In this exclusive interview, Jeroen Hölscher, Global Head of Payment Services at Capgemini, delves into the transformative trends shaping financial services. From open finance personalisation to instant payments, decentralised identity and remittance affordability, he explores the challenges, innovations and opportunities defining the FinTech landscape by 2025.
Open finance is expanding to include a full financial footprint. How do you see this impacting personalisation in financial services and consumer behaviour in 2025?
Open finance expands the horizon of open banking beyond payments and account data, encompassing a 360-degree financial footprint of consumers, including insurance, investments and retirement plans. By integrating data from multiple sources through secure APIs, we’ll witness a rising wave of firms able to drive deeper personalisation. This allows institutions to tailor products and services to unique consumer needs.
Regulatory frameworks like Section 1033 of the Dodd-Frank Act in the US and the European PSD3 and FiDA frameworks are evolving to standardize APIs and promote secure data sharing. However, Capgemini’s World Payments Report 2025 highlights that 62% of banks are unprepared for this shift, emphasising the need for infrastructure investments.
In 2025, open finance will foster a more connected and inclusive financial ecosystem, empowering consumers with greater control over their data and enabling banks to deliver innovative, personalised solutions.
With instant payments expected to grow significantly, what challenges do banks and FinTechs face to meet this demand, especially with digital wallets becoming dominant?
The rise of instant payments and the growing dominance of digital wallets are reshaping how people transact. Our data estimates that instant payments will surge from 16% of global payment transactions in 2023 to 22% by 2028. The rise of instant payments and digital wallets presents significant challenges for banks and FinTechs. Traditional banking systems are designed for batch processing. They require extensive technological upgrades to support real-time, 24/7 transactions. Integrating these systems with digital wallets demands seamless interoperability to ensure smooth user experiences.
Fraud prevention is another critical element as instant payments increase the risk of fraud, requiring advanced AI and AML measures while maintaining speed and convenience. Regulatory compliance, such as adhering to PSD3, adds another layer of complexity, necessitating alignment with evolving rules to avoid disruptions.
Low transaction limits in some regions also hinder adoption, emphasising the need for regulators to raise these caps, as seen in countries like the Netherlands, where instant payments thrive.
To meet growing customer expectations for speed, security and personalisation, financial institutions must prioritise system reliability and user experience. Strategic adoption of instant payment solutions can also unlock cost savings and enhance corporate treasury capabilities.
What role do you see FinTechs and regulators playing in reducing remittance costs to below 3% by 2030, and how will innovations help improve accessibility and affordability?
Global remittance flows reached US$857 billion in 2023, but remain costly, with banks charging up to 12.66% per transaction. Developing countries, which receive over 75% of remittances, face fees as high as 10-15%. Reducing remittance costs below 3% by 2030 will require both FinTechs and regulators to play pivotal roles.
We are noticing the FinTech community address this issue by bringing cheaper products to market. They can do this through efficient digital solutions like mobile wallets, enabling real-time, low-cost transfers. These innovations are making traditional remittance methods less competitive by improving speed and affordability. In India, we are seeing Unified Payments Interface (UPI) building corridors from and to India to create cheaper remittance solutions.
We must see regulators support this by fostering bilateral agreements, promoting FinTech partnerships and encouraging digital adoption over non-digital methods. They also ensure real-time foreign exchange rates and accurate fund settlements, creating a conducive environment for cost-effective remittance services.
With the rise in identity fraud, how do you see decentralised identity (DID) improving KYC processes and security for both banks and consumers in the near future?
In 2023, identity fraud losses amounted to US$23 billion in financial harm for American consumers. Decentralised identity (DID) offers a secure and efficient way to enhance KYC processes and protect both banks and consumers.
DID allows users to store and manage identity documents securely through digital wallets or distributed ledgers, reducing the risk of fraud and data breaches. Customers gain control over their digital identities, only sharing information when necessary, which builds trust and streamlines onboarding.
Banks benefit from tamper-proof storage and cryptographic verification, ensuring accurate authentication and improved security. DID also addresses AI-driven fraud, such as deepfakes, by offering robust protection against advanced fraud techniques.
We are already seeing companies like HSBC and Japan’s MUFG prototype solutions with this technology, and we anticipate this arena will pick up pace in the coming years.
What trends in FinTech are you most excited to see in 2025?
Due to their relative newness and leaner structures, FinTechs often face unique challenges in maintaining a satisfactory level of financial crime compliance (FCC). We can anticipate a shift towards ‘perpetual KYC’ (pKYC), broadly defined as the continuous, trigger-based risk monitoring of customers.
Given that the industry must embrace modern AI/ML-based tools to establish and maintain an FCC programme that meets industry standards and regulatory expectations, it provides significant potential for the FinTech community. pKYC provides the ability to respond to behaviour and status changes far more rapidly because it alerts institutions to milestones in a customer’s life that affect their financial crime risk level.
