The financial services sector is bracing itself for potentially transformative change in 2025.
There is considerable uncertainty around how the new US administration’s first 100 days will play out, and how quickly it’ll follow through on its promise to deregulate.
AI and automation promises to change the operational landscape considerably.
Thanks to competition from digital-first fintechs, innovation around products and services are picking up pace.
While challenging, this represents an opportunity for financial services firms to do things a bit differently.
Sage spoke to several financial services finance leaders across the US and the UK to get their predictions for 2025.
Their answers revealed scope for CFOs to play a much more strategic role in the future, using real-time insights to become an indespensible partner to the CEO and C-suite peers.
Here’s what we’ll cover
Economic and market dynamics
When asked about the factors that would most impact their businesses in 2025, economic uncertainty and market competition ranked highly among the finance leaders surveyed by Sage.
Cost reduction and revenue growth were also top priorities.
In terms of the economy, US share prices fell at the end of 2024 as the Federal Reserve cut its interest rates for the third time in a row, and signaled a slower pace of cuts in the new year.
Experts say policies backed by the new US administration, such as plans for tax cuts and import tariffs, will put inflationary pressure on prices and borrowing rates in 2025.
There’s also expected to be a consolidation of the industry, with increased M&A activity, and an uptick in investment flows.
Financial services firms can also expect the competition from digital-first fintechs to continue in 2025.
By using data to build more personalized products and offer self-serve options, these challengers have raised customer expectations, and are putting pressure on more traditional firms to innovate.
During times of market volatility, real-time data insights are also helping astute C-suite leaders build resilience, anticipate trends as they emerge, and build a better strategy for growth.
AI is a growth catalyst
Financial services firms have already been making big investments in AI, and are starting to reap the benefits.
One survey by Bain & Company found adopters are seeing a 20% productivity gain on average, with software coding and customer service among the most popular use cases.
But questions around risk, data security, and team skills are already limiting the pace of adoption.
In the Sage predictions survey, most respondents agreed AI will help financial services firms to:
- streamline back-office operations
- increase productivity
- drive better decision making.
Rebecca Miller, controller at Byler Holdings LLC also sees potential for greater personal growth among staff:
“When there is less need for a manual process, we see it as an opportunity to advance the learning of everyone, which makes them able to take on those more complicated tasks that need a human touch…
Rebecca Miller, Controller at Byler Holdings LLC
[It will enable] a profound shift so that our entire firm is more efficient and better organized.”
Aaron Harris, CTO at Sage, agrees but stresses the sector needs to think about guardrails for this new technology:
“This will be the year where we start to see AI agents take over responsibilities for accounting functions.
Aaron Harris, CTO at Sage
As AI effectively becomes a ‘user’ in accounting software to automate tasks, we will teach a tipping point where accountants will be able to focus more on high-value activities like strategic planning and advisory services–so long as the industry applies the necessary safeguards for these AI agents.”
Risk, compliance and governance
A number of the financial services leaders surveyed by Sage stated regulatory compliance was going to be a significant factor impacting their business in 2025.
There’s uncertainty around what plans the new US administration has for governance and compliance. However, KPMG points to shifts around areas of technology, data risks, and consumer protections.
Consequently, financial services firms are likely to need to enhance transparency. They will also need to improve risk controls around cybersecurity and financial crime in particular.
ESG reporting requirements may also continue to ramp up. However, the new administration in the US may water down anticipated legislation.
This is a sentiment that’s also been reflected by the wider sector.
In a financial services survey by PwC, for example:
- 48% of its respondents said they were most worried about regulation around data privacy and security
- 31% said digital identity authentication was a concern
- 30% said regulation around the use of new technology (such as AI) was giving them pause for thought.
Future of financial operations
The World Economic Forum predicts that by 2027, 43% of work tasks across all sectors will be automated.
In financial services, the shift to process automation and real-time reporting will necessitate investment in upskilling for finance teams.
In PwC’s annual global CEO survey, 54% of financial services chief executives said skills shortages hindered their firm’s ability to innovate effectively.
This needs to be a priority for firms to maximize the opportunities technology investment can bring.
Additionally, existing finance personnel need assurances that AI and automation does not necessarily equate to headcount reductions.
Rather, workflow refinements through these tools are designed to offload much of the tedious work on their plate and serve as complementary to human work.
Sage’s research highlighted a number of skills finance leaders believe will be critical in 2025, from data literacy and visualization, to AI proficiency and strategic thinking.
Sage CTO Aaron Harris says AI isn’t a silver bullet and a proficiency with tasks such as prompt engineering shouldn’t be overlooked.
“It is about understanding how to communicate with and guide their AI ‘copilots’ to achieve desired outcomes, asking the right questions and, over time, training AI behaviour to optimise performance.”
Aaron Harris, CTO at Sage
Softer skills such as adaptability and a willingness to embrace change were also emphasized.
Change management is as important a part of digital innovation projects, as the technology installation itself.
Market growth and competitive advantage
The majority of financial services leaders surveyed about the most significant growth opportunities for 2025 point to the ability to boost productivity and efficiency through automation.
Others believe they’ll find competitive advantage by using customer data to launch more personalized products or move into new business lines.
But with so much in flux, some organizations feel there is an opportunity to take advantage of the uncertainty in the market.
Krunal Thakkar, team leader at Analytix Solutions, for example, says that employing strategies to capitalize on interest rates would be the company’s most significant growth opportunity in 2025.
Another anonymous respondent pointed to acquisition opportunities.
Aaron also believes the competitive advantage of investing in AI and automation will only continue to grow.
“In 2025, this will manifest itself in the next step on the industry’s journey towards continuous accounting, continuous assurance, and continuous insights.
Aaron Harris, CTO at Sage
This shift will empower businesses with unparalleled operational efficiency, improved compliance, robust risk management, and more accurate financial forecasting.”
Final thoughts
While financial service leaders are concerned about market volatility and the uncertainty around new regulation in 2025, there’s a real recognition of the potential offered by new technology.
At the end of 2024, the strongest barriers seem to be skills and capacity within in-house teams, as well as legacy systems that keep data siloed.
With the right upskilling and technology in place to optimize back-office operations in 2025, finance teams will be able to automate high-frequency administrative tasks, and focus more on higher level strategic work.
Compliance reporting and strategic forecasting become seamless – regardless of the regulatory changes that come to pass.
Leaders will be empowered to make better decisions to build resilience, boost revenue, and innovate new products and services to serve a wider cohort of customers in 2025.
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