Global Banking in 2025: Trends, Challenges, and Strategies

A quiet transformation is unfolding in digital banking. What began as a race for speed, convenience, and low-cost access is now evolving into something more human, a movement that blends faith, personal purpose, and financial empowerment within a digital framework. Across the financial sector, digital banks are moving beyond transactional functions to create emotionally intelligent ecosystems. The shift is subtle but profound: from offering accounts and apps to offering meaning. The rise of savings features linked to spiritual, ethical, or life-stage goals reflects an awareness that money is not merely a medium of exchange, it is an expression of values. This change is most visible in faith-based digital finance. New platforms are embedding Shariah principles and value-based design into their interfaces, making financial planning feel less like accounting and more like aspiration. Savings tools that help users plan for pilgrimage, charity, or community-oriented goals are emerging as digital companions that motivate consistent behaviour rather than passive deposits. Behind the design lies technology — behavioural analytics, AI-assisted nudges, and data visualisation — quietly helping users form better habits. These systems monitor patterns and offer reminders or encouragements, turning saving and spending into guided, mindful experiences. The technology itself is agnostic, but the intent behind it, to align financial conduct with moral and emotional purpose, is what distinguishes this new generation of digital banking. Globally, the industry is also learning that inclusion is no longer just about access. True inclusion means understanding why people save and spend, not just how. Digital tools that integrate spiritual or ethical motivations bring financial planning closer to lived reality, especially for younger generations who see money management as part of personal growth rather than mere accumulation. This merging of fintech and faithtech opens intriguing policy questions too: How can financial institutions balance data-driven personalisation with ethical transparency? How do algorithms encourage responsible behaviour without crossing into manipulation? The answers will shape not only user trust but also the moral architecture of digital finance itself. As digital banking matures, differentiation will no longer rest on who has the sleekest interface or the most features. It will depend on who can design experiences that reflect conscience, community, and care. In a way, the future of finance may circle back to its oldest lesson — that wealth is a trust, not a possession. Digital tools are simply giving us new ways to live that truth, one purposeful savings plan at a time.

5 years later 📆⏳👣 The banking industry’s growth is indeed exciting, and I'd love to share some insights with you! 🚀 *Growth Drivers:* 1. *Digitalization*: Online banking, mobile apps, and digital payments have increased accessibility and convenience. 2. *Fintech Integration*: Partnerships between banks and fintechs have introduced innovative solutions and improved services. 3. *Customer-Centric Approach*: Banks are focusing on personalized experiences, security, and user-friendly interfaces. 4. *Expanding Financial Inclusion*: Banks are reaching underserved populations, promoting economic growth and stability. *Opportunities:* 1. *Increased Financial Literacy*: Banks can educate customers on digital banking, security, and financial management. 2. *Innovative Products*: Banks can develop tailored products and services for specific customer segments. 3. *Partnerships and Collaborations*: Banks can partner with fintechs, startups, and other industries to drive innovation. *Challenges:* 1. *Cybersecurity*: Banks must prioritize security and protect customer data. 2. *Regulatory Compliance*: Banks must adapt to evolving regulations and ensure compliance. 3. *Competition*: Banks face competition from fintechs, neobanks, and other financial institutions. *What's next?* 1. *Artificial Intelligence*: AI-powered chatbots, credit scoring, and risk management. 2. *Blockchain*: Secure, transparent, and efficient transactions. 3. *Sustainable Banking*: Environmentally conscious banking practices and products. How do you think the banking industry will continue to evolve? 🤔 What opportunities or challenges do you see on the horizon?

