In the last two years, we've seen very generous APYs and little-to-no requirements to earn those high rates - but what goes up must come down. In 2025, I'm expecting banks to lower their rates, and for high-yield savings accounts to start having more requirements, such as direct deposit or balance requirements to get the bank's best rate.
Banking is going to get much more intangled with people's existing digital lives, I think. Rather than have users move from one app to another for different financial services, we will see banking integrated with social media, e-commerce sites, even smart home products. For example, an online buyer could request instant credit options from their bank while shopping without going through a separate app. I also anticipate is the evolution of decentralized finance (DeFi) into more mainstream banking practices. Though it began as a niche market, its technology (chained payments, for example) promises to transform the way that banks function. In 2025, I believe banks will also start implementing elements of DeFi for faster, more secure payments and decentralized investment services that will give customers more control over their assets. And of course, I look forward to a more aggressive drive toward financial inclusion. As mobile-first apps will open their doors more widely all around the world, banks will bring their services to those with limited access to bank accounts. With simpler products for such consumers, such as micro-loans or low-cost digital savings accounts, banks could give millions of people financial security.
Adoption of Embedded Banking at a Large Scale: Banking will progressively get embedded within other services such as e-commerce and ride-sharing. This allows a user to perform actions such as taking loans or making payments through the preferred platform enhancing the experience and convenience for the consumer. Growth of Digital Banks: Cost effective and effortlessly operable with an appealing screen interface, digital banks will capture a vast market share in the younger demographics. These charge reduced rates, have more practical mobile applications and provide their services instantly, making it difficult for ordinary banks to compete in technology and consumer services. AI Powered Contextualization: Artificial Intelligence will provide advanced solutions like offering customized financial advice, setting up automatic savings and granting loans instantaneously. This enhances customer satisfaction since it offers advanced solutions to users based on their behavior and their financial practices. More Emphasis on ESG Banking Practices: One of the major concepts in the banking products in the future will be Environmental, Social, and Governance (ESG) principles. This will include offering green loans, sustainability-linked financing and banks pursuing net-zero portfolios practices which will appeal to eco-friendly users and companies. Improved Biometric Security: Passwords and PIN numbers will be replaced by biometric identification like voice identification, fingerprint scanning and facial ID in order to strengthen security in online banking.
I have seen a significant shift towards digital banking services in the past few years. With the rise of technology and changing consumer behaviors, I expect this trend to continue and even accelerate in 2025. The convenience and accessibility of digital banking services are undeniable. From online account opening to mobile banking apps, customers can easily manage their finances from anywhere at any time. As a result, traditional bank branches may become less relevant in the future as more people turn to digital solutions. For example, I recently had a client who was able to secure a mortgage entirely through an online platform without ever stepping foot into a physical bank branch. This not only saved them time and effort but also provided a seamless experience.
2025 will be the year decentralized finance (DeFi) starts reshaping mainstream banking. Much like how PinProsPlus innovates by adapting to client demands, traditional banks will need to pivot, offering hybrid models that combine centralized services with decentralized options. My fintech experience taught me that customers value autonomy whether it's managing assets or crafting something unique. For banks, the actionable step is embracing blockchain partnerships and simplifying access to DeFi tools. Staying relevant will mean empowering customers with control and transparency.
In the year 2025, I anticipate dramatic growth in offered embedded banking. Because consumers crave greater simplicity in their interactions, it is predicted that banks will expand their presence within a variety of third-party solutions such as e-commerce or mobile applications and provide users with loans, payment, and other financial products without the need to switch to another platform. Besides, personalized baking with AI will become widespread as data analysis will be employed to identify users and provide them with relevant recommendations and other products on the go. Finally, decentralized finance (DeFi) has great potential to develop further and that will lead to traditional banks resourcing to blockchain for enhanced services especially for smooth cross border transactions.
As a banking expert, I think digital banking will keep growing in 2025. With better AI and smart technology, banks will be able to offer services that feel more personal and helpful to customers. I also expect open banking to expand, giving people more control over their money and making it easier to use different financial tools. Blockchain might become more common, too, helping to make transactions safer, while cryptocurrencies could become a bigger part of how we handle money. Another big change will be the focus on green banking. More banks will support projects that help the environment and follow sustainable practices. At the same time, cybersecurity will be super important in protecting everyone's information as banking becomes even more digital.
The banking industry in 2025 I expect to face a low-growth, lower-rate environment, prompting banks to reinforce their foundations for sustainable growth with ingenuity and discipline. I highlight that artificial intelligence is projected to significantly boost the banking sector's profits by $170 billion over the next five years, with profits rising to nearly $1,992 billion by 2028. Additionally, the adoption of open banking and hyper-personalized banking is expected to deliver unique customer experiences, while blockchain enhances the integrity of financial systems. These trends suggest that banks will need to adapt to a changing environment by embracing new technologies and focusing on customer-centric strategies.
The arrival of Trump's second term in the White House is likely to herald an era of deregulation throughout the financial technology sector that can present myriad opportunities and challenges for key industry players. Deregulation could pave the way for a rapid rise in the adoption of generative AI technology as large-language models deal with increasingly complex customer queries with ease, as well as faster adoption of transformative blockchain infrastructures that could deliver more open banking services and security across the board. However, rapid deregulation could also lead to less data protection and weaker vetting processes for fraudulent fintech platforms over the year ahead. It's for this reason that the banking sector is set to see a mass push to adopt AI cybersecurity measures as a means of keeping customers, and their data, safe as the industry begins a wave of rapid expansion. Regulators take an active approach to a wave of Big Tech and other non-traditional entrants to ensure a safe and strong financial system. Government antitrust actions push technology players out of the industry and increase barriers to entry; competition comes solely from firms that hold full financial services licences. This degree of regulation opens the door for banks to rebuild trust and reclaim their role as the central provider of financial products and services.
With the rise of technology and the internet, it is no surprise that there will be an increased demand for digital banking services in 2025. As a real estate agent, I have seen first-hand how convenient and efficient online banking has become for my clients. From opening new accounts to making payments and managing finances on-the-go, digital banking has simplified many financial processes. In 2025, I expect to see even more advanced digital banking features such as AI-powered chatbots, voice recognition technology, and virtual banking assistants.