Current Trends in the Banking Industry

What’s on the global payments #horizon in 2025? In 2024, I engaged with 150+ of our Deutsche Bank Corporate Bank financial institution clients, regulators, and policymakers through travel across 18+ countries; partnered with Partior, a leading payments innovator; sat on the BAFT (Bankers Association for Finance and Trade) Transaction Banking Global Leaders council; and worked with our expert Cash and Trade management team. In short, a front-row seat to the evolving demands shaping the payments horizon. Five 5️⃣ key trends FIs should anticipate in 2025: 1️⃣ Real-Time Everything Instant payments as the norm. FIs are investing in real-time infrastructure for both domestic and cross-border transactions. Blockchain solutions, direct connections to clearing networks, using your correspondent as on ramp to a clearing house, and expanded use of book transfer networks all enable instantaneous settlement with efficiency, transparency and traceability. #dbXpay 2️⃣ Turning Competitors to Partners Reducing transaction costs for our clients is a top priority in today’s margin-conscious environment. FIs are working together to play to each others strengths to leverage corridors and networks to build economies of scale and provide better pricing. 3️⃣ High Bar to Effectively Manage Financial Crime and Geopolitical Risks Rise in fraud, increased digital payments, and global destabilization have increased the complexity of managing FCR and sanctions risks. There’s a growing demand for technology to ease compliance demands and increase protection without compromising speed or customer experience. AI-driven tools, use of blockchain, and solid preventative #riskappetite drafting will help FIs stay ahead of risks. Partnering with an expert correspondent bank can support delivery of all. #dbXadvise 4️⃣ Capitalizing on FX Volatility Economic uncertainty has increased FX volatility, creating opportunities for clients to optimize currency positions. Heightened demand for integrated payments, liquidity management, and FX solutions that allow real-time currency exposure management. At Deutsche Bank, platforms like #FX4Cash and investments in #dbXconvert enable businesses to combine payment flows with FX execution, turning market movements into value-creation opportunities. 5️⃣ Global Interoperability Clients demand greater flex and flow outside business hours and regulators pushing for global payment harmonization. Blockchain’s inherent transparency sets a new standard, enabling real-time tracking and reconciliation at all hours. Additionally countries are aligning regulatory frameworks to foster cross-border interoperability. At Deutsche Bank, we are addressing these trends via our #dbX strategy, developing key partnerships, deploying our expert FCR team to support clients, expanding #FX capabilities, and combining technology with trusted expertise. Deutsche Bank is shaping the future of payments—one that is faster, smarter, and built to empower our clients. 🚀

For decades, banks enjoyed a steady flow of low-cost funds from savings accounts. But the landscape is changing dramatically. Customers are increasingly opting for higher-yielding investments like fixed deposits and mutual funds. → Fixed deposits offer attractive rates of 5% to 7.85% for a one-year tenure. → Mutual funds provide even higher returns, averaging 12% to 14% for a one-year period. This shift is forcing banks to rethink their strategies and find new ways to fund their operations. The 2 main challenges they face are: 1. Rising Cost of Funds: As customers move away from savings accounts, banks face higher costs to acquire funds. {The cost of deposits has surged from 3.72% in Q1FY23 to 5.09% in Q4FY24} 2. NIM Pressure: The increasing gap between deposit rates and lending rates is squeezing banks' net interest margins. To navigate these challenges, banks must focus on: → Leveraging AI and automation to reduce operational costs and enhance customer experience. → Exploring alternative funding options beyond traditional deposits. →Identifying new revenue streams through value-added services and premium offerings. The banking industry is watching the upcoming Union Budget closely for potential relief, such as tax breaks on interest income. The changing dynamics of the deposit market underscore the need for banks to adapt their business models and embrace innovation. I write about this in more detail for ETBFSI, the article is pinned in the comments.

The banking industry is navigating a rapidly evolving landscape, where gaining a clear, comprehensive view of the forces shaping the future has never been more critical for senior leaders. Our latest Executive Briefing provides an authoritative, 360-degree perspective on the key trends, innovations, and strategic imperatives defining success over the next 12-24 months. Drawing on proprietary data and insights from the Alloy Labs ecosystem of leading banks, partners, and portfolio companies, this briefing offers a uniquely valuable window into banking's next horizon.   Key highlights include: • The acceleration of embedded finance and banking-as-a-service models, enabling banks to deliver new non-rate customer value propositions through strategic partnerships • The rise of digital-first banking experiences and the new competitive landscape, as banks face an exponential increase in competition from both traditional and asymmetric players • Emerging technologies and their industry-shifting applications for enhancing operational efficiency, driving product differentiation, and improving customer experiences • Evolving customer demands around personalization, convenience and trust, amidst increasing regulatory complexity and the need to update legacy playbooks • The imperative for banks to embrace VUCA (volatility, uncertainty, complexity, ambiguity) as the new normal, requiring greater speed, agility and a willingness to test and learn For senior executives, these briefings represent an essential resource for staying ahead of the curve, identifying high-potential opportunities, and positioning your institution as an industry thought leader.   DM me if you'd like a briefing for your leadership team. We welcome any questions and look forward to discussing the insights in greater detail.

🚀 What's Next in Banking and the AI Revolution 🌐 The intersection of bold growth strategies in banking and the transformative power of AI is shaping an unprecedented future for the industry. Drawing insights from PwC's latest reports, here are some key takeaways: 1️⃣ Banks on the Offense: With declining interest rates, solid loan demand, and an optimistic U.S. economy, 2025 is the year for banks to expand aggressively. But with this opportunity comes the need to carefully allocate capital to areas offering the most attractive risk-adjusted returns . 2️⃣ AI Driving the Next Wave of Competitiveness: The rapid adoption of AI in banking is no longer experimental—it's a strategic imperative. AI is enabling hyper-personalization, redefining operational efficiency, and transforming compliance processes. The leaders will leverage "AI-ready" data and robust governance frameworks to unlock new efficiencies . 3️⃣ Data as the Edge: AI’s potential lies in its ability to turn data into a strategic asset. However, banks face challenges with fragmented and unstructured data, which could limit AI’s transformative impact. Tackling this with scalable and secure data frameworks is essential . 4️⃣ A Resilient Talent Ecosystem: The race for top-tier talent—data engineers, architects, and AI experts—is intensifying. For banks to keep pace, they need not only to hire but also to reskill teams and adapt to blended human-digital workforces . 5️⃣ Sustainability and AI: Beyond profitability, AI is set to be a major player in driving sustainability in the banking sector. From automating ESG reporting to optimizing energy use in operations, this dual focus on growth and responsibility is pivotal . As banking leaders, we stand at a transformative crossroads. Bold strategies, combined with the disciplined application of AI and data, will define the winners of this new era. https://lnkd.in/enYu4ZNp