Digital-led with a Human Touch: The New Frontier of MSME Banking Transformation Micro, small, and medium-size enterprises (MSMEs) are the unsung engines of global growth, representing over 90% of businesses worldwide, contributing more than 50% to global GDP, and employing nearly two-thirds of the global workforce. Yet, despite their importance, MSMEs have long been underserved by traditional banks constrained by legacy systems, manual processes, and fragmented distribution models. As digital attackers—fintechs, neobanks, and digital-first entrants—disrupt the market with seamless, low-cost, and hyper-personalized experiences, incumbent banks face a strategic imperative: to reimagine their MSME offerings by combining digital excellence with human empathy. This next era in small-business banking will be digital-led yet human-centered, powered by artificial intelligence (AI), generative AI, automation, and data-driven insights. The winning banks will be those that can simplify value propositions, personalize engagement, optimize digital sales and servicing journeys, and empower their frontline relationship managers to deliver strategic advisory rather than transactional service. The future belongs to institutions that can blend technology, trust, and tailored financial insight—creating not only financial inclusion but also economic resilience and sustainable profitability. 1. Simplified and Tailored Value Proposition Banks must move from “product pushing” to solution orchestration, simplifying offerings for MSMEs that often lack financial sophistication. A tailored value proposition might include: Segment-based bundles (for micro, small, and medium tiers); Integrated financial dashboards combining cash flow, invoicing, payments, and lending; Flexible credit models using alternative data (e.g., transaction histories, utility payments); Tiered advisory services, offering digital guidance for micro-enterprises and hybrid human-AI advisory for larger ones. Simplicity attracts; personalization retains. 2. Customer Value Management and Personalization Banks must understand MSMEs as ecosystems, not accounts. AI-powered analytics can map customer journeys, anticipate needs, and recommend next-best actions. Personalization strategies include: AI-driven segmentation beyond demographics—by behavior, lifecycle stage, and profitability; Predictive churn modeling to retain at-risk customers; Cross-sell optimization linking business and personal finance for owners; Proactive engagement, where digital nudges precede requests (e.g., offering short-term credit before liquidity stress). 3. Reimagining Digital Sales and Servicing Journeys

Rethinking Banking for the Digital Era Digital banks are no longer the disruptors on the sidelines. They’re redefining the global financial landscape. Across markets, customers are gravitating toward platforms that act as financial partners, not just service providers. By embedding payments, lending, and ecosystem integrations, digital-only banks are creating seamless, real-time experiences that are both scalable and personal. The results speak for themselves: - Top-tier digital banks achieve a stickiness ratio (DAU/MAU) above 50%, reflecting deep customer engagement. - Most successful digital-banks acquire customers 5X faster than traditional incumbents in their early years. - Digital banks can operate at a cost to serve up to 80% lower than legacy banks. Their success rests on a simple but powerful equation: Customer obsession + strategic partnerships + digital efficiency = competitive advantage. For established institutions, the message is clear: - Digital agility is today’s competitive edge, not tomorrow’s aspiration. - Customer-first design drives sustained engagement and loyalty. - Ecosystem collaboration amplifies reach, trust, and relevance. The next frontier in banking will not be defined by technology alone, but by how deeply institutions understand and design around their customers’ lives. Are we building experiences customers love, or products they simply tolerate?

The Thread of Innovation: Transformative Banking Starts with People A Case Study on Capital One Bank!!! In the rapidly changing financial landscape, the fusion of technology and human-centered innovation has emerged as the new competitive differentiator. This report explores how Capital One Bank, under the leadership of Celia Edwards Karam, President of Retail Bank, embodies transformative banking by placing people—both employees and customers—at the heart of innovation. Through data-driven technology, inclusive culture, and a commitment to financial well-being, Capital One demonstrates that sustainable transformation begins not with systems, but with human capital. The Genesis of Transformative Banking For over 25 years, Capital One has maintained a mission to revolutionize financial services through data, digital innovation, and customer-centric thinking. As the sixth-largest U.S. bank, Capital One’s evolution mirrors the wider banking industry’s transition from traditional operations toward intelligent orchestration—where innovation is people-powered. This case study examines how a “people-first” culture has been instrumental to Capital One’s breakthroughs, such as eliminating overdraft fees, developing AI-driven financial tools, and integrating community-centric services. 2. Innovation Starts with People Capital One’s transformation journey highlights one foundational truth: innovation begins internally before it manifests externally. Celia Edwards Karam’s leadership philosophy emphasizes building teams that combine domain innovation with inclusive collaboration. By encouraging diversity of thought and empowering employees to make autonomous decisions, the organization fosters creative ownership. The success of initiatives like the elimination of overdraft fees resulted from over 140 associates’ collaboration—a testament to participative innovation rather than top-down directives. 3. The Road to Innovation and Transformative Banking Transformative banking is neither linear nor effortless. It requires continuous iteration, risk-taking, and a resilient cultural mindset. The journey involves challenging entrenched norms, integrating advanced technologies, and aligning leadership vision with market realities. Banks must navigate regulatory constraints, cybersecurity risks, and customer trust issues while simultaneously reengineering legacy systems. For Capital One, innovation is not a project—it’s a permanent organizational behavior grounded in agility, experimentation, and empathy. 4. People as the Pivotal Element of Innovation At the core of every transformative agenda lies the human element. Employees are not merely executors but co-creators of change. Capital One’s strategy hinges on leveraging “people advantage”—the collective intelligence, creativity, and motivation of its workforce.

