Fintech 2025

Seven Years of FinTech Global Practice Guides

2025 marks seven years since Chambers and Partners first introduced their Global Practice Guide for Fintech, and I am humbled and honoured to be its second contributing editor. When I was first approached by Chambers in 2024 to succeed Lee Schneider in this post, I thought back to each previous iteration of this Guide. I have always been struck by the Guide’s ability to incisively capture the flavour of the market in each year. In particular, I have found these Guides invaluable in providing an overview of the key developments in the fintech world, and their ability to identify and expound on key global trends. In keeping with this excellent tradition, I set out in this introduction some key global trends I believe will shape the landscape of fintech this year.

Increased Adoption of Artificial Intelligence

Fintech businesses have capitalised on the boom in AI to integrate it into many products and services. AI models are being used, for example, to detect if a customer is being scammed in real time, mitigate the occurrence of e-commerce fraud, analyse and predict spending patterns, and even offer personalised stock trading recommendations. Generative AI is also being used to conduct detailed and well-referenced research on investment themes or strategies.

Moving into 2025, we can expect to see various AI models continue to work their way into mainstream fintech offerings. For example, Generative AI can be integrated into brokerage applications and used to summarise relevant news about a particular stock. As “agentic AI” grows in sophistication, they can be used to prepare and execute trading or investment strategies. This could represent the next stage in the evolution of “algorithmic trading” and “robo-advisory” products.

Fintech players would have to balance the ease of AI adoption against the need to ensure these models deliver accurate information. In addition, regulators will need to consider how best to achieve consumer protection and data protection objectives, given the speed of innovation and the novelty of the business models which arise.

The Growth of Embedded Finance and Super Apps

Embedded Finance – or the bundling of financial products and services alongside non-financial products and services – is not a new trend in and of itself. Insurance products have long been sold alongside flight bookings. However, the fintech scene has observed the increasing occurrence of “Embedded Finance” integrations, particularly in the context of Super Apps, which integrate a wide variety of services into one platform.

As an example, we have observed ride-hailing and delivery services being bundled alongside financial products such as buy-now-pay-later facilities and e-wallets. The concept of Embedded Finance takes this further, by allowing these financial products to be used not just to make payments to the Super App platform operator (for rides or delivery services), but also to third-party merchants that may sell other goods and services on the platform, not related to transport or food.

In particular, Super Apps that are centred around e-wallets allow customers to make payments and transfer money domestically and internationally, and more quickly and inexpensively. Some Super Apps might also allow moneys held in their e-wallets to fund the purchases of commodities, stocks and even cryptocurrencies on the same unified platform. We would expect these Super App platforms to grow in sophistication in 2025.

Growth in Cross-Border Transactions

As a corollary, most fintech businesses centre their value propositions around their ability to process many transactions quickly and cheaply, whether domestically or on a cross-border basis. In particular, fintechs have made great strides over the last few years in increasing settlement speeds for cross-border transactions.

Among other developments in the sophistication of payment and settlement flows, fintechs have adopted “nostro-vostro” arrangements. For example, where a customer in Singapore wishes to make payment to a merchant in Sweden and pays the Singapore dollar into a Singapore account of the fintech, a traditional cross-border payment flow would involve that Singapore dollar being transferred through various intermediary payment service providers and correspondent banks, being converted to the Swedish krona, and arriving finally at the fintech’s Swedish account.

This is contrasted with an arrangement where, once the customer pays Singapore dollar into the fintech’s Singapore account, transactions from other customers paying the same merchant are aggregated during the day, and the equivalent sum of Swedish krona is disbursed from the fintech’s Swedish account to the merchant on the same day. This circumvents the multiple layers of intermediaries which increase the fees and time taken to effect the transaction.

Stablecoins are also being used as a way to speed up the settlement of cross-border transactions. They represent an alternative to other volatile cryptocurrencies. Their values may achieve such “stability” by a variety of mechanisms. The two most common are:

• the use of algorithms to buy and sell stablecoins in reserve on the open market, in order to achieve price stability; or
• the backing of stablecoins issued by fiat currency-denominated reserve assets effectively “tying” the values of such “single-currency stablecoins” to the values of their reserve currencies.

In any case, like other cryptocurrencies, stablecoins can typically be sent on a “peer-to-peer” basis (ie, directly from the wallet of one stablecoin holder to the wallet of another stablecoin holder). This minimises the use of intermediaries, fees and settlement timelines.

Even in the example above, where the fintech acts as an intermediary to assist the Swedish merchant to collect Swedish krona from its customers in Singapore paying in Singapore dollars, stablecoins can act as a payment settlement layer, used by the fintech to transfer value from Singapore to Sweden. Customers can still pay for goods using Singapore dollars, with the fintech converting those dollars into a Singapore dollar-based single-currency stablecoin for the purposes of the cross-border transfer (ie, from the fintech’s wallet in Singapore to the fintech’s wallet in Sweden), and converting it back to Swedish krona for settlement with the merchant in Sweden. Barring issues such as blockchain network congestion or inadequate estimation of gas fees, the transfer may therefore be completed in a matter of minutes.

