We’re now almost two months into 2025, and while January dragged on – in true January style! – February is flying by. With there already having been several important fintech moments this year – from open banking’s 7th anniversary, to the UK Government launching a consultation on banks’ use of AI – 2025 is set to be a momentous year in the world of fintech. But what else should we expect to see?

At Seven, we specialise in purpose-driven innovation and technology – with a particular focus on health-tech, sustainability and fintech. We work as extensions to our clients’ in-house teams which means that as well as understanding their businesses, we must also understand the landscape in which they operate. Nowhere is this more important than in the fast-paced and evolving world of fintech.

With this in mind, we have scoped out what we think 2025 will have in store for the sector …

Open finance

Open finance is the evolution of open banking: while open banking enables data-sharing between third-party providers (with consumer consent), open finance encapsulates a wide range of financial services, extending this access to areas such as mortgages and pensions, and enabling an integrated financial ecosystem that delivers enhanced value to consumers.

At present, there are more than 11 million users of open banking; and 750,000 small businesses are leveraging this technology to receive insights on cash flow and speed up payment processes. However, 2024 presented a shift: as a result of CMA confirming the full completion of the Open Banking Roadmap; and with the introduction of the Data (Use and Access) Bill – a legislation that will pave the way for smart data to be used across a wider range of sectors – the era of open finance is upon us.

In 2025, this new phase of financial innovation will offer increased value for consumers and small businesses, boosting the UK economy by a predicted £10 billion. Given open finance’s emphasis on increasingly transparent data, it will also promote financial empowerment and autonomy, so that consumers and businesses can make more informed decisions.

Having worked with clients involved in open banking for a long time, we have seen first-hand the innovations possible within this space. The Open Up 2020 Challenge – a £1.5m prize fund run by Challenge Works and backed by the Open Banking Implementation Entity to unlock the power of open banking for UK consumers – was a great example of the early possibilities of open banking.

Open finance is quickly evolving, and momentum is building. As remarked by Marion King, Trustee and Chair of OBL “we are [moving] closer to a smart data economy in which we unlock the full potential of open banking for consumers and businesses alike”. The Smart Data Challenge Prize, which is designed to identify and develop Smart Data use cases across the economy, attests to this. The £600,000 challenge prize, funded by the Department for Business and Trade and delivered by Challenge Works, is aimed at identifying innovations that demonstrate how cross-sector Smart Data solutions might work. With the challenge focusing on the economic opportunities presented by the better use of shared data sets, the insights garnered will help to propel new innovations within open finance.

VRPs

In her Mansion House speech, Chancellor Rachel Reeves reiterated the government’s support for the UK’s fintech sector and its commitment to a National Payments Vision. The continued development of Variable Recurring Payments (VRPs) – especially given that the Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR) have announced the creation of a new independent central operator for VRPs – will play a big part in furthering that vision in 2025.

Commercial VRPs have the power to drive innovation in financial services by replacing traditional direct debits, which are bound to date and amount restrictions. Instead, VRPs can deliver recurring payments through open banking, making it far easier for consumers to seamlessly move and manage their money. Examples of areas that will offer clear consumer benefits include subscription and membership services (with users having access to flexible billing), retail and e-commerce (reducing failed payments due to expired or blocked cards), and travel and hospitality (as VRPs enable customers to be charged based on real-time changes to their bookings).

These examples are just the beginning, as the possible use cases for VRPs are expansive. Baringa predicts that future VRPs could allow insurance providers to offer variable insurance premiums based on monthly driving habits, for example. With the rollout expected to continue this year, this technology will no doubt play a significant role in streamlining payments and improving financial accessibility for individuals and businesses alike.

Partnerships

As the well-known saying goes: a job shared is a job halved. While strategic partnerships may not halve the amount of work, they allow companies to leverage each other’s strengths in order to drive innovation, promote efficiency, and create new opportunities – all whilst supporting customers. As such, they continue to be an important component within the fintech ecosystem.

