This will require many companies to step up their efforts to simplify your business environment, Expand automation capabilities to improve resilience and security, accelerate the modernization of core platforms for greater agility that enables real-time capabilities and optimizes the use and cost of hybrid cloud platforms.
Based on these global macro trends, Richard Harmon, VP & Global Head of FSI at Red Hat, identifies some specific areas that will be key in 2025 for much of the financial services and insurance sectors worldwide:
- Payment platforms Globally, they will continue to modernize to facilitate real-time capabilities and support a wide range of new service offerings for institutional and retail clients. In addition, new global standards (ISO 20022) are vital to the operation of instant payments and play an important role in the overall modernization of payment processes. Benefits to the financial system include streamlined financial crime compliance, improved management and investigation of payment exceptions, simplified regulatory reporting, the ability for financial institutions to innovate and enhance their product offerings, as well as strengthened corporate treasury activities for better reconciliation and improved liquidity management.
In 2025, we will also see some countries moving forward with early-stage implementation of central bank digital currencies (CBDCs).
- AI and generative AI will focus more on creating real business value through a range of use cases that leverage smaller, specialized generative AI models. Use cases are likely to span customer services, code assistants, fighting financial crime, regulatory compliance, document analysis and processing, customer onboarding, and risk management. We will see the first applications of foundational time series models to new anomaly detection approaches and forecasting-by-generalization use cases.
On the AI regulatory front, the EU AI Law will come into force in January 2025, which will start defining specific guardrails by implementing risk-based requirements for explainability, documentation, process and data governance, human oversight, risk management, and auditability of critical AI-based applications. This will drive investment in enterprise-wide AI platforms that enable consistent security, model lifecycle management, and governance.
AI-based simulation capabilities will gain wider adoption due to their high degree of transparency and explainability, coupled with the ability to generate emergent results that go beyond the limitations of historical experience. Likely areas for AI-based simulation applications in 2025 will include investment stress testing, execution and trading strategies, assessing and reducing risk exposure, verifying the viability of new product or service offerings, and improving the operational efficiency of a company’s supply chain while reducing the carbon footprint.
- AI-powered cyberattacks: a new frontier in threat intelligence. Current geopolitical tensions, coupled with state-sponsored cyberthreats, constitute a major risk factor for the global financial system. Threat actors of all stripes will increasingly use AI to conduct sophisticated phishing, vishing (voice phishing), and social engineering attacks. They will also leverage deepfakes for identity theft, fraud, and security circumvention.
A key area of focus and investment in 2025 will be software supply chain resilience. This is due to the highly interconnected nature of supply chains, which exposes organizations to cybersecurity risks from suppliers and third parties that could result in systemic risks to the global financial system.
Richard Harmon
VP & Global Head of FSI at Red Hat
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