By Michael Anderson
As we enter 2025, it feels as though the list of trends impacting the tech and finance spaces is endless – advances in Artificial Intelligence (AI) & Machine Learning (ML), greater regulatory and compliance pressures across industries, and the impact of political and social change across the globe, to name just a few.
It feels like it has never been more difficult to try and predict the future, but my senior colleagues at Davies – an experienced group of industry leaders spanning multiple disciplines and sectors – and I have come to believe that the following trends will be pivotal in how the next 12 months will unfold.
1. AI & ML Integration
Starting with the obvious, AI & ML will be the chief focus and primary disruptors across virtually every industry this year, challenging the way we approach eCommerce, security, management, and customer experience. While the hype around them remains unstoppable, the truth is that the potential for improvements to both strategy and efficiency is very exciting.
But potential is no guarantee of success – we’ve seen in the past how new opportunities can be mishandled, which leads to costly, ineffective outcomes. If we are to make the most of this new year, we need sound strategies for managing, implementing, and monitoring AI to ensure we are laying our best hand down.
2. Digital Twin
Digital Twins will be a major focus for 2025, transforming operations by giving firms the power to test potential solutions and scenarios safely without risking significant disruption. While this may seem technical, the upside for banks, Big Tech, and investment firms is massive.
The Digital Twin – a virtual replica of physical systems and processes that can be used for testing and analysis – allows firms to gain insights about new strategies in weeks that historically would have taken months. Impact analyses on new operating models, cost-to-serve projections, and more give firms leveraging Digital Twins a huge advantage in mitigating risk and disruption.
This exciting tech has the power to bring widescale transformation at pace and scale in ways that previously would have been too risky to action. Firms that implement these solutions early could gain a massive leg up on their competitors, so expect to see more businesses implementing these across tech and finance in the coming year.
3. Operational Optimisation
In order to meet rising customer expectations and the looming threat of increased regulatory demands, firms will have to fully review their organisational capabilities and align themselves with new benchmarks in order to avoid falling short of their competitors.
Machine learning runs through these trends predictably enough, but operational optimisation is the name of the game when it comes to AI implementation. My colleague Matthew Lonsdale was emphatic on the need for firms to prioritise AI deployment: “Clients who have recently made big operating model changes should be very confident about operational resilience and the ability to deploy AI. By the end of 2025 clients in that position should be 2–3 years ahead of firms on old technology.”
AI is an invaluable tool for levelling up customer experience – from supporting customer service agents, customising customer journeys, and even interacting with customers at scale. But as ever, a tool is only worthwhile when it’s used properly, and a rigorous approach to strategy and deployment will be the differentiator for firms.
4. Preparing for Tech Disruption
While AI has the potential to improve processes and systems, it can also present challenges for certain areas within the finance sector – financial advisers and fund managers may see more clients turning to AI for affordable, customised advice, putting a strain on their ability to retain customers. Tackling this problem will require these businesses to ensure cost-effectiveness and improved customer service to account for this imbalance – ironically, AI integration may prove to be the cause of – and solution to – this problem.
Cybersecurity will also be a critical concern in 2025, as the rapid advancement of AI exposes vulnerabilities across industries. AI systems are increasingly becoming targets for cyberattacks, making robust security measures indispensable. Firms must ensure they are proactively safeguarding sensitive data and intellectual property, as the reputational and operational damage from breaches could be catastrophic. Additionally, the intersection of AI and cybersecurity will demand careful alignment with data protection regulations as scrutiny over AI-driven practices intensifies.
AI is not the only potential source of disruption this year. Other sources of disruption include:
- Climate change, which will be a major influence on strategies across tech and finance, with the insurance industry battered with claims due to severe weather events and questions raised over the massive energy cost of AI.
- The regulatory climate might prove to be as disruptive as the global one. There are widespread predictions of massive regulatory scrutiny on financial services, which will cause consternation among fintechs and legacy financial institutions alike.
- In the United States, the incoming Trump presidency and its promise of tariffs could significantly raise costs for businesses reliant on selling to or buying from American concerns.
What’s more, the incoming Central Treasury Clearing mandate, which is marked for December 2025, will prove to be disastrous for unprepared banks and dealers – my colleague Michael Barrett told me that firms that fail to prepare for the change are preparing to fail: “For central clearing of US Treasuries, firms need to assess where they are today, and then determine where they want to be as businesses in the future state so that the options available can be fully vetted and selected for implementation – and this needs to happen forthwith.”
5. Focus on customer needs, trust, and expectations.
Firms taking a customer-centric focus in 2025 will find themselves at an advantage. While many firms sprint to implement their own AI-powered solutions for security and customer service, they must ensure that their AI deployment doesn’t end up lessening customer trust.
Again, preparation and planning will separate the winners from the losers in the AI arms race. Prioritising service quality, transparency, and tailoring solutions to customer needs should mitigate this risk.
In the world of wealth management, this might involve the redefining of commercial models, which was another priority for my colleague Matthew Lonsdale: “I think margins will be squeezed further and organic growth will be elusive… It’s time to embrace change – create a new commercial model that sees the difference between service and services.”
Whatever lies ahead
Only time will tell how our industry will cope with the changes and challenges that lie ahead, who has best prepared for the coming rollercoaster, and what the hot new thing will be that takes everyone by surprise.
But if you watch the above trends closely and keep your eyes on what the competitors are doing, you will remain close to the action and will likely end up better prepared to make the most of 2025.
About the Author
In his current role, Michael Anderson has successfully established a Customer Experience (CX) practice in Canada and, after returning to the UK three years later, now leads the identification, scoping, and delivery of larger CX transformation programmes. With over 35 years of global customer management experience, Michael possesses a deep understanding of customer strategy, operational excellence, and service delivery.
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