Financial institutions (FIs) and fintech companies enter 2025 with a relationship defined by deep collaboration and co-evolution. What was once a competitive standoff has transformed into a symbiotic partnership driving innovation across banking, payments, lending, and more. This report identifies and analyses the key trends reshaping FI-fintech relationships in 2025, grounded in industry data and executive insights. Major findings include:

Embedded Finance Mainstreaming

Embedding financial services into non-bank platforms has become a game-changer for reaching customers in new contexts. The global embedded finance industry is booming – projected to grow from about $164 billion in 2024 revenue to over $530 billion by 2029. Banks now attribute more than half of their revenues (51%) to partnerships powering embedded finance offerings, demonstrating how integral these collaborations have become. This trend is unlocking new distribution channels and an estimated $230 billion in new revenue for financial services by 2025.

AI-Driven Financial Services

Artificial intelligence has moved from hype to real-world impact in financial services. In 2025, AI is entrenched in fraud prevention, credit scoring, customer service, and personalization. An overwhelming 85% of IT executives plan to increase spending on AI or generative AI to boost efficiency and customer experience. AI’s potential to add an estimated $200–340 billion in annual value to financial institutions is catalyzing its adoption. C-suite leaders predict AI will be mainstream in banking – improving credit risk models with alternative data and enabling hyper-personalized services at scale.

Instant Payments and Digital Currencies

Real-time payments are becoming the global norm, accelerating the shift to an “instant economy.” Dozens of countries have live instant payment rails, with Brazil’s Pix illustrating success by processing ~42 billion transactions in 2024 (a 74% YoY increase) and capturing 30% of all payments in the country. In 2025, instant payments are expanding across borders by linking national systems via ISO 20022 standards . Even regulated digital currencies like stablecoins are at a turning point, promising to speed up cross-border settlements while reducing costs. However, fragmentation remains in markets like the US, which lags due to its highly fragmented banking system despite the launch of FedNow.

Evolving Regulatory Landscape

Regulatory changes in 2025 are profoundly influencing FI-fintech collaboration. Governments and regulators are raising the bar on operational resilience, consumer data rights, and fintech oversight. In the EU, PSD3 and the Digital Operational Resilience Act (DORA) take effect, extending open banking and imposing strict ICT risk requirements. The United States will implement CFPB Rule 1033, mandating banks give customers easier data access to spur competition. At the same time, global bodies like the Financial Stability Board are pushing for consistent crypto-asset regulations. Heightened regulatory scrutiny is driving banks and fintechs to invest heavily in compliance and RegTech solutions – a sector projected to reach $85 billion by 2032 – to keep pace with complex, patchwork rules worldwide.

Alternative Funding Models

New lending models pioneered by fintechs are filling gaps that traditional finance left underserved. Buy Now, Pay Later (BNPL), having reshaped consumer credit, is now expanding into B2B financing and trade credit. Fintechs and payment processors are partnering (e.g. Adyen with Billie) to offer BNPL for SMEs and corporate purchases. The U.S. BNPL market alone is expected to reach $122 billion in 2025. Revenue-based financing and on-demand credit lines are providing small businesses flexible funding linked to their cash flow, rather than fixed payment schedules. These models, often delivered via embedded platforms, allow companies to repay as they earn, easing cash crunches. Such alternative financing solutions are growing in popularity, especially among SMEs – 72% of small businesses that used embedded lending reported a positive impact on their operations. Going forward, these fintech-driven models offer credible alternatives to traditional bank loans and are increasingly implemented in partnership with banks or through Banking-as-a-Service arrangements.

Open Banking and Open Finance

The initial wave of open banking (data sharing through APIs) is evolving into broader open finance in 2025. Banks and fintechs are leveraging customer-permissioned data to create integrated financial ecosystems. In regions with mature open banking regimes (UK, EU, parts of Asia), APIs are enabling seamless account-to-account payments and data-driven services. Global open banking payment transaction values are projected to reach $330 billion by 2027, up dramatically (estimated 2,800% increase since 2021). Forward-looking institutions are moving beyond compliance to capitalize on open data – for example, Brazilian credit unions like Sicredi used open finance to launch new services that fuel growth. However, banks must balance innovation with data security, as open finance also raises data privacy and cybersecurity considerations.

Other Emerging Themes

Blockchain and Digital Assets are heading for mainstream adoption within traditional finance. What started with cryptocurrencies is now driving tokenization of assets and new payment infrastructure. By 2027, 10% of global GDP could be stored on blockchain networks, according to the World Economic Forum. Leading banks are piloting blockchain for faster settlements and smart contracts for automating compliance. Sustainability and ESG considerations are also shaping fintech offerings. In 2025, fintech lenders increasingly incorporate ESG metrics into credit decisions, offering green loans and sustainability-linked financing that reward borrowers for positive impact. This aligns with customer and investor demand for responsible finance, adding another layer to FI-fintech strategy.

In summary, FI-fintech relationships in 2025 are characterized by unprecedented integration: banks provide the licenses, customer trust, and balance-sheet strength, while fintechs contribute agility, innovation, and technology. Together they are delivering services – from instant digital payments to AI-powered lending – in ways neither could easily achieve alone. These partnerships are driving significant revenue and efficiency gains, but also require navigating new regulatory terrain and technology risks. Financial leaders who embrace these trends and foster strategic fintech collaborations will be positioned to deliver superior customer experiences, unlock new markets, and future-proof their institutions in the years ahead.

Sources

• Global Embedded Finance Business Report

• 11 Embedded Finance Stats for Banks in 2024 | Alloy

• LNRS214 Payment Trends to Watch

• AI, Payments, and Digital Banking: Fintech Predictions 2025

• AI Accelerates Embedded Finance And Loyalty Battles Get Personal: Payments Tech Predictions For 2025

• Are you ready? Four major Fintech trends for 2025) (Are you ready? Four major Fintech trends for 2025

• B2B buy now, pay later: A huge, emerging opportunity | Arthur D. Little

• United States Buy Now Pay Later Business and Investment Opportunities Databook 2025: 8.5% CAGR Forecast During 2025-2030, with U.S. BNPL Sector Set to Reach $184.05 Billion by 2030 - FinTech Futures: Fintech news

• Fintech Predictions for 2025: What’s Next?: By Katherine Chan

• Increased regulation and embedded finance predicted as the top fintech trends for 2025 by Mambu and partners | Mambu

Not affiliated with Fintech Meetup Events

Bobsguide is a Contentive publication in the Events division