Voice of the Industry

Charting fintech's future: insights from Fintech 2025+ report

Thursday 13 June 2024 09:03 CET | Editor: Mirela Ciobanu | Voice of the industry

‘The measure of greatness in a scientific idea is the extent to which it stimulates thought and opens up new lines of research.’ Paul Dirac, English mathematical and theoretical physicist

Have you ever wondered why we dive into fintech reports with such enthusiasm? It’s simple: they’re treasure troves of insights and inspiration! Whether it's staying ahead of the curve with the latest payment trends, delving into fascinating data, finding that spark for our next fintech piece, or simply learning from our fellow peers, these reports are our go-to source for all things fintech.

Recently, I had the privilege of delving into 'Fintech 2025+' by Convera, a comprehensive exploration of global commerce trends, tech, and transformation. The title alone is enticing, offering a glimpse into the fintech landscape of 2025 and beyond. 

A deep dive into cross-border payments

The Fintech 25+ presents an in-depth analysis of cross-border payments, examining their current state, future projections, geographical distributions, and sectors poised for growth. A key insight reveals a surge in cross-border payment flows, expected to reach USD 290 trillion by 2030, driven by factors like international ecommerce and digital payment innovations. While multinational corporations dominate B2B transactions, new entrants focus on underserved segments like C2C, B2C, and B2B low-value transactions.

When it comes to who is the cross-border revenue leader – I won’t spoil the fun of reading the report – I will tell you who is in third place: Europe, with 20% of global revenues. You will find much more info on market activity and outlook in the report’s pages, all packed with checked data.

The report also discusses the Financial Stability Board's roadmap endorsed by the G20 to enhance cross-border payments, which includes exploring global stablecoins and CBDCs. 


Driving value in the digital age: fintechs and paytechs at the forefront

Besides these initiatives, another component of making payments faster, safer, and more accessible are fintechs and paytechs. They enable swift, effortless money transfers, enhancing global economic networks both old and new. As the fintech sector expands to capitalise on the rapid growth in cross-border payments key innovations have emerged, including developments in real-time payments, blockchain and cryptocurrencies, Open Banking, and advancements in fraud prevention and regulatory trends.


Prime time for real-time payments

As real-time payments connect with cross-border payments, the report goes on to present some initiatives, technologies, and innovations that are supporting the connection of these types of payments. These include central banks, blockchain, different initiatives – G20, BIS, etc., use of crypto and stablecoins, and tokenisation.

Here are just a few takeaways from the report worth pondering over:

  • Real-time payments (RTP) are increasingly recognised as a catalyst for economic expansion (and GDP growth). Already, 86% of businesses with revenues between USD 500 million and USD 1 billion have embraced this streamlined transaction method. While developed economies may not see a significant impact, emerging economies stand to gain substantial benefits from the advantages of real-time payments.

  • In Asia, the success of RTP is attributed to its user-friendly features, such as QR codes and mobile integration. Governments and businesses, particularly within ASEAN, have embraced it for cross-border payments. The region’s rapid technologisation, high smartphone and internet penetration, and collaborative efforts among states and organisations are praised. Other countries could emulate this model to enhance their payment systems.

  • The rise of RTP systems brings cost savings for both businesses and consumers by eliminating intermediaries and reducing transaction fees. Merchants benefit from lower interchange fees, immediate fund settlements, and smoother returns processes, fostering customer loyalty. This shift may prompt new business models as some intermediaries fade away. For instance, in markets like the Netherlands, banks don’t charge RTP transaction fees but generate revenue through bundled account benefits, interest, and traditional banking services. Banks should reassess their use of RTP infrastructures and explore strategic opportunities to strengthen their position in the evolving payment landscape.

Payments as catalysts for positive change

When it comes to payments, topics like financial inclusion, remittances, disaster recovery, ESG, and humanitarian aid often take a back seat. Not so with the Convera Fintech 25+ report team. They’ve dedicated a chapter to how real-time payments (RTP) improve financial inclusion and humanitarian aid. RTPs play a crucial role in providing instant P2P family support, lowering transaction costs, and ensuring immediate access to funds in emergencies.

The report also explores how blockchain technology, like that deployed by the Stellar Development Foundation, aids in humanitarian aid disbursement. Additionally, the focus shifts to the evolution of ESG, with insights from Nameer Khan, CEO of Fils, on the transformative role of fintech and blockchain in addressing climate challenges.


The convergence between crypto and traditional financial markets

The fintech ecosystem plays a pivotal role in shaping the future of finance, leveraging advancements like blockchain integration, real-time payments, and Open Banking frameworks. Referred to as ‘Finternet’ by the Bank for International Settlements general manager, Augustin Carstens, this vision aims to simplify and enhance financial services through technologies like tokenisation and unified ledgers.

