significantly by 2027. Mayur Vichare, Director of Strategy and Value Consulting at Backbase, highlighted the empowering nature of open banking and embedded finance in delivering seamless, personalized financial solutions.
Vertical iPaaS solutions, which enable unified API environments, are expected to increase in adoption as banks aim to allocate more of their IT budgets to value-creating activities. These solutions promise improved connectivity between diverse banking systems and applications, ultimately enhancing the overall customer experience.
The report also underscores the intensified disruption from neobanks and fintech companies, prompting established banks to advance their digital capabilities to remain competitive. Jouk Pleiter, Founder and CEO at Backbase, emphasized the importance of banks adapting to these changes, stating that those who act now will be the winners in 2025.
In conclusion, the future of banking is set to be shaped by technological advancements, regulatory shifts, and changing consumer demands. Banks that embrace AI, open finance, and modern tech architecture will be well-positioned to thrive in this rapidly evolving landscape. The time to adapt is now, as the industry undergoes its most significant transformation since the introduction of ATMs.
