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:

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

2024 Trends in the Financial Services Industry

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.

For instance, consumers can now use their bank accounts to directly pay the cost of goods or services without needing to go through other gateways or credit card processing.

  • 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

Challenges in the Financial Services Industry

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.


References:

Banking package – Questions and answers. (2024, July 24). Finance. https://finance.ec.europa.eu/news/banking-package-questions-and-answers-2024-07-24_en

Brankas Pte Ltd. (n.d.). 16 Benefits of open banking Everyone should know | Brankas. https://www.brankas.com/benefits-of-open-banking

Carnegie Consulting. (2024, October 11). Talent shortages in specialised areas across the finance sector and finance roles. https://www.linkedin.com/pulse/talent-shortages-specialised-areas-across-finance-plwre/

Crypto Wallet Market Size, Share & Trends Analysis Report by wallet type (Hot wallets, cold wallets), by operating system (Android, iOS), by application, by end-user, by region, and segment Forecasts, 2023 – 2030. (n.d.). https://www.grandviewresearch.com/industry-analysis/crypto-wallet-market-report

Cyber Risk GmbH. (n.d.). Digital Operational Resilience Act (DORA) – Regulation (EU) 2022/2554: Training, updates, compliance. https://www.digital-operational-resilience-act.com/

Digital Payments – Worldwide. (2024, December). Statista. Retrieved January 3, 2025, from https://www.statista.com/outlook/fmo/digital-payments/worldwide

Global inflation rate from 2000 to 2029 | Statista. (2024, July 4). Statista. https://www.statista.com/statistics/256598/global-inflation-rate-compared-to-previous-year/

Hayes, A. (2024, March 29). Embedded Finance: Everything you need to know. Investopedia. https://www.investopedia.com/what-is-embedded-finance-8417153#toc-what-is-embedded-finance

LTS Group. (2024, November 11). Generative AI in Banking and Finance: Use cases & challenges. https://www.linkedin.com/pulse/generative-ai-banking-finance-use-cases-challenges-6wegc/

Mastercard Data & Services. (2024, May 17). State of global payments: Six trends shaping the industry. Mastercard Data & Services. https://www.mastercardservices.com/en/advisors/payments-consulting/insights/state-global-payments-six-trends-shaping-industry

Sobers, R. (2024, September 13). 157 Cybersecurity Statistics and Trends [updated 2024]. 157 Cybersecurity Statistics and Trends [updated 2024]. https://www.varonis.com/blog/cybersecurity-statistics

S&P Global Market Intelligence Has Released a Report Exploring How Climate Change and Extreme weather are Reshaping the Insurance Industry. (2024, November 20). News Release Archive. https://press.spglobal.com/2024-11-20-S-P-Global-Market-Intelligence-Has-Released-a-Report-Exploring-How-Climate-Change-and-Extreme-weather-are-Reshaping-the-Insurance-Industry

US banking agencies are ramping up scrutiny of Bank-Fintech partnerships | Skadden, Arps, Slate, Meagher & Flom LLP. (2024, August 21). https://www.skadden.com/insights/publications/2024/08/us-banking-agencies-ramp-up-scrutiny

What open banking is and how it works | Stripe. (2023, December 4). https://stripe.com/resources/more/open-banking-explained#examples-of-open-banking-services

Operations Excellence is at the heart of every thriving business. Its three pillars of streamlining processes, maintaining quality, and optimizing costs directly impacts your ability to meet customer expectations, control spending, and adapt to changing market conditions.

Understanding Operational Excellence

At its core, operations excellence focuses on achieving two goals that are crucial to any company’s sustainable success: efficiency and effectiveness. 

Achieving operational efficiency means optimizing your processes. This entails minimizing resource waste while maximizing the output you produce. Meanwhile, operations effectiveness is about your business’ goals and ensuring your customers are satisfied. 

Every business, regardless of size, can greatly benefit from embracing operational excellence. By prioritizing efficiency and effectiveness in your operations, you can increase customer satisfaction, boost profitability, and lay a strong foundation for long-term success. In essence, operational excellence is not just a strategy, but a necessity in order to unlock your business’ full potential, drive growth, and differentiate yourself in an increasingly competitive landscape.

