Nicholas Holt, Head of Solutions and Delivery, Europe at Marqeta
Before sharing my fintech forecast, let’s take a moment to reflect on 2024. To provide some perspective, I will revisit my predictions for 2024.
I predicted that flexible payment options like Buy Now, Pay Later (BNPL) would gain traction, normalising short term credit. I foresaw the increased integration of AI to provide personalisation and enhance financial literacy, and more brands offering embedded services. I suspected these developments would lead to the credit card becoming the new homepage for the brand experience – these predictions have been fairly accurate!
2024 was known as a year of ‘BNPL revolution’, with Klarna continually making headlines for partnerships, and even filing for an IPO. AI also became a fixture of fintech, with personal finance digital assistants helping users to budget. Finally, the embedded finance market reached around $112.6 billion, with notable announcements such as Uber’s embedded insurance and the launch of an Amazon and Barclays co-branded card.
How will the fintech industry build on this in 2025?
Tapping Into Trends
Today, the status quo in financial services is no longer enough for consumers or businesses. Millions of consumers already manage their lives through their smartphones and tap-to-pay digital experiences have continued to gain traction — our State of Payments (https://www.marqeta.com/state-of-payments) research found that 80% of UK consumers used contactless in the previous week. Due to the convenience of this type of payment, it will become increasingly embedded into fintech infrastructure, leading towards the phase out of clunky manual checkouts.
In 2025, there will be less demand for the traditional roles banks once played via ATMs and physical branches. The front door to a bank is now an app for many. To remain competitive, banks need to invest in digital infrastructure and develop mobile wallets and seamless payment apps, elevating the customer experience and offering the fast and convenient services consumers demand.
Personalised Rewards and Loyalty
Across 2024, the industry emphasised payments with new budgeting tools and financial options. This year, fintechs will expand their focus from payments to personalisation, leading to loyalty points becoming a universal, accessible form of currency, seamlessly incorporated into everyday transactions.
We’re already seeing innovative rewards programs incentivising customers to try new things, rewarding loyalty and unlocking new revenue streams. This will be amplified in 2025, as brands realise that payments are not just transactions, but touchpoints of a consumer journey where loyalty can be fostered.
AI-driven data analytics are redefining loyalty and rewards, and much innovation is to come in 2025 as financial providers get creative with the tailored incentives consumers demand across all products.
Businesses leverage general rewards, like cash-back or gift cards, which are easy to implement but transactional in nature. They will now need to offer tailored experiences that move beyond one-size-fits-all solutions and towards aspirational rewards, such as exclusive access to products, app credits or the promise of planting a tree with each purchase.
Earned Wage Access
Organisations use benefits packages to attract and retain talent. In 2025, a promising tool for boosting employee retention will be Earned Wage Access (EWA), allowing workers to get faster access to their earned wages.
Soon, more organisations will adopt EWA as a strategic advantage in the competitive hiring landscape, and to foster worker loyalty. With EWA solutions, workers can get same day access to their wages, helping to reduce their reliance on credit and better manage their finances. As consumer demand for flexibility increases amid economic uncertainty, EWA will likely grow in popularity. EWA is associated with the gig economy, however, we are now seeing the adoption of EWA across various industries including healthcare, retail and non-profits.
This technology can be applied anywhere, and as payslip flexibility becomes an expectation, companies that offer EWA will realise the benefits of worker retention and satisfaction. It’s vital that rather than having a universal instant pay solution, organisations tailor their EWA offering to the specific needs of the business and workers while keeping the brand front and centre. We will soon see companies developing their own cards to provide workers with paychecks and expense management on demand.
As we continue into 2025, it’s clear that last year’s trends will accelerate, driving innovation in mobile payments, personalised rewards, and earned wages. Over the next year, financial providers should focus on technological advancement and embrace a new era of financial services that are digital, data-driven and tailored to the needs of workers and consumers alike.