Partnerships deliver value for both businesses and consumers. Agile fintechs can work with established incumbents to allow them to rapidly integrate tech solutions into their models, to diversify and build market share. On the flipside, fintechs can unlock access to a massive customer base that would otherwise be out of reach, at a much earlier stage, supporting their growth in a challenging financial landscape.

Raindrop, a fintech specialising in pension tracing hunting down savers’ lost pots, has partnered with some of the UK’s largest financial providers, including Standard Life and AJ Bell, to help consumers locate and consolidate their pensions. In doing so, £460 million has been located, across 43,000 pension pots.

Similarly, Currensea – a direct debit travel card that seamlessly connects to users’ existing bank accounts, offering them the ability to spend abroad with the lowest foreign exchange fees on the market – recently announced a new partnership with Hilton. The fintech has launched a debit card that not only saves Hilton’s reward scheme customers money when travelling, but also allows them to accumulate loyalty points. As noted by James Lynn, Co-Founder of Currensea: “the power of cross-sector partnerships presents an exciting opportunity for organisations of all sectors and sizes to drive innovation, deliver value and support growth”.

It is expected that numerous businesses from outside financial services will continue to embrace collaboration with fintechs.

Investment in the sector

According to research conducted by Sifted, 49% were considering leaving their VC-backed start-up in 2024, citing financial security as a key reason. Similarly, Fintech Futures revealed that a 20% decline was experienced by global fintech investment in 2024, and that there was a 16% decrease in the total number of fintech deals globally.

Despite a tough few years, fintech investment is making a strong comeback, and 2025 is set to bring renewed investor confidence. Signs of this resurgence are already visible: Klarna is preparing to go public in April; Sokin, a payments and money-transfer fintech for businesses, has raised €14.4m in debt funding from BlackRock; and Visa has acquired fintech start-up Featurespace: a fraud and financial crime management platform. With an increase in fundraising activity, fintech start-ups can expect greater opportunities for expansion and innovation.

We also foresee a surge in AI and machine learning (ML)-integration into the fintech space, given this global trend across all sectors – and particularly in the wake of the UK’s recently-announced AI Opportunities Action Plan, which emphasises the mission to develop the UK into an AI powerhouse. As AI continues to evolve and fuse with a number of sectors, catalysing innovation and redefining customer experience, fintech will be sure to continue to benefit from this. As noted by Dr. Emily Johnson, Chief AI Strategist at FinTech Innovators: “The convergence of AI and fintech is not merely a technological shift; it’s a paradigm shift that will redefine how we interact with and experience financial services”.

Fintech for good

Research has shown that 39% of firms are helping to reduce inequality by increasing financial inclusion and promoting financial education, and a further 26% are positively contributing to the protection of fundamental freedoms around data privacy. According to a report by Deloitte, there is an obvious presence of fintech for good initiatives across the digital banking (24%), payments (20%) and investment (19%) sectors. These initiatives are present in both advanced and emerging economies, revealing the globality of the trend.

At Seven, we believe in communication with purpose. Supporting companies that have ideas to drive change and positively impact their sector is what we do, and so it should be no surprise that we have been involved in fintech for good.

As examples, Creditspring is dedicated to responsible and transparent lending, creating a unique subscription-based lending model that helps consumers avoid falling into debt by offering small, fixed-fee loans without interest. Likewise, in addition to making significant savings on their holiday spending, Currensea cardholders continue to make a positive environmental impact when they spend: users have now removed over 13 million plastic bottles from the ocean through donations to environmental causes. And Featurespace is working to fight the global fraud epidemic, protecting £500m consumers per year with its AI solution.

In a world increasingly characterised by challenging social issues, it is essential that the financial sector works in tandem with others to promote inclusion, sustainability and ethical practice. Companies that align themselves with these values will not only attract customers but also gain credibility and long-term success.

Whilst these are key trends we’ve identified for 2025, in the ever-evolving and innovative world of fintech much could happen over the next 10 months. We know the sector will continue to push the needle – especially in the face of mounting AI use and crowded markets – keeping the UK at the forefront of innovation. We’ll leave that bit to you!