Today, some of the largest stablecoins by market capitalisation include the USD-denominated stablecoins issued by Tether and Circle. Moving forward into 2025, we expect that more “single-currency stablecoins” backed by reserve assets will hit the market, providing an increase in use-cases; not only for facilitating cross-border transactions, but also for acting as a store of value to promote financial inclusion, in markets where access to traditional banking services may be limited.

By contrast, interest in “algorithmic stablecoins” may remain muted, particularly in light of consumer scepticism after the crash of Terra Luna’s stablecoin in 2022, where massive withdrawals led to the value of the stablecoin slipping below its USD1 algorithmic “peg”.

We would also expect regulators to continue to work on robust regulatory frameworks for the regulation of stablecoins and stablecoin issuers. This includes imposing requirements relating to how reserve assets are to be stored (and what these reserve assets are), and prescribed timelines for consumers to be able to redeem their stablecoins at par for the underlying fiat currency value.

Increasing Focus on Consumer Protection Requirements

In the past years, consumer protection concerns surrounding cryptocurrency have taken centre stage. Given the spate of cryptocurrency crises in 2022, with the fall of Terra Luna mentioned above, as well as the collapse of the cryptocurrency exchange FTX in November 2022, both regulators and consumers now take a greater interest in knowing how their cryptocurrencies are being protected, and what measures are being put in place to ensure that they will be able to recover their cryptocurrencies in the event of a crash.

Accordingly, there has been a concerted push by regulators around the world to require more cryptocurrency service providers to implement measures to safeguard customers’ cryptocurrencies, including implementing “insolvency-remote” structures to hold cryptocurrencies on behalf of customers, storing a defined proportion of customers’ cryptocurrencies in cold wallets, conducting daily reconciliation of assets held on behalf of customers, and putting in place measures to maintain the security of private keys. Moving forward into 2025, we would expect an even greater focus on consumer protection requirements.

Adoption and Development of RegTech Solutions for Blockchain Analytics, Screening, Transaction Monitoring, and the Transmission of Value/Wire Transfer Information

In tandem with the deepening emphasis on consumer protection requirements, regulators are increasingly scrutinising how financial institutions comply with requirements relating to areas such as the conduct of blockchain analytics and screening, transaction monitoring and the transmission of value and wire transfer information. This may necessitate the adoption of more sophisticated regtech solutions by fintechs, in order to comply with their regulatory requirements.

By contrast to most traditional financial institutions, some newer fintechs may not have developed sufficiently robust procedures for transmitting and receiving value and wire transfer information. Fintechs may also not be plugged in to any harmonised standards for sending and receiving value transfer information. To fill the void, regtech solutions can be integrated into the process flows of fintechs to allow them to conduct screening and transaction monitoring, and fulfil value/wire transfer requirements, more efficiently.

Moving forward, we would also expect to see an increased focus on the interoperability of these regtech solutions. For example, some value transfer solution providers may currently require that a transfer of cryptocurrency from fintech A to fintech X can only be accompanied with value transfer information if both fintech A and fintech X have adopted the same value transfer solution. As different fintechs A, B, C and D may adopt different value transfer solutions, a single fintech X receiving cryptocurrencies from all of these fintechs may need to adopt all of the different value transfer solutions used by its counterparties, which increases its compliance costs. Accordingly, there may be a growing push for regulators to require value transfer solution providers to be “interoperable”, to prevent such fragmentation and its associated costs.

Scams and Responsibility for Losses

Regrettably, the remarkable growth of the fintech industry has also attracted malicious actors seeking to exploit vulnerabilities and defraud individuals and businesses. Hence, such growth has come alongside a growth in losses due to scams. By one measure, USD1.02 trillion was lost to scams between August 2022 and August 2023. We would expect consumers and regulators alike to require fintechs to do more to guard against scams. For example, regulators may implement frameworks for determining when losses to scams should be borne by fintechs as opposed to end-consumers. These frameworks may also aim to better define responsibility amongst the different types of entities that are involved in the “scam chain”, such as financial institutions, consumers and telecommunication companies.

Conclusion

In summary, we expect the trends of AI, Embedded Finance and Super Apps to continue to dominate the fintech scene. We also expect to see continued growth in the volume and speed of cross-border payments, an increase in the use-cases for “single-currency stablecoins”, an increased regulatory focus on consumer protection requirements, and an increased scrutiny of how fintechs are complying with regulatory requirements. The last point is expected to translate into increasing market demand for regtech solutions that allow fintechs to comply with regulatory requirements.

For 2025, the Fintech Global Practice Guide continue to cover a wide variety of areas, including new additions on anti-money laundering rules, reverse solicitation, the regulatory treatment of staking, lending and cryptocurrency derivatives, and responsibility for losses. I am sure the Fintech Global Practice Guide for 2025 will be a useful resource for all practitioners and participants in the field.

Acknowledgement

The author would like to acknowledge and thank Alexander Fong and Benjamin Samynathan, senior associates at Allen & Gledhill, for their invaluable assistance in the writing of this overview.