The Three Pillars of Operational Excellence

To achieve operations excellence, you must have:

Streamlined Processes

In today’s fast-paced business world, slow processes hinder your success. Optimize your workflows by identifying the inefficiencies present in your current ways of working and eliminating them. This can be done by implementing lean principles, which refer to methodologies designed to optimize processes by minimizing waste and maximizing value. 

An example of these principles are:

  • Value Stream Mapping – Analyze your end-to-end service process and identify steps that can be simplified or removed.
  • Encouraging a culture of continuous improvement – Empower all employees to suggest and implement process changes that will make operations more efficient!

Quality Management

Providing your customers with consistent quality is necessary in building strong, long-lasting relationships with them. Your business can achieve this by implementing Total Quality Management principles, a holistic approach that focuses on maintaining quality in all aspects of the business, from planning all the way to customer service. 

Some components that are vital to Total Quality Management are:

  • Fact-Based Decision Making

Data is crucial in making effective strategic choices. By basing your decisions on evidence-based analyses, your business can keep up with industry trends and avoid the biases of subjective judgment.

  • Continuous Improvement

Consistently enhancing your services is crucial to adapting to changing market dynamics. Your business should continuously look for ways to tailor your offerings to consumer preferences.

  • Customer Focus

You should understand what value your customers are looking for and tailor your offerings accordingly. To gain this understanding, you need feedback mechanisms such as Net Promoter Score surveys, which are designed to figure out the factors behind client satisfaction.

Optimized Costs

Controlling your costs is crucial to gaining a competitive advantage in any industry. You must look through all aspects of your operations to pinpoint areas where you can cut costs without compromising your services’ quality. 

After identifying these areas, you can implement cost-minimizing strategies such as automating processes to reduce administrative costs, or outsourcing non-core functions to make your overhead expenses lower.

Key Initiatives to Achieve Operational Excellence

With over 12 years in the industry, Payreto has a proven track record of helping financial service providers achieve operational excellence. Some of the steps we’ve taken to ensure efficient and effective operations are:

Streamline our recruitment machinery through our Express Hiring Strategies

Our efficient recruitment methods enable us to get the best people to help our clients grow their business. Our Express Hiring Strategies include:

  • Implementing a referral program that incentivizes our employees to recommend potential candidates for job vacancies
  • Using a resume prioritization tool to give our Talent Acquisition experts more space to do other tasks

Assist clients with quality management through our 24/7 Support Hub

Our Contact services include voice customer services, lead generation assistance, and technical support for various systems. We give our clients support coverage even during non-core working hours, so they can rest assured that their customers will be responded to no matter their country or time zone!

Cut clients’ operational costs by optimizing processes

Our formidable team of professionals use their specialized knowledge of Finance, Payments, Onboarding, Data, and Contact to help clients reduce complexities in their core services and focus on tasks that really matter. So far, we have helped our clients cut down their operational costs by a total of 20% – 50%.

Bridge talent gap in clients’ workforce

Payreto’s true edge is the brilliance of its people. While technology and automation are important in today’s market, their positive impact is only as good as your workers’ ability to use that technology. Our services are provided by professionals with the knowledge and skills needed to deliver the results our clients need. Whether we are helping our clients with Payments, Finance, or Onboarding, they can have peace of mind that they are getting the best results possible.

Grow Your Business with Payreto Today!

Operational excellence focuses on achieving efficiency and effectiveness, goals that are essential to all businesses regardless of their size. They are crucial to unlocking your business’ full potential, driving your growth, and differentiating yourself from your competitors.

In order to achieve operational excellence, you must:

  1. Streamline your processes by reducing inefficiencies and implementing lean principles;
  2. Maintain consistent high quality through following Total Quality Management principles; and
  3. Optimize costs by identifying cost-saving opportunities and implementing corresponding cost reduction strategies.

Talk to Payreto today and kickstart your business’ journey to operational excellence. Working with us means receiving attentive support regardless of where you are and efficient, cost effective strategies designed by amazing professionals.