This year isn’t just another year for banking — it’s quite possibly the gateway to a transformative era. With a new administration settling in and a change in leadership at regulatory bodies, the landscape is shifting in ways that make crystal-ball predictions a risky game. Yet several things are clear: Artificial intelligence is taking center stage; open banking is gaining traction; and banking technologies are stretching the boundaries of innovation.
But let’s be clear: Change in 2025 is not just about the technology. It’s about how banks harness these tools to drive value, build trust and stay ahead in a hyper-competitive landscape.
To make sense of it all, a panel of ABA’s experts has shared their thoughts on the trends and technologies defining the year ahead. Their perspectives cut through the noise, offering clarity on the opportunities and challenges that matter most.
So, let’s dive into banking innovation with a lens that’s as forward-looking as it is grounded.
Innovation: Driving the future
Brooke Ybarra, SVP, Innovation and Strategy
As banks think about innovation in 2025, there is tremendous opportunity. But, importantly, there is no one-size-fits-all approach. Individual banks must consider their own strategies, product strengths, customer needs and local markets. So, while themes including agentic AI, generative AI, quantum computing, personalization and super apps may be top-of-mind innovation buzzwords, these technologies may not be on the roadmap for all banks. The fundamentals remain crucial, and banks should prioritize building robust data strategies and modernizing tech infrastructure to ensure secure, nimble and enduring platforms.
The future of banking is bright and full of possibilities. By staying customer-centric and strategically investing in innovation, banks can create a more dynamic, responsive and inclusive financial ecosystem. The journey ahead is inspiring, with endless opportunities to meet customers’ changing expectations and operate efficiently.
Innovating with ownership and purpose
Samah Chowdhury, Senior Director, Innovation Strategy
In 2025, product design isn’t just a strategy. It’s the edge.
A trend that is decisive and evolving in a clear direction is the shift toward modular products — individual pieces of technology or functionality — that can be integrated, swapped or upgraded independently. Too often, banks rely on digital and core providers to shape foundational products like deposits and lending — leaving little room for differentiation in a crowded market.
The future lies in reclaiming ownership — using fintech firms as enablers and combining in-house expertise with modular technologies and consumer-conscious design.
Why now? Generative AI is unlocking hyper-personalized solutions. While much of gen AI’s impact remains behind the scenes, it’s creating new ways to deliver tailored experiences at scale.
Payments 2025: Faster, faster, faster, prepare, prepare, prepare
Stephen Kenneally, SVP, Payments
More payments will be made faster in 2025 than ever before through FedNow and the TCH Real Time Payment network, but the old rails aren’t giving up the chase.
Late last year, the Federal Reserve Board of Governors proposed a change to Fedwire and the National Settlement System (NSS) to allow operations seven days a week including weekends and holidays as soon as 2027. Banks could voluntarily participate to send and receive wires on weekends. Plus, with NSS open on the weekends, that would enable ACH operations 24 hours a day, seven days a week, 365 days a year.
Banks need to track new payments innovations, but they can’t ignore legacy systems reinventing themselves and the downstream effect those changes can have on their institution.
The AI fraud storm
Paul Benda, EVP, Risk, Fraud and Cybersecurity
This is likely the year that AI-enabled fraud goes mainstream. The risk is three-fold. Use of AI tools to break into banking systems, ever improving AI deepfakes to scam customers, and the potential to destabilize the financial system by impersonating bank CEOs and manufacturing fake crises.
The common thread is how to tell what and who is real. For years, banks have practiced out-of-band confirmation on transactions, but now it needs to become integral to every transaction. Verifying a customer not just with their voice or knowledge but also by the device they’re using or by giving grandma a password the grandkids will use to verify it’s really them on the phone.
By leveraging best practices and new technologies, banks and their customers will be able to weather the coming “AI fraud storm.”
