Original insights sourced from: 10x Banking: 2025 Core Banking Trends.
As we approach 2025, core augmentation is set to become an indispensable catalyst for banks grappling with the demands of digital transformation. Faced with soaring customer expectations, intensifying regulatory scrutiny, and the relentless pace of fintech innovation, financial institutions are under pressure to evolve with agility and scale.
SunTec believes that these four pivotal trends will redefine the banking landscape and drive strategic shifts across the industry:
Ecosystem development – expansion into platform economies
By 2025, banks are expected to expand modular composable architectures, increasingly adopting platform ecosystems that enable broader business collaborations, especially with fintechs and non-banking entities. These platforms will enable seamless integration of third-party services, allowing banks to offer enhanced value propositions without building every service internally. An EY survey pointed out that over 94% global technology financial leaders believe that a financial product’s success hinges on its ability to meet customers’ real-time needs. As competition intensifies, the ability to orchestrate diverse partners within a cohesive ecosystem will be a strategic differentiator for institutions looking to remain relevant.
Product, pricing, and proposition – hyper-personalization at scale
In 2025, customers will expect hyper-personalized financial products, delivered in real time and tailored to their specific needs. Banks will leverage AI and machine learning to offer more dynamic pricing models and customized bundles based on customer behavior and market conditions. In fact, according to a survey, 53% of customers said they would switch FSIs if services felt impersonal. Augmentation of the core with specialized pricing and proposition platforms will be essential for delivering these personalized experiences.
Governance and compliance – automated regulatory adherence
A Thomson Reuters survey suggested that 45% of respondents did not monitor cost of compliance. Further, they cited managing cost pressures and balancing competitive and compliance demands as a challenge. With regulations becoming increasingly stringent, 2025 will see banks relying more heavily on automated governance and compliance solutions. These solutions, integrated as part of the core augmentation strategy, will help financial institutions manage regulatory changes swiftly while minimizing operational risks. The use of AI-driven tools for real-time compliance
monitoring will allow banks to focus on innovation while ensuring they remain compliant with evolving global regulations.
AI-enhanced operational excellence – evolving core functions
Banks are gradually adopting AI to improve operational efficiency, particularly in areas like revenue management and risk mitigation. A Deloitte report indicates that successful innovators (FIs) have the potential to improve their cost-to-income ratio by 5-15% over the next five years. For instance, by incorporating AI for real-time anomaly detection in transactions, institutions can begin to proactively identify and address irregularities, which may help reduce frauds, disputes, and strengthen risk governance. However, this evolution won’t happen overnight; it will unfold gradually as banks integrate these technologies into their operations. This shift toward internal transformation is likely to enhance the resilience of banking operations, with predictive analytics and automation playing key roles. Ultimately, this evolution could lead to improved workflows and a stronger foundation for client-facing services.