The financial services industry has always run on a simple idea: Put capital or expertise to work and earn a margin on it. Banks take in deposits and lend them out; asset managers charge a fee on the money they manage; insurers price risk. But today, that model is under pressure. New digital tools give customers fresh ways to move money and shop around, while nonbank players court the business that banks and financial advisors used to count on. At the same time, AI is rewriting how finance work itself gets done.
This article walks through nine trends reshaping financial services, what’s behind each one, and what they mean for the firms swept up in it all.
Key Takeaways
- Instant payments and digital money are changing how dollars move, putting low-cost deposits—the cheap, low-interest funds banks rely on to lend profitably—at new risk.
- Nonbank lenders and platforms are pulling business away from established financial firms.
- Meeting rising compliance and cybersecurity demands is toughest for smaller institutions, where limited budgets and lean staff are already stretched.
- AI has moved from experiment to expectation, but its success depends on clean, connected data—a resource many financial services firms lack.
- The companies that pull ahead will fix their data foundations and choose a focused set of moves instead of chasing every trend.
The State of the Financial Services Industry
For a long time, financial services was a “sticky” business. Customers rarely switched banks, advisors kept clients for decades, and competition came from firms that looked and worked the same way. Now, money moves faster—sometimes instantly—customers shop around more freely, competitors come from outside the industry, and the software that runs everything is being rebuilt around AI. Some firms are embracing these changes and turning them to their advantage. Others find it difficult to let go of habits that have worked for decades.
New competitors are testing traditional financial services businesses’ core economics from several directions. Embedded finance, for instance, lets non-financial online platforms offer payments or lending directly, slipping between an established firm and its customer. Stablecoins, a form of cryptocurrency tied to the value of the dollar, give customers a way to hold and move money outside a bank account, so funds used to buy them usually leave a bank’s balance sheet. Companies in the private credit sector, which has grown to between $1.5 trillion and $2 trillion, keep winning both borrowers and investors from traditional institutions. On top of that, customers now expect instant, personal service, thanks to the advent of digital and mobile finance—and it’s easy for them to try a competitor if they don’t get it. Compliance and cybersecurity, meanwhile, are becoming more demanding and more expensive, and those costs bite hardest at smaller and community banks.
Traditional financial institutions aren’t necessarily fighting these newcomers head-on. More often, they partner with them. A bank might originate a loan and pass it to a private credit fund, collecting a fee without tying up its own capital. Or it might simply lend to the fund and earn steady interest. In embedded finance, an established institution can supply the regulated rails while the online platform handles the customer. In effect, the competitor becomes a channel. But regardless of whether an institution is competing or collaborating, the quality of its data is emerging as one of the—if not the—most important success factors, especially in terms of AI and automation projects.
The good news is that many institutions are dealing with these challenges from a position of financial strength. The Federal Deposit Insurance Corporation (FDIC) reported that the US banking industry’s net interest margin—a measure of the gap between what banks earn on loans and the interest they pay on deposits—reached 3.39% in the fourth quarter of 2025, its highest level since 2019. Community banks did better still, at 3.77%, the best since 2018. The catch is that most of the deposit growth came from uninsured balances (deposits above the $250,000 FDIC insurance limit that aren’t government-guaranteed if a bank fails), which are the most likely to bolt at the first sign of trouble.
9 Emerging Financial Services Trends to Watch
Forces in the financial services industry overlap and feed one another. Some strengthen the firms that get out in front of them; others chip away at the old way of doing business. Here are nine financial services industry trends to watch this year.
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Artificial Intelligence
AI has moved from a side project to the center of how financial work gets done, whether that means screening a loan, underwriting a policy, or building a client portfolio. But many firms have gotten ahead of themselves amid the pressure to deliver on AI. Across industries, including financial services, the share of companies that abandoned most of their AI initiatives before they reached production was 42% in 2025, according to S&P Global.
The difference between the financial services firms getting value from AI and the ones abandoning pilots frequently comes down to the quality and integration of their data. AI agents can take on work that would consume a finance team’s day, such as helping spot suspicious transactions or drafting the first pass of a compliance review, but only when the agents have access to clean, connected information. Point them at data scattered among systems that don’t talk to each other, and they stall. This being the case, the practical first move for financial services firms seeking to lean into AI is to get their data in order. This entails honestly assessing data quality and determining which AI projects can succeed with the data in its current state. As the data foundation improves, companies can raise the stakes for AI projects.
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Scaling and Automation
Growth no longer means hiring so that financial firms can process more transactions and, thereby, add more customers. That math doesn’t work as margins become tighter and skilled people get more expensive to find and keep. Instead, companies must learn to handle more work without growing the payroll, and automation is how firms are scaling.
The back office is a prime target. It’s repetitive, rules-bound work: reconciling accounts, processing transactions, running compliance checks, onboarding clients, closing the books each month. Workflow automation hands those steps to software, which cuts down on the manual tasks that slow processes and invite errors. Agentic AI raises the ceiling on what can be automated, taking on work that used to need a person’s judgment. AI agents work continuously in the background, matching transactions between accounts, highlighting the variances that matter, and clearing routine exceptions so month-end becomes less of a scramble than a review. The gains compound when the automated work draws on the same data the rest of the business runs on, instead of a separate copy someone has to reconcile later.
