UK Finance & Fintech Predictions 2025: Artificial Intelligence & Security

The Finance and Fintech industry in the UK continues to evolve at pace driven by continual technology innovation, regulatory scrutiny and changes in customer expectations.

Across two articles we will explore our predictions for 2025 across 5 key areas, focusing on the challenges and opportunities facing the UK finance and fintech sectors.

Artificial Intelligence:

It wouldn’t be a list of predictions without mentioning AI. A topic that remains on the lips of many in the industry and has been an ever-present theme in finance conferences throughout 2024. As the technology becomes ever more ubiquitous, and banks familiarise itself with its capability, the potential use cases for its adoption are hotly debated but continue to grow.

Fraud and cyber:

We have already seen AI successfully adopted in fraud detection and prevention, reducing payment fraud and detecting money laundering. This area will continue to evolve. With an increase focus on cyber security in 2025, AI has a potential to provide similar enterprise-wide monitoring and assessment of network traffic in the fight against cyber treats. 

Operational efficiency:

It is often difficult to measure the ROI of significant AI investments. It is therefore anticipated that banks will continue to trial AI capability to increase ‘operational efficiency’ to seek the greatest gains from AI. 

Financial institutions are complex and for internal staff, navigating knowledge management solutions is often complex, non-user friendly and unintuitive. Utilising generative AI against a carefully reviewed knowledge base could provide a fast natural language query capability that would optimise operations.

AI Personalisation:

For customer-facing use cases,there will be a more cautious view of AI utilisation in 2025. We will see a slower rate of generative AI adoption in finance - compared to other industries - as banks grapple with the regulatory and ethical impacts of providing personalised AI generated content directly to their customers. Ethical concerns around biased algorithms, and data privacy remain real. AI systems require access to highly sensitive financial information, making data privacy and security a key pre-requisite and will remain the main focus for banks.

In an industry where hyper-personalisation is the holy grail for customer retention, the ability to provide personalised content, rates, recommendations and advice through automationalone is clearly an attractive proposition but is an extremely high risk strategy. In 2025, any AI utilisation for ‘individually tailored’ financial advice will most likely come in the form of a co-pilot solution where AI generated content is surfaced to an agent for validation.

Access to data: 

Outside of individual financial advice, there remain use cases where personalised content can be surfaced to customers that are purely factual and insightful - based on an individual customer’s personal transactional behaviour - and is therefore less exposed to interpretation and reputational risk. While solutions exist that would benefit from AI capability to surface deeper insights to a customer in more ways, the biggest blocker to make this a success still remains access to a customer’s complete financial data. 

With increased competition in the market many customers have spread their financial portfolios across multiple providers and therefore an individual’s transactional and behaviour data are siloed. Any AI generated insight against a partial view of a customer’s financial behaviour is of low value and potentially inaccurate. 

Building trust with Open Banking:

With only 1 in 9 customers utilising Open Banking, there will be an increase in focus on building trust with customersto utilise Open Banking more extensively and effectively. So far, the value to the customer for giving Open Banking consent has been limited and therefore trust and engagement is low. This paradox between a bank’s desire to provide hyper-personalised services with AI,and the trust required from customers to consent to sharing their data requires careful consideration. Banks must earn the right from their customers to use AI for personalisation; it will bevery interesting to see how banks will build this trust in 2025.

Security: 

The total cost of cybercrime continues to increase. Announcements at the World Economic Forum predicted that globally cyber related crime will cost the industry $10.5 trillion annually by next year. Security will therefore continue to be top priority for finance technology. Significant investment in security technology and partnerships in Fintechs to counter new threats will continue at pace throughout 2025.

Quantum on the horizon:

2024 saw significant advancements in quantum computing, and while the technology remains in early stages of scalable computing, there are some significant early warning signs that traditional cryptography security solutions will be under threat in the future. It is anticipated that the finance industry will accelerate investment to shift towards quantum-resilient security protocols, enhancing cybersecurity measures to protect sensitive data and maintain customer trust.

Passkeys:

In 2025 it is likely that we will see more early adopters of the passkeys solution within banking. Passkeys, is a security solution that negates the reliance on traditional step-up security methods and user generated passwords, enabling a high level of security for account access and payment authorisation, as well as a more seamless user experience. With approximately 93% of devices “passkey-ready” (state-of-passkeys.io), it should only be a matter of time before we see widespread adoption of this capability within the industry.

Penetration testing:

Banks will continue to invest significantly in greater penetration testing capability as a proactive mechanism to identify potential security vulnerabilities before they are exploited. With increased focus by regulators mandating threat-based penetration testing capability we will see a greater focus on advanced technology investment. As mentioned in our AI predictions, AI will increasingly play a more pivotal role in enhancing security capability and penetration testing is a key area to exploit. To keep pace with security threats, the finance industry needs to increase their AI capability for cyber security at an equivalent rate to the cyber attacker community themselves; a cyber-security war where AI is the common currency.