In 2025, the fintech industry will be shaped by heightened regulatory scrutiny, the rise of embedded finance and widespread adoption of artificial intelligence (AI). These trends present both challenges and opportunities for industry stakeholders, experts say.

These predictions, shared by industry leaders from organizations such as Microsoft, EY, and Backbase, are featured in Mambu’s annual partner predictions report. The report compiles key forecasts on the trends expected to shape the industry in the year ahead and beyond, offering strategic guidance to stay ahead of the curve.

Regulation intensifies

In 2025, concerns about risk and regulation will grow as AI-driven financial advice and embedded finance become global. Against this backdrop, financial institutions will need to adopt robust governance to protect customers, and ensure compliance.

Alexis Valdez Gonzalez, Manager, Risk and Compliance at Mambu, highlighted the urgency to implement platforms designed with security and compliance at their core, especially with the EU’s AI Act and Digital Operational Resilience Act on the horizon.

Bauke Sprenger, Partner, Financial Services Consulting, PwC Netherlands, emphasized the EU’s Financial Data Access (FIDA) regulation as a transformative force for fintech. Unlike previous regulations focused solely on payment data, FIDA extends to customer information across loans, mortgages, insurance, and pensions, accelerating the shift toward open finance.

This regulation is expected to reshape financial experiences by intensifying competition for relationships and introducing new business models.

Embedded finance

In 2025, embedded finance will continue to gain momentum, transforming the industry by enabling non-bank platforms to integrate financial services seamlessly.

Tyler Pichach, Head of Banking Strategy, Worldwide Financial Services, Microsoft, expects significant advancements in the integration of financial services over the next two to three years, leading  to enhanced customer engagement and new revenue streams opening up for businesses. This trend may be accelerated by the advancement of generative AI (genAI), where conversational commerce may be embedded across customers’ daily lives and work activities.

Marcin Glogowski, SVP, Managing Director Europe and CEO UK, Marqeta, noted the steady increase in non-financial providers offering financial services. He expects this trend to accelerate over the next year as consumers increasingly demand hyper-personalized financial products from the brands they love.

With embedded finance continuing to grow at double-digit rates, Irena Pauls, Senior Manager, Strategic Projects Mambu, highlighted the importance of cloud-based platforms. Businesses must adopt these technologies to gain the agility and scalability needed for long-term success, she said.

Alternative lending

The third trend highlighted in the report is alternative lending. Sayantan Choudhury, Partner, FS Technology Consulting at EY Consulting Vietnam Joint Stock Company, predicts a major transformation in the lending landscape across emerging markets, especially those within the Association of Southeast Asian Nations (ASEAN).

In particular, Vietnam’s digital lending landscape is poised to be the next frontier for fintech-led growth, he said, driven by recent developments driven by the State Bank of Vietnam (SBV).

This will have a significant impact on small and medium-sized enterprises (SMEs), which have long faced challenges in accessing credit. On the consumer side, new digital lending models are expected to rise and gain traction, driven by Vietnam’s young, tech-savvy population.

With alternative lending on the rise, Perminder Grewal, Director, Solutions Engineering, Mambu, advises business leaders to adopt robust core banking platforms to stay competitive and attract borrowers. Mambu’s platform, for example, enables straight through processing access to data, and pay-as-you-grow pricing. This has helped lenders grow loan portfolios by 13 times and active customers by 19 times.

Increased adoption of AI

In 2025, the role of AI in financial services will deepen, driven by machine learning (ML) advancements and the increasing availability of financial data.

Anil Saboo, Director, Industry ISV Partnerships, Google Cloud, predicts a surge in personalized financial services, with AI-driven robo-advisors providing tailored investment advice, and AI-powered chatbots offering instant customer support and personalized financial guidance.

Sahoo also predicts improved fraud detection as AI algorithms analyze real-time transaction data to mitigate fraud. He also forecasts increased deployment of AI for risk management, especially for use cases like lending.

AI-powered solutions are set to transform customer experiences, streamline operations, and reshape finance. By 2033, the global AI in fintech market size is projected to be worth around US$76.2 billion, represents a 20.5% annual growth rate from US$11.8 billion in 2023, according to a market research.

Real-time payments and blockchain

Finally, cross-border payments are expected to improve in 2025, driven by advancements in real-time payment systems and blockchain technology.

Pramod Kamath, Senior Director, Product Management, Publicis Sapient, expects to see increased adoption of advanced payment infrastructure in the coming year. In particular, the introduction of ISO 20022 promises an inflection point for backend efficiency. This new standard will deliver data-rich exchanges, enhance operational efficiency and streamline interoperability between banks.

Central bank digital currencies (CBDCs) are also gaining traction. As of September 2024, three central banks had launched a live retail CBDC for general use by households and businesses, according to Bank for International Settlements (BIS). These jurisdictions are the Bahamas, Jamaica and Nigeria.

Currently, consumers and businesses in about 120 jurisdictions can make and/or receive fast payments through a domestic or regional fast payment systems.

While some of these systems are still at an early stage of development, others have demonstrated impressive uptake after their launch. In Brazil, Pix onboarded more than 150 million individual and business users in its first year of operation and is now used by over 90% of adults in the country. PromptPay in Thailand registered around 63 million end users in early 2022, representing more than 85% of the population. Finally, in India, nearly 600 banks were live on the United Payments Interface (UPI) in March 2024, with more than 13 billion transactions carried out using that infrastructure in a peak month.

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