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Embedded Finance
Embedded finance puts financial products where customers already are—inside the software they use to run a business or make a purchase. Consider a restaurant that borrows through its point-of-sale system, or a software platform that offers its users insurance or payments without sending them to a separate financial provider. Bain & Company has projected that embedded finance will surpass $7 trillion in US transaction value in 2026, up from $2.6 trillion in 2021.
Established institutions face a choice: They can partner with fintechs, supplying the regulated infrastructure that embedded finance runs on and reaching borrowers they would never have signed on their own; or they can stand back and let embedded finance platforms slip between them and their customers. The first path is a real growth channel, but it comes with a catch. According to a joint statement from the Federal Reserve, FDIC, and the Office of the Comptroller of the Currency, a bank’s use of third parties “does not diminish its responsibility to comply with all applicable laws and regulations.” In plain terms, the bank holding the charter stays on the hook for compliance, even when a partner it doesn’t control owns the customer relationship. The opportunity is genuine, but so is the risk.
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Digital-Native Experiences
Customers now judge financial providers against the best apps on their phones, not against other banks. They expect to open an account in minutes, get help at midnight, and pick up on their phone right where they left off on their laptop. Meeting that standard is the price of holding on to customers who would be happy to scatter their business among several providers.
Instant payments show how fast the bar is moving. FedNow, the Federal Reserve’s instant payment system, settled 8.4 million payments in 2025 with an aggregate value of $853.4 billion, up from 1.5 million and $38.2 billion the year before. And the growth continues: In only the first half of 2026, FedNow settled 7.7 million payments valued at $545.9 billion—on course to top $1 trillion this year. But speed is only one factor. The harder work is in connecting channels to create an omnichannel approach, so a customer’s information follows them from app to branch. Institutions that remain tied to rigid, disconnected systems will become laggards.
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Increasing Compliance Pressures
The pressure on compliance teams comes less from a pile-up of new rules than from how fast the rules keep changing. Open banking is the clearest case. The Consumer Financial Protection Bureau’s rule giving customers ownership of their financial data was finalized but is now stayed while the bureau reconsiders it, leaving institutions to prepare for regulations that could still shift beneath them. As originally written, the rule requires firms to hand over a customer’s data to another provider the customer chooses, securely, in a usable digital format, and free of charge. Thus, the advantage shifts. When any provider can access the same customer data, the winner is whoever turns it into the most useful, appealing product—and that’s often a nimble challenger, not an incumbent weighed down by older systems. Digital assets pull compliance into fresh territory, too. As stablecoins enter the mainstream, the US Treasury and partner agencies have proposed extending know-your-customer and anti-money-laundering rules to stablecoin issuers, applying a familiar compliance playbook to a new kind of money.
AI is reshaping compliance as well. As financial firms lean harder on AI for everyday work, they must write their own rules for how it’s used because regulators are still catching up. For example, companies must determine which decisions an AI tool can make on its own, which need a person to sign off, and how the steps are logged for auditors. Firms that set those guardrails early tend to adopt AI with more confidence than those waiting to be told what to do. For compliance teams, the move is to build safeguards that can flex as the rules change.
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Evolving Cybersecurity Threat Landscape
Customers’ personally identifiable information is what cyberattackers seek most often, and financial firms hold exactly that—so it costs firms dearly when defenses fail. The average breach in the financial sector cost $5.56 million in 2025, second only to healthcare. Criminals now use AI to run phishing at a scale no human crew could match. They’re also generating deepfake voices and video, synthetic identities, and forged documents convincing enough to deceive identity checks. In fact, depository institutions filed 2.8 million suspicious activity reports in fiscal 2025. Meanwhile, criminals are increasingly putting AI to work.
Two things make these crimes harder to defend against. First, systems are more connected than ever, so a weak link at a cloud host or a fintech partner can quickly become a financial services firm’s problem, and the share of breaches traced to a third party has been climbing. Second, the AI technology that firms are racing to adopt is itself a target, opening a new front just as it’s becoming central to operations. Defenses are sharpening in response. Pairing a proven technique, such as anomaly detection, with newer AI that can explain what it’s flagging gives a stretched security team a better shot at catching trouble early. The edge goes to firms that can see their whole environment at once, rather than piece the picture together from disparate systems.
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Hyper-Personalized Customer Engagement
Relevance, or knowing a customer well enough to offer the right financial product at the right moment, is emerging as the core of competitiveness. Customers reward the providers that know them and quietly drift from the ones that don’t. According to the JD Power 2026 US Retail Banking Satisfaction Study, the average retail bank customer now keeps three deposit accounts at different institutions, and one in five moved money away from their primary bank in the three months leading up to the study.