The National Bank of Bahrain (NBB) recently launched its digitalised treasury bills (T-Bills), marking a transformative step in the evolution of Bahrain’s capital markets infrastructure. The new digital process enables end-to-end issuance, settlement, and management of T-Bills through a secure and automated platform. Accessible through NBB’s Digital Banking platform, the solution allows customers to select from a range of investment opportunities. Users can subscribe to, manage, and monitor their T-Bill portfolios anytime and anywhere through a secure and fully digitalised experience. Commenting on the announcement, NBB head of wealth management Ali Janahi said, “At NBB, our mission is to put customers at the heart of everything we do. This launch is a testament to our commitment to building strong partnerships with all our customers and potential investors to grow together. It also underscores our focus on driving innovation, enhancing operational efficiency, and delivering tailored solutions that raise the bar for investor experience.” Omar Al Adhami, head of retail digital banking at NBB added, “This initiative represents a key milestone in our digital-first strategy, aimed at delivering every customer a seamless and secure digital experience tailored to their financial needs. Through NBB Digital Banking, customers can conveniently access a new investment opportunity in addition to the comprehensive suite of products and services, all in one place, making NBB Digital their trusted one-stop shop for all their banking requirements.” The launch is aligned with NBB’s broader strategy to integrate customer-centric digital solutions across its investment banking offerings, while supporting national objectives for digital advancement and sustainability. The platform is underpinned by a robust and compliant digital infrastructure that safeguards client data and ensures the integrity of all transactions. It also contributes to the bank’s ESG agenda by reducing reliance on paper-based processes. Read more: https://lnkd.in/dJDPu48d

The National Bank of Bahrain (NBB) recently launched its digitalised treasury bills (T-Bills), marking a transformative step in the evolution of Bahrain’s capital markets infrastructure. The new digital process enables end-to-end issuance, settlement, and management of T-Bills through a secure and automated platform. Accessible through NBB’s Digital Banking platform, the solution allows customers to select from a range of investment opportunities. Users can subscribe to, manage, and monitor their T-Bill portfolios anytime and anywhere through a secure and fully digitalised experience. Commenting on the announcement, NBB head of wealth management Ali Janahi said, “At NBB, our mission is to put customers at the heart of everything we do. This launch is a testament to our commitment to building strong partnerships with all our customers and potential investors to grow together. It also underscores our focus on driving innovation, enhancing operational efficiency, and delivering tailored solutions that raise the bar for investor experience.” Omar Al Adhami, head of retail digital banking at NBB added, “This initiative represents a key milestone in our digital-first strategy, aimed at delivering every customer a seamless and secure digital experience tailored to their financial needs. Through NBB Digital Banking, customers can conveniently access a new investment opportunity in addition to the comprehensive suite of products and services, all in one place, making NBB Digital their trusted one-stop shop for all their banking requirements.” The launch is aligned with NBB’s broader strategy to integrate customer-centric digital solutions across its investment banking offerings, while supporting national objectives for digital advancement and sustainability. The platform is underpinned by a robust and compliant digital infrastructure that safeguards client data and ensures the integrity of all transactions. It also contributes to the bank’s ESG agenda by reducing reliance on paper-based processes. Read more: https://lnkd.in/d4qXPVu5

💡 Why Digital Corporate Banking Must Become Seamless, API-Driven, and Payment-Native The next evolution in corporate banking isn’t about going digital it’s about becoming programmable. API-driven. Real-time. Embedded directly into how businesses move money, manage liquidity, and make decisions. If your corporate banking still relies on portals, manual uploads, and batch wires… You’re not operating digitally — you’re operating with delay. 🔗 1. APIs as the new banking backbone APIs shouldn’t be a wrapper around legacy systems they are the system. Every core service, accounts, payments, FX, compliance, must be modular, accessible, and composable. This unlocks: Automated payables, receivables, and liquidity flows Real-time cash visibility across global accounts Seamless integration with ERP, treasury, or DeFi tools APIs are how finance teams stop managing banks — and start orchestrating money. ⚡ 2. Payment-native architecture Corporate payments should move at the speed of business. Instant, cross-border, multi-currency with embedded FX, smart routing, and transparent tracking. Real-time payments are no longer innovation they’re infrastructure. 🧠 3. Intelligence and compliance built in Modern digital banking must combine automation with intelligence: Machine-learning insights on liquidity and risk Embedded KYC/AML checks and approval rules Dynamic limits, controls, and audit trails Compliance should be invisible — yet always active. 🌍 4. Composable, connected, global The future of corporate finance is ecosystem banking: Plug-and-play services across banks, fintechs, and tokenized payment rails. Each module replaceable. Each connection standardized. Each transaction seamless. 🔸 At Realis Finance.Finance, we believe digital corporate banking should work like code — clean, intelligent, and borderless. When banking becomes API-driven, companies unlock true financial agility — real-time control, transparency, and growth at scale. Explore how we’re building the next generation of digital corporate banking: 👉 https://lnkd.in/edKuh9nh #DigitalBanking #Fintech #CorporateBanking #APIs #EmbeddedFinance #Payments #Treasury #RealisFinance #FutureOfFinance

