AI, security and customer experience dominate fintech innovation in 2025

Fintech companies continue to play a decisive role in shaping the future of technology for the financial services industry, according to market intelligence firm IDC.

“While the names of the vendors have changed, the impact fintechs have, both large and small, in shaping how we learn, transact and plan our financial journeys has not,” said IDC in its analysis.

Today’s financial customers are increasingly conducting research online before engaging with providers, whether comparing rates, products, locations or reading reviews.

“Consumers want to know the information ahead of time before taking things to the next level,” IDC added.

In banking, consumer loyalty is closely tied to how well digital services and human interactions meet expectations.

“That often starts right at the point of beginning a new relationship, and the importance of engaging a customer where they are, on any device, with relevant and personalized offers and messages,” IDC noted.

Banks typically leverage enterprise platform solutions, specialised vendors, or a combination to develop these digital experiences.

“Large institutions may choose to build their own, but will often augment areas with prebuilt components in order to improve speed to market,” IDC added.

IDC Financial Insights has been conducting its IDC FinTech Rankings research for more than twenty years, measuring financial services– and fintech-based revenue earned by the top 150 technology firms globally.

The financial services industry, IDC explained, includes banking, insurance, capital markets and fintech firms that buy hardware, software and services from third-party IT providers.

Two major categories are ranked by IDC: the FinTech Top 100, which comprises solution providers deriving more than one-third of their revenue from financial services and fintech industries and operating across no more than two additional key non-financial sectors, and the FinTech Enterprise Top 50, which supports four or more industries but generates sufficient financial services revenue to be ranked.

IDC highlighted that while the names of the vendors may have shifted, fintechs continue to shape how consumers learn, transact and manage their financial lives.

Annual technology spend in hardware, software and services by banks, capital markets and insurance providers exceeds USD 550 billion, according to IDC estimates.

“To put that in perspective, that would make the IT spend by financial services equivalent to being one of the largest 25 economies in the world by nominal GDP, equivalent in size to Ireland,” IDC said.

Of the 150 companies ranked in the IDC FinTech Rankings, nearly 60 per cent of financial services IT spending is captured by these firms, leaving substantial market share for thousands of additional fintech providers.

At the Finovate Fall event in New York City, IDC observed the next generation of fintech solutions across banking and wealth management.

“First, the importance of customer experience remains a key component of the demonstrated solutions, but glad to see that the importance of employee experiences has equaled in importance,” IDC noted.

The industry has often neglected employee-focused solutions, which are critical for supporting customers who use modern technology while staff operate outdated interfaces and disparate platforms.

“Single sign on has been helpful, but there is much that needs to be done,” IDC added.

AI is increasingly being leveraged to automate and create efficiencies, though IDC stressed that automation does not always mean executing processes independently.

“For example, using AI to begin a fraudulent transaction makes sense to gather as much information as possible, yet we are not ready to have AI actually execute the steps necessary to either disable a card or issue a refund,” IDC said.

“There still needs to be a human on the loop, whether it is the customer or the bank employee,” they added.

Security and identity management were also prominent themes, with solutions aimed at safeguarding money movement and maintaining compliance with regulatory requirements.

“The idea, which is more refinement than innovation, is to embed fraud prevention within the solution, but ensure that the forensics are available to detect and deter actions by bad actors,” IDC said.