Closing the chapter on 2024, the financial services industry stands at quite an exciting time—having gone through a year filled with innovation, changing regulations, and impactful global events. The industry is best described as a landscape in flux, driven by a digital-first mindset with more institutions embracing technological solutions to stay competitive, address customer expectations, and manage risks.
To name a few of the ongoing digital trends are:
- Open banking and data are forecasted to exceed $6.5 billion worth of transactions by 2027.
- Generative AI in global banking is expected to have a 56% compound annual growth rate until 2023, reaching an estimated worth of $84.99 billion.
- Crypto has also seen major changes, increasing by 75% from 2020 to 2022 with an estimated total of 81 billion wallets globally. Its market size has a projected compound annual growth rate of 25% from 2023 to 2023.
Overall, digital payments are projected to have a total transaction value of US$36.75 trillion by 2029. The data from previous years up to the present have demonstrated how the financial services sector is adapting to our changing world.
The shifts we’ve witnessed in 2024 provide critical insights for predicting and preparing for the challenges and opportunities of 2025. By analyzing this year’s key patterns, your organization can identify potential growth areas, risks, and competitive advantages to leverage for the upcoming year.
With that said, we look back on these industry highlights and explore how they’re redefining financial services for the next year.
Breaking Down the Key Financial Services Trends of 2024
Financial services are the backbone of economic activity, giving us access to capital, credit, and investment opportunities. From digital payments to fintech innovation, financial services pave the way for financial inclusion—enabling small businesses and individuals to actively participate in the economy.
In 2024, we’ve noted 3 major trends impacting the financial services sector.
1. Open Banking
It’s no surprise that digital payments are projected to have an annual compound growth rate of 15.90% until 2029. Technological advancements like real-time payments, digital wallets, and QR code-based systems underscore how the world is shifting toward cashless economies. One major player contributing to the expansion of digital payments is the integration of Open Banking, further changing interactions in finance.
Through API-based data sharing, banks, FinTechs, and payment service providers can collaborate seamlessly. By enabling customers to securely share their financial data, open banking has opened the door to more innovative services like personalized lending, account aggregation, and financial wellness tools.
- Open Banking in Online Payments
For Payment Service Providers, open banking has changed online payment processes through its real-time access to verified financial data. Using Application Programming Interfaces (APIs) enables financial service providers to facilitate and streamline payment approvals and ensure faster, more secure transactions.
This has effectively lowered the access barriers for your SME clients seeking to integrate financial services into their business. It lets them offer money transfers and online payments to their consumers.
- Open Banking for Embedded Finance
We see open banking as a catalyst for the growth of embedded finance. The integration of financial services to non-financial platforms has made transactions easier to perform. It puts a consumer’s savings, loans, insurance, debit cards, and investment tools into platforms that typically don’t deal with finance—like retail brands.
For example, e-commerce platforms can use an embedded banking ecosystem to streamline financial management and offer Buy Now, Pay Later (BPNL) options at checkout. This actively enhances their customer convenience and improves their payment experience.
Ultimately, open banking gives your business the ability to diversify revenue streams and deliver personalized financial products. Its ability to provide more efficient financial services can drive both customer loyalty and operational efficiency across the board.
2. Global Regulation Changes
Aside from technological advancements, the financial services industry also faced significant regulatory changes in 2024. Governments worldwide introduced stricter data privacy laws and anti-money laundering (AML) measures to counter the effects of illicit activities.
- Regulations in the European Union
In Europe, the Digital Operational Resilience Act (DORA) mandated stronger cybersecurity frameworks for financial institutions. This act establishes the technical standards that financial entities and their third-party providers must implement for more stringent security in the finance sector. While this was published in December 2022, it’s forecasted to take full effect from January 2025.
- Regulations in the United States of America
The US ramped up its scrutiny of fintech operations—primarily for insufficient third-party risk management. The U.S. prudential bank regulators released a joint statement to improve and implement stronger regulatory compliance functions, payment processing, customer service, and complaint and dispute resolution. They also released a request for information on bank-fintech partnerships to gauge whether there’s greater supervisory guidance needed in these arrangements.
So, how do these regulations affect your financial services? These changes have compelled financial institutions to invest heavily in compliance technology and processes. The increased focus on transparency and accountability is pressuring companies to enhance their reporting and governance practices—forcing financial service providers to do the same.
3. Climate Change and Sustainability
Environmental, Social, and Governance (ESG) considerations have become critical in financial decision-making. Recently, investors and regulators have been demanding greater transparency around sustainability metrics, driving a surge in green bonds and sustainable finance initiatives. In fact, according to Mastercard, more than 75% of the largest 250 companies globally have targets to reduce their carbon emissions.
