Nima Montazeri on What’s Next for Embedded Finance in 2025

The pace of innovation in fintech and embedded finance continues to accelerate, driven by advancements in AI, evolving user preferences, and regulatory changes. As we approach 2025, these factors are set to reshape the competitive landscape, transforming how businesses and consumers engage with financial services. In this Q&A, we asked Nima Montazeri to share his key predictions for the year ahead, including insights into the evolving regulatory environment, the role of emerging technologies, and the impact of AI on customer experiences and industry dynamics. Understanding these trends will help stakeholders navigate the challenges and seize the opportunities shaping the future of finance.

What emerging technologies are enabling the next generation of embedded finance solutions?

So, a lot of technologies are coming together to deliver an embedded finance experience to our end users. The one that is top of mind at the moment is, of course, GenAI. GenAI algorithms give us superpowers that we didn't have before. We can look at pages and pages of bank statements and, within seconds, recognise revenue, understand, and extract very valuable information from that data. We can do this for a whole sweep of documents that it was not possible to easily do before. Also, GenAI allows us to tap into and access unstructured data, which was quite hard for machines to understand before. So, whether it is looking at reviews for a business or social posts about the business, we can analyse a vast amount of data, understand the sentiment, and use that as input into our decision-making algorithms.

What are the anticipated user preferences for embedded finance services in 2025?

We expect more and more users to use their banking services through their platform of choice. For example, if you are a restaurant selling on Uber Eats, your banking will move from your traditional high street bank to Uber Eats. Similarly, if you are a stationery shop selling on Etsy, your banking services will be delivered through Etsy. This is a trend we have been observing over the last few years, and we expect the rate of bundling banking services on these platforms to accelerate exponentially.

How is AI influencing the competitive dynamics between traditional financial institutions and fintech startups?

It all depends on the speed of execution and innovation. Traditional financial institutions are much better positioned to leverage new advances in AI because they have access to larger pools of data and more data points. Therefore, they should be able to build better algorithms. However, traditionally, they have not been very fast at executing new initiatives. As a result, I expect fintechs to increase their lead in customer experience with financial institutions, simply because they will build better algorithms using the fewer data points, they have access to. One way forward for traditional financial institutions is to partner with fintechs and find ways to leverage their data and technology to build better customer experiences.

How is AI improving personalisation in financial services?

Personalisation in financial services has always been a topic that seemed just two years away, always around the corner, yet never fully achieved. However, with recent advances in Generative AI and large language models, we are finally at a point where we can analyse large amounts of data, mostly unstructured text, and improve the journeys and offers we present to customers. So, I'm hopeful. It's no longer two years away; I think it's just 6 to 12 months away.

In what ways is AI enhancing credit scoring and underwriting processes?

Here at Liberis, we've been using AI for credit scoring and automatic decisioning for many years. We are one of the pioneers in using machine learning and artificial intelligence in this area. However, we are now using large language models and generative AI to enhance our models. Previously, we only used structured data as input for our credit decisioning models. With the advent of large language models, we can now analyse unstructured data, such as text documents and reviews, understand the sentiment, identify key points, and feed this information into the algorithm. As a result, our algorithms are much more personalized and can process larger amounts of data than before. We expect this to have a very positive impact on our customers.

How can AI help companies better understand customer behaviour and preferences in 2025?

Using Generative AI and large language models, we can analyse a much larger volume of customer feedback, reviews, and calls between customers and customer service agents. We can process this data at a rate that was simply impossible before. As a result, we expect to see a significant improvement in the service we provide.

How is AI expected to transform consumer expectations for financial products in 2025?

I think AI will have both direct and indirect impacts on customer experiences. The direct impact will be the use of generative AI and large language models to understand structured data and create personalized experiences in financial services. For me, the indirect impact is more interesting. Big technology companies, like Amazon, Uber, and Facebook, will also use AI to improve their experiences. As a result, consumer expectations will increase. Consumers will expect the same amazing experiences from their high street bank, their finance provider, and their platform of choice as they get from these big tech companies. As they say, a rising tide will raise all boats.

How do we expect regulation to change across the EU in relation to fintech and embedded finance?

Over the next 12 months, I expect the regulatory landscape to be very different in the EU and across the US. With Donald Trump coming to power and Elon Musk starting the Department of Government Efficiency, I anticipate less regulation for fintech in the US. They are likely to push hard on deregulation, and unfortunately, I think it will be the exact opposite in Europe. In the EU, I foresee more regulation, which will favour incumbents who can afford more lawyers and spend more money to meet regulatory requirements. Unfortunately, fintechs will likely be victims of this increased regulation in the EU.

I also believe that more regulation in the EU would be bad for consumers. For example, citizens of the European Union spend 575,000,000 hours clicking on cookie banners, which add little value. Additionally, EU citizens have to pay the same price for the latest Apple iPhone as those in the UK or US, but they don't get many of the new features due to regulation. Apple intelligence, for instance, is not enabled in the EU simply because of regulatory constraints. As a result, EU citizens are paying the same price but receiving a worse product.

As we look toward 2025, the embedded finance and fintech sectors stand on the cusp of significant change. Regulatory landscapes will likely diverge between regions, emerging technologies such as Generative AI will unlock unprecedented possibilities, and evolving consumer preferences will reshape the way financial services are delivered. The interplay between traditional institutions and fintech startups will continue to define the competitive dynamics of the industry, with AI-driven personalisation and efficiency at the forefront. By staying ahead of these trends, businesses can position themselves to thrive in an increasingly complex and fast-moving financial ecosystem.