The quantum computing conundrum
John Carlson, SVP, Cybersecurity Regulation and Resilience
Quantum computers could break widely used encryption within the next five to 10 years, posing a significant challenge for banks and other organizations that rely on encryption to secure sensitive data. Cyber threat adversaries are harvesting encrypted data now with the hopes of decrypting it later. Swapping out encryption algorithms embedded in software and hardware takes a long time. In September 2024, the U.S. Treasury and Group of 7 released a statement warning of the risks and the need to take action. In July 2024, the National Institute of Standards and Technology (NIST) released new quantum-resistant encryption standards.
Banks and technology service providers can take several steps now to mitigate risks. These include using the NIST-approved encryption algorithms; monitoring CISA efforts to develop risk mitigation plans; using FS-ISAC’s tips on “crypto agility”; engaging information security, vendor management and business continuity professionals to ensure that these risks are being addressed and coordinated internally; and being prepared to answer questions from financial regulators about plans for mitigating the risk.
Emerging regulatory horizon
Ryan T. Miller, VP and Senior Counsel, Innovation Policy
While the political environment is ever fluid, on a large enough scale we can observe the yonder horizon.
We can expect digital assets to play a major role in the early days of 2025. This could have implications for banks, such as whether to onboard crypto firms as customers and permissibility to use blockchain technology. Banks should conduct risk assessments on these questions.
Another issue that will be in focus are fintech firms. It is likely the new administration will create a more favorable environment for many fintech companies. For banks, that means more competition as well as more opportunities to partner. There doubtless will be many twists and turns. Above all, banks must follow their own guiding star even if they must sometimes adjust their route due to the regulatory landscape.
More direct models, less middleware
Krista Shonk, SVP & Senior Counsel, Regulatory Compliance and Policy
How will regulators’ third-party risk management expectations evolve under the Trump Administration in 2025? Here’s one prediction: Regulatory scrutiny of third-party risk management practices is unlikely to change with the political winds that accompany a new administration, at least in the short term. As a result, more banks may pursue a partnership model where the bank — not the fintech — has the principal relationship with the end user.
In this type of arrangement, the fintech’s application serves as the end user’s point of entry into the bank and is similar to a virtual branch or a marketing engine that supports the bank’s customer acquisition. Increasingly, banks that use this model take on the compliance-related functions associated with fintech relationships instead of outsourcing them to the fintech or a middleware provider. Banks cite multiple reasons for this approach, including improving customer service and reducing the risk that the bank will be charged with a regulatory violation due to noncompliance by the fintech.
In sum, fewer layers and clearer accountability will trend in bank-fintech partnerships in 2025.
Core decisions, big impacts
Deborah Whiteside, SVP, Vendor Evaluation
All innovation roads ultimately lead to a bank’s core platform. And core platform management is more complex than ever before.
Managing your core platform, and ensuring that it supports your business, operational and innovation goals, is key to a bank’s success. To support their strategies, and their growth, banks are engaging with and managing more technology partners than ever before to augment and extend their cores’ capabilities.
In addition, many major core providers are mounting sweeping core “modernization” efforts over the next few years, which will lead to multiple waves of foundational change rippling through the industry.
To remain competitive, bank leaders should evaluate if and how their core supports their vision for the future and ensure that they understand the full capabilities of their core provider and their provider’s plans for the future.
The AI tipping point
Ryan Jackson. VP, Innovation Strategy
What’s top of mind for 2025?
Ask me this two months ago, and I would’ve done everything possible to avoid this topic, but alas, I have to go with artificial intelligence as it is set to significantly impact the banking sector in 2025. With the recent administration change and appointments of leaders with backgrounds in technology and venture capital, AI’s role in banking will grow substantially in 2025.
Two key trends to watch are: Banks that have been hesitant to adopt AI due to regulatory concerns are likely to start experimenting with AI-integrated technologies; and banks that have already implemented AI will push further into “production usage” with particular focus on measuring and reporting the return on investment from these technologies. These developments will drive innovation and efficiency in the banking industry, making 2025 a pivotal year for AI in finance.
Closing thoughts
The perspectives shared here are not just ideas — they’re a challenge. A challenge to think bigger, move smarter and lead with intent. The path forward might be intricate, but it’s rich with opportunity for those ready to act.