- UK Sustainability Regulations
In the UK, the Financial Conduct Authority’s (FCA) sustainability disclosure requirements and investment labels compel financial institutions to enhance transparency in their operations and offerings. These requirements mean financial firms (including service providers) can face greater scrutiny from regulators, investors, and consumers regarding sustainability practices.
- Integration of ESG Risks into Europe’s Banking Regulations
Including ESG risks in the Capital Requirements Regulation (CRR) and Capital Requirements Directive (CRD) signals a great shift in risk management. The amendments stated in the “banking package” say that ESG risks (physical and transition) must now be accounted for in capital adequacy assessments and collateral valuations.
This means that banks are now being required to update their risk management strategies to incorporate ESG factors—influencing credit assessments, loan pricing, and portfolio management. Plus, supervisory reviews like the annual supervisory examination review (SREP) now include ESG risk oversight, giving regulators the power to require banks to mitigate ESG risks.
As a financial services provider, these regulatory changes may indirectly impact your business. Your acquiring bank partners, now subject to stricter ESG requirements, may implement more rigorous onboarding processes for merchants.
- Climate Change’s Impact on Financial Risk
Rising global temperatures and extreme weather events are exposing financial institutions to climate-related risks. Insurers, for instance, are struggling with higher claims volumes due to extreme weather. Meanwhile, lenders are reassessing credit risks in various sectors like agriculture, real estate, and energy to avoid losses.
Financial service providers like you may need to integrate climate risk into your overall risk management framework. This includes aligning with regulatory expectations, such as the EU’s inclusion of ESG risks in banking assessments.
Additionally, your financial institution partners may impose stricter requirements, as they too face increased scrutiny from stakeholders demanding transparency in climate-related risk disclosures.
As the financial services sector grapples with the growing realities of climate change, sustainability has become more than a trend—it’s a necessity. Now that the world is focused on going green, the industry is transforming to meet environmental issues head-on.
Major Challenges the Financial Services Industry Faced This Year

While 2024 has seen significant progress in the financial services industry, it’s important to acknowledge the challenges that we encountered. Every year, the industry faces new obstacles, and this year was no exception. By understanding these challenges and adopting innovative solutions, we can continue to drive positive change in finance.
The 3 major challenges we experienced this year were:
1. Economic Uncertainty and Geopolitical Risks
The global economy in 2024 faced headwinds from inflation, slowing growth, and geopolitical tensions. Data shows that while inflation rates are steadying, it’s still relatively high and is in recovery due to the Russian-Ukrainian war.
These factors continuously disrupt financial markets, creating volatility and uncertainty for investors. For financial firms, balancing risk and opportunity in this environment remains a pressing challenge. Businesses like yours need to monitor and adapt to the changing fiscal and monetary policy environments based on economic factors.
2. Cybersecurity Threats
The increasing frequency and sophistication of cyberattacks highlight the urgent need for more robust security measures. In fact, from this year alone, the cost of data breaches reached US$4.9 million, while more than 50% of companies experience phishing attacks daily—and this is only the tip of the iceberg!
This underscores the need for your organization to stay ahead of these evolving threats by investing in advanced technologies and spreading a culture of vigilance among your employees.
3. Talent Shortages
The financial services sector continues to face talent shortages, particularly in areas like cybersecurity, AI, and data analytics. These gaps in technology put a halt to the development of innovative solutions such as AI-powered risk models or blockchain-enabled transactions. Plus, this increases your organization’s vulnerability to cyber threats, increasing the risk of losses from attacks.
A key solution to address these shortages is through:
- Upskilling and reskilling your employees.
- Using automation tools to optimize your hiring process, matching you with the perfect candidates.
- Leveraging third-party services for back-office support or accomplishing your routine tasks.
The challenges of 2024 have tested the resilience of the financial services industry, emphasizing the need for adaptability, innovation, and strategic foresight. Addressing economic uncertainties, fortifying cybersecurity measures, and bridging manpower gaps will be critical as the industry advances into the new year.
Moving Forward in the Financial Services Industry in 2025
As we transition into 2025, the financial services sector faces a critical moment of reflection and reinvention. The lessons from 2024 demonstrate that we have a strong foundation for progress.
In the year ahead, it’s our responsibility as key players in the industry to uphold and develop the progress we’ve made so far. With the insights Payreto has discussed in this article, your business can learn from what worked well—or failed in 2024 to develop stronger strategies, invest more in tech solutions, and improve customer engagement initiatives.
This foresight can position your company to not only survive but thrive in the uncertainties brought upon by the fast-changing financial services sector.
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