The global banking industry is at a pivotal juncture, shaped by technological advancements, regulatory shifts, and evolving customer demands. As banks navigate this transformative landscape, the convergence of innovation, risk management, and profitability emerges as a crucial balancing act. - **Digital Transformation and AI Integration:** Banks are fast-tracking their digital evolution, leveraging AI, cloud computing, and data analytics to revolutionize operations. AI plays a pivotal role in credit assessment, fraud detection, and personalized customer experiences. The appointment of Chief AI Officers and investments in intelligent automation underscore the industry's commitment to enhancing efficiency and decision-making accuracy. - **Shift in Revenue Models:** Amid tightening interest margins, banks are diversifying revenue streams through non-interest avenues like wealth management and transaction fees. The integration of financial services into non-banking platforms through Embedded Finance and Banking-as-a-Service (BaaS) heralds a new era of income generation. - **Rise of Neobanks and Digital-Only Players:** Disruptive digital challengers are reshaping the banking landscape with customer-centric solutions. Traditional banks are responding by modernizing infrastructure and forging strategic alliances to stay competitive in a digital-first environment. - **Focus on ESG and Sustainable Finance:** Environmental, Social, and Governance (ESG) imperatives are driving banking strategies towards sustainable practices. Institutions are directing investments towards green initiatives, responsible lending, and transparent ESG disclosures, aligning profitability with social impact. - **Regulatory and Cybersecurity Landscape:** With digital expansion comes heightened cybersecurity risks and regulatory complexities. Regulators are intensifying scrutiny on AI usage, data security, and digital asset management. Banks must navigate these challenges by prioritizing governance, cybersecurity measures, and ethical AI deployment. **Outlook:** The future of banking hinges on adaptability, collaboration, and trust. Institutions embracing technology responsibly, responding to shifting customer dynamics, and integrating sustainability into their core operations will shape the upcoming era of global finance.

🚀 Considering #agency banking as a business model for domestic growth.   🏦 As domestic markets saturate due to intense competition, relatively lowered entry barriers in terms of regulations and as various customer segments gain maturity leading to high expectations, there are two potential paths for growth (increase in customer base, revenue, margins, brand strength etc.), that banks (and fintech) can consider - ✈️ 1️⃣ #Expand beyond domestic borders, following the customers, mostly corporates and institutions segments. 🧗♀️ 2️⃣ Find ways to #grow in the domestic market, by entering new segments while improving current operations and margins.   🏭 🌏 There could be multiple possible options that can be derived from the above two considerations. An option that plays well into the strength of a commercial banks is agency banking, essentially becoming an aggregator of payments services in the country, leveraging its regulatory and operational strengths. Serving an increasing demand due to globalized nature of operations for banks and fintech.   🏛️ ⏳ This also opens up an opportunity for domestic scheme operators to offer these services with the objective of increasing adoption of systemic payments schemes in the country. 🌐 🏗️ Considering the two points above, banks have been growing their presence in the international markets. A regional or global reach for a bank is a representation of its #distribution advantage, which is difficult to replicate. 🪢 But as they enter these markets, regulators allow them, in most cases, to access the clearing and settlement systems for a country. Though resources required to comply do present challenges. Hence leveraging a direct participant into the national payments infrastructure is a viable solution.   🀄 Foreign banks that already exist and have a relationship, struggle with compliance of new schemes and payments infrastructure.   📱 Fintech are essential parts of the value chain, encouraged in an economy, by policies to reduce the entry barriers and create an environment of innovation and competition. Government policies will most likely keep them going, but to be effective, fintech need banks.   🎼 🎛️ Approach for agency/aggregator banking - 🏄 An important consideration is to separate domestic payments operations from aggregator operations, as the needs, speed of change management and risks involved are expected to be different. Risking domestic operations may not be an appropriate path. 💸 The entire flow or major parts of the model should be disconnected to keep things separate; some parts of the existing infrastructure can be reused though. An ability to continuously evolve, accommodating needs of a diverse set of in-direct participants is important. Considering substantial scale (relative to the size of country) this could be a lucrative business to get into.   🎢 Payments technology stack will be an important differentiation for growth. Temenos can help.   #payments #strategy