Finternet facilitates the emergence of comprehensive pages on crypto, DeFi, stablecoins, and specialised service providers. With the DeFi market projected to reach USD 26.17 billion in revenue this year, banks worldwide are exploring opportunities in issuing, trading, and offering custody services for digital assets.


Data sharing and the Open Banking revolution

Fintech 25+ elucidates key concepts such as Open Banking, embedded finance, and BaaS, which have gained traction globally. Open Banking frameworks in regions like the EU, UK, and Brazil grant third-party providers access to financial data with customer consent. While Open Banking focuses on financial data, its principles of transparency align with open data, extending to diverse information realms.

Embedded finance seamlessly integrates financial services into non-financial offerings, facilitated by BaaS, which provides backend banking functions for digital banks and non-banks. Juniper Research predicts BaaS platform revenue to exceed USD 38 billion by 2027, reflecting its growing significance in the ‘as a service’ trend.


Fraud prevention, security, and compliance take centre stage

The ongoing battle against financial crime is exacerbated by the rapid growth of real-time and mobile payments, creating vulnerabilities for scams. Today's digital era, infused with AI, witnesses increasingly sophisticated fraudulent activities, posing risks to consumers and institutions alike.

Industry reports reveal substantial financial losses from various fraud types, including bust-out schemes and APP fraud. In the US, instant payment networks like RTP and Zelle leave little time for verification, heightening the risk of fraud. Cross-border payments are not immune, with many SMEs expressing concerns about fraud in online transactions.

However, the Fintech 25+ also highlights strategies to detect, prevent, and stop these crimes through technology, collaboration, and education. A fintech leadership spotlight section featuring Erica Dorfman of Brex discusses the impact of fintech and AI on spend management and fraud detection.


Emerging regulatory trends in 2024+

To combat fraud, extensive data analytics are used, leveraging vast amounts of data while ensuring privacy and consent in compliance with global regulations. The report delves into global approaches to data privacy and key payment regulations in 2024, notably highlighting PSD3's impact.

PSD3, the proposed successor to PSD2, aims to bolster the EU's payment services market by addressing fraud trends and fostering fair competition. A key feature of PSD3 is the reinforcement of Strong Customer Authentication (SCA) requirements, allowing users to authenticate transactions using two identical categories for heightened security. Additionally, issuers can delegate SCA to third parties, subject to stringent rules, ensuring accessibility for vulnerable customers.


The cherry on the cake

I really appreciate how the Convera team went the extra mile by including additional resources in the report, inviting readers to explore specific topics further. You can dive into what's driving the surge in digital wallets and its implications for FX, or learn more about RTP, FedNow, and the new frontier of B2B transactions, as well as delve into tokenization.

For podcast enthusiasts or those on the move looking to learn more, there's a treasure trove of recommendations. Personally, I'm excited to listen to Soups Ranjan, CEO and founder of Sardine, discussing fintech fraud in the realm of real-time payments. I'm also keen on exploring a deeper analysis of DeFi's growth and its impact on traditional finance through Convera's 3-part series podcast titled ‘Why DeFi Matters,’ featuring author Ian Horne, Head of Content for Money2020 EU. Additionally, I'm eager to hear insights from the Bank for International Settlements' Daniel Eidan on the challenges of cross-border payments and the quest for interoperability through various Central Bank and private sector experiments.

In conclusion, Fintech 2025+ offers a comprehensive view of the rapidly evolving fintech landscape, focusing on key areas such as cross-border payments, real-time transactions, and the convergence of crypto and traditional finance. With insights into emerging regulatory trends and the importance of data sharing in the Open Banking era, this report is essential reading for anyone trying to understand the complexities of the modern financial world. From driving value in the digital age to addressing fraud prevention and compliance challenges, Fintech 2025+ provides valuable insights that can shape the future of finance.


I highly recommend diving into its pages to gain a deeper understanding of the trends shaping the fintech industry.


About Mirela Ciobanu

Mirela Ciobanu is Lead Editor at The Paypers, specialising in the Banking and Fintech domain. With a keen eye for industry trends, she is constantly on the lookout for the latest developments in digital assets, regtech, payment innovation, and fraud prevention. Mirela is particularly passionate about crypto, blockchain, DeFi, and fincrime investigations, and is a strong advocate for online data privacy and protection. As a skilled writer, Mirela strives to deliver accurate and informative insights to her readers, always in pursuit of the most compelling version of the truth. Connect with Mirela on LinkedIn or reach out via email at mirelac@thepaypers.com.

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Keywords: fintech, cross-border payments, real-time payments, regtech, fraud management, data, instant payments, cryptocurrency, CBDC, DeFi
Categories: Banking & Fintech
Countries: World
This article is part of category

Banking & Fintech