Next – Voices from the Future | From Cloud to Cybersecurity: all the trends and technologies shaping 2025

January is the time for projections for the new year. In fact, we've been discussing trends for several weeks now on our editorial hub, Sella Insights (by the way, have you read the longform piece on 2025 trends?). Today, in this first installment of our Next column, we aim to clarify some concepts by examining how these trends are set to take hold. From artificial intelligence to an increasingly solid focus on embedded finance, 2024 was a pivotal year for the banking sector. In a process of continuous transformation, driven by technological innovations, rising customer expectations, and growing regulatory complexity, the trends of 2025 will enable the industry to expand its customer focus, ensuring an increasingly competitive offering alongside the market's major players.

In fact, while the banking sector was considered relatively stable and predictable until just a few years ago, it now faces an extremely dynamic landscape characterized by:

•    Increasing competition from fintech and big tech, along with a growing focus on innovation across all traditional banking institutions;
•    Rising regulation, aimed at governing emerging technologies and ensuring maximum support for end customers;
•    Embedded finance, poised to redefine the role of traditional banks, transforming them from direct service providers for end customers into access points and distributors of their services on third-party platforms;
•    Evolving consumer expectations, with a growing emphasis on personalized and digital services.

These are the four fundamental areas on which traditional banks must focus, aiming to understand and address them to build the resilience and capabilities needed to thrive in an increasingly dynamic environment.

Analyzing the current landscape, here are the five scenarios for the banking sector.

First: front-end revolution
Embedded finance will play a pivotal role in the future of financial services. Not just traditional banks, but also tech and entertainment companies will integrate financial services into their platforms, offering hyper-personalized experiences. A prime example is Rappi, which began as a food delivery service and has evolved into an all-in-one platform and super app, driving digitalization for businesses in Latin America. In this context, traditional banks are transforming into infrastructure providers, often losing direct contact with customers.

Second: consolidation
During a profound industry revolution, only a few major banking players and fintech companies will be able to deliver offerings aligned with end-customer demands. The scale and magnitude of required investments will ensure that this is achievable only for a limited number of large players. As a result, end customers will gravitate toward the top market players, seeking more personalized and cost-effective services.

Third: fragmentation
The heightened focus on increasingly personalized products and services will drive customers to seek out the best-in-class offerings, even from niche and highly specialized providers. In a growing technological landscape, the size or market dominance of a player matters less than the quality and value of their offerings for the end customer. Innovation, therefore, becomes a cornerstone for achieving the right market positioning in the future.

Fourth: regulation
National, European, and global regulators are increasingly focused on emerging technologies, with the goal of protecting customers while ensuring offerings remain secure and within established frameworks. In this context, traditional banks may find their central role restored, backed by a solid regulatory structure that gives them a competitive edge in providing secure and compliant services.

Fifth: rise of Crypto Assets and CBDCs
The growing presence of crypto assets in banking portfolios and the adoption of CBDCs (Central Bank Digital Currencies) aim to revolutionize the sector by introducing new models of risk and portfolio management. This shift also ensures renewed attention to the relationships between central banks and commercial banks.

According to estimates, digital banking transactions will reach $1 trillion by 2025. In this context, the key technologies driving the sector include:

•    Digital Banking: mobile apps and online portals becoming increasingly sophisticated;
•    Hyperautomation: advanced automation combining RPA with AI to optimize complex processes;
•    Cloud computing: scalable solutions that reduce costs and enhance agility;
•    Blockchain: applications in cross-border payments and identity verification;
•    AI and machine learning: chatbots and predictive analytics to improve customer experience;
•    Advanced Cybersecurity: biometric authentication systems and fraud prevention technologies.

The selection and implementation of appropriate technologies represent a crucial challenge for banks. The main difficulties include:

•    Complexity: adapting to an ever-evolving technological landscape;
•    Cost efficiency: evaluating the cost-benefit ratio of new technologies;
•    Integration: ensuring compatibility between new systems and legacy infrastructures;
•    Security: protecting sensitive data from increasingly sophisticated cyber threats;
•    Compliance: adhering to regulations such as GDPR and KYC.

According to a survey conducted by Accenture, 63% of major banks are transferring their core systems to the cloud or preparing to do so. Additionally, 70% of bank executives consider cybersecurity a top priority.

Thus, 2025 is shaping up to be a pivotal year for the banking sector, with a profound transformation underway, driven by both technology and changing customer behaviors. Banks that can embrace change, adopt innovative technologies, and proactively respond to customer needs will be the ones to thrive. The key to success lies in balancing innovation, operational efficiency, and trust-building.