Backbase highlights banking trends shaping the industry in 2025

Backbase has released its report on the future of banking, highlighting six significant market trends predicted to impact the industry in 2025.

The report foresees traditional banks potentially losing up to 30% of market share to digital competitors unless they undergo substantial technological transformation. The detailed analysis explores advancements in artificial intelligence, open finance, and more, anticipated to drive a USD $1 trillion transformation within the banking sector.

The report notes the anticipated large-scale adoption of AI-driven recommendation engines within the banking industry. These are expected to be critical in personalising customer engagements and becoming a key component of the primary banking relationship. According to Glassbox, banks that embrace these AI-powered solutions may see up to USD $300 million in additional revenue per USD $100 billion in assets. This growth is contingent upon transitioning from legacy systems to more unified platform models.

Chris Shayan, Head of Artificial Intelligence at Backbase, remarked on integrating AI within banking: "AI can be easily managed by existing technologies, but you need to have a platform for your customer experience orchestration, one that's fully microservice-driven. Then, it's a very natural move."

Agentic AI, or AI-powered customer service assistants, is predicted to become increasingly prevalent. These AI agents aim to enhance operational efficiency and customer experience by offering proactive engagement without significant human oversight. However, a business case for such implementations should be evaluated first.

Thomas Fuss, Chief Technology Officer at Backbase, commented on the potential of agentic AI: "Agentic AI is a game-changer for modern banking. It empowers us to offer hyper-personalised experiences, optimise complex workflows, and proactively manage risks — all while reducing costs. By integrating autonomous decision-making into our platform, we're not just meeting customer expectations; we're shaping the future of financial services."

Open finance, evolving from open banking, is expected to see rapid growth and development, enabled by platform model advancements and improved API technology. It is seen as an inevitable development driven by regulatory shifts and rising consumer demands. Juniper Research predicts global open banking payments will increase from USD $57 billion to over USD $330 billion by 2027.

Mayur Vichare, Director of Strategy and Value Consulting at Backbase, stated, "Open banking and embedded finance empower consumers and businesses by delivering seamless, personalised financial solutions, driving inclusion and growth in a digital-first world."

Vertical iPaaS solutions, which enable unified API environments, are expected to increase in adoption as banks aim to allocate more of their IT budgets to value-creating activities rather than integrations. These solutions promise improved connectivity between diverse banking systems and applications.

The development of differentiated service models is also expected to progress, allowing banks to leverage existing data more effectively. This will enable them to personalise customer interactions further, transforming data into actionable insights that enhance customer relationships.

The report also highlights intensified disruption from neobanks and fintech companies. These entities will likely continue gaining traction and disrupting traditional banking paradigms, prompting established banks to advance their digital capabilities.

Jouk Pleiter, Founder and CEO at Backbase, summarised the potential transformations: "2025 represents an inflection point where AI, open finance, and modern tech architecture converge to fundamentally reshape banking. We're witnessing the biggest banking transformation since the introduction of ATMs. Banks have an 18-month window to adapt or risk becoming obsolete. The winners in 2025 will be those who act now."