AI capabilities within a financial services firm’s CRM system are changing what’s possible here, too. AI can help a business act on what it already knows, noting, for example, that a longtime customer is drifting toward the exit, or that a client nearing retirement hasn’t talked through an estate plan. Used effectively, AI tools extend the kind of tailored attention once reserved for the wealthiest clients to a far broader base. But personalization has limits. The JD Power study found overall retail banking satisfaction inched up in 2026 even as satisfaction with personal service slipped, a reminder that speed and automation don’t replace a person when the moment is complex or emotional. The path to success involves routing routine interactions to self-service and putting real people where they make a difference. That won’t work without a connected, current view of the customer.
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ESG and Climate Risk Management
The rules around climate reporting just loosened in the United States. In May 2026, the Securities and Exchange Commission proposed scrapping its climate disclosure rules, having already stopped defending them in court. But easing a disclosure mandate doesn’t make the underlying risk disappear, so the story has quietly shifted from reporting to risk management.
The reality is that climate has become a frequent—and material—financial input. A report from professional services firm Aon notes that global climate disasters caused economic losses of $368 billion in 2024. As a result, insurers are repricing or pulling out of markets where wildfire and flood losses have piled up. Lenders are looking harder at whether properties behind a loan sit in a flood zone, and at whether a borrower’s business could erode as the economy shifts away from carbon. Investors weigh that same exposure when they judge an asset. This is risk work that firms do regardless of disclosure rules. Meanwhile, the pressure on financial firms to keep reporting sustainability information hasn’t vanished: Large investors still ask for the data, and a number of states and overseas jurisdictions have their own rules on the books. Consequently, ESG data tends to be scattered and inconsistent, and a risk is hard to manage when you can’t measure it cleanly.
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Stablecoins and Tokenized Deposits
Digital dollars are moving from the crypto fringe into everyday finance. A stablecoin holds a fixed value, usually a dollar, and settles on the blockchain in seconds, at any hour. That makes them useful for the payments that traditional systems handle slowly and expensively, especially cross-border payments. With stablecoins, a cross-border supplier payment or payroll run can clear in minutes instead of days. The Federal Reserve noted in March 2026 that stablecoins can reduce “the need for individuals/businesses or small banks to rely on intermediaries in processing cross-border payments.” And Deloitte has pointed out that fintech stablecoin-as-a-service offerings put issuing stablecoins within reach of regional and community banks that have no blockchain team of their own.
While stablecoins can help retain customers, converting deposits into stablecoins pushes that money off the bank’s balance sheet. That matters because deposits are a bank’s cheapest source of funding for loans. Tokenized deposits offer a way for traditional institutions to have it both ways: the same blockchain-based speed and round-the-clock movement, but the balance stays on the books as an interest-bearing deposit that can fund lending. The capability is so new that regulators are still working out exactly how tokenized deposits will be treated. But in June 2026, The Clearing House, a consortium of 25 US banks, announced plans to provide blockchain-based clearing and settlement of tokenized deposits among established banks.
A Modern ERP System Is the Backbone of Financial Services Growth
Nearly every trend here can be thwarted by data scattered across systems that don’t talk to one another, which starves AI and slows everything that depends on a full picture of the business. NetSuite ERP Software for Financial Services pulls financial, operational, and customer data into one cloud system where built-in AI capabilities can work from complete business context instead of fragments. That foundation is what lets NetSuite put AI to work rather than bolt it on. The Ask Oracle conversational interface lets teams query live data in plain language; anomaly detection flags unusual transactions as they occur; and AI agents handle multistep work, such as monitoring the close continuously, identifying exceptions, and proposing resolutions before they cause delays. Because new modules for accounting, investment tracking, or customer management all draw on that same shared data, financial services firms can add capability and put AI agents to work without the integration headaches that come from stitching together standalone tools.
The trends facing financial services firms today are interconnected. The pressure on core revenue, the contest over customers and capital, the push to automate, and the rising cost of getting security or compliance wrong all trace back to the same question: Can a firm organize and act on what it knows—its data—fast enough to matter? The tools needed to compete are more within reach than they’ve ever been, often available as a service instead of a build. What will separate the winners won’t be which firms spend the most, but which get their data house in order.
Financial Services Industry Trends FAQs
What is the future of the financial services industry?
The near future is defined by faster money movement, smarter software, and a tougher fight for customers, deposits, and capital. Firms that connect their data and adopt AI with a clear plan will be better positioned than those treating each new tool as a one-off fix. Expect more partnerships and steady pressure on long-standing business models.
How is AI transforming the financial services industry?
AI helps financial firms handle high-volume work faster, such as spotting fraud and speeding up the monthly close. The bigger shift is toward AI agents that can carry out multistep tasks under human oversight. Results depend heavily on data quality, since clean, connected information produces useful output, while scattered data holds AI back.
What are the top three trends in the financial services industry?
The three trends that stand out are the spread of AI and AI agents into everyday operations, the move toward instant and embedded ways of paying, and mounting pressure on core revenue from new digital and nonbank competitors.
