Key Emerging Technologies Shaping the Future of Banking

Igor Mikhalev, Digital Finance Conference 2025, Amsterdam

Six key emerging technologies will likely define the next wave of disruptive change in the banking sector: (Gen)AI and machine learning, blockchain and distributed ledger technologies (DLT), open banking ecosystems, biometrics and advanced authentication, robotic process automation (RPA), and quantum computing.

(Gen)AI and Machine Learning

Artificial intelligence and machine learning, particularly large language models (LLMs) and other generative AI solutions, enable banks to automate, personalize, and optimize at scale. Examples include:

• Customer Engagement: Intelligent chatbots or virtual assistants that can respond to queries, help with troubleshooting, and even guide customers through product selection.
• Predictive Analytics: Risk management and credit-scoring models benefit significantly from machine learning, leading to faster, more precise underwriting decisions.
• Automated Workflows: By deploying ML algorithms, repetitive back-office tasks (e.g., form processing, compliance checks) can be handled quickly and accurately, freeing staff to focus on value-added activities.
• New Revenue Models: Beyond cost efficiencies, advanced AI can drive hyper-personalized offerings, such as investment guidance, opening the door to fee-based services that previously required human advisors.

From a disruptive-strategy standpoint, adopting (Gen)AI and ML can help banks deliver a seamless, intuitive experience across channels. This shift not only satisfies heightened consumer expectations but also acts as a defensive measure against digitally native challengers.

Blockchain and Distributed Ledger Technologies

While cryptocurrencies and stablecoins have garnered significant media attention, there are numerous ways banks can leverage DLT today:

• Payments and Settlements: Blockchain networks can drastically reduce the time and cost associated with clearing and settling transactions, potentially displacing complex correspondent-banking arrangements.
• DeFi Integration: Banks can integrate with decentralized finance (DeFi) protocols for new product offerings, such as digital asset lending, tokenized fund issuance, or prime brokerage services.
• Tokenization of Assets: Real estate, bonds, equities, or even fine art can be tokenized, simplifying ownership transfer and enabling fractional investments.
• Digital Identities and KYC: Shared ledgers can streamline identity verification while maintaining privacy, reducing overhead in know-your-customer processes.
• CBDCs (Central Bank Digital Currencies): Multiple central banks worldwide are experimenting with CBDCs, potentially reshaping monetary systems and opening new channels for banks to engage with retail and wholesale customers.

For strategy consulting, building a comprehensive DLT roadmap involves understanding the bank’s internal appetite for experimentation, assessing regulatory readiness, and evaluating potential ecosystem partners. Disruptive transformations may include spin-off ventures, joint blockchains with consortia, or new business models built around tokenized assets.

Open Banking Ecosystems

Open banking stems from regulatory directives (like PSD2 in the EU) that mandate banks to share customer data with authorized third parties under secure, standardized protocols. This shift paves the way for:

• Embedded Finance: Non-financial platforms (e.g., retailers, travel websites) can integrate banking or payment services directly into their user journeys, potentially overshadowing bank-branded offerings.
• Ecosystem Partnerships: Banks can partner with FinTechs and other non-financial players to create “beyond-banking” propositions that serve customers in broader contexts such as wellness, travel, or education.
• Collaborative Platforms: By sharing data via application programming interfaces (APIs), banks can generate new revenue streams (e.g., revenue-share models) and reach underserved markets more effectively.

Disruptive strategy in open banking often requires a “platform mindset,” in which banks think of themselves less as isolated institutions and more as integrators or orchestrators in a broader ecosystem. This approach can fundamentally alter how banks compete, emphasizing cooperation and data-sharing in pursuit of broader value creation.

Biometrics and Advanced Authentication

Biometric technology, ranging from fingerprint and facial recognition to voice analysis and digital identity management, enhances security and simplifies the customer experience. Banks that adopt biometrics can:

• Reduce Fraud: More robust identity checks and authentication can detect or thwart fraudulent activity before it escalates.
• Streamline Onboarding: Automated identity verification shortens account-opening timelines, boosting customer satisfaction and reducing compliance bottlenecks.
• Enhance Accessibility: Voice or facial recognition can serve customers who find traditional channels cumbersome, opening new doors for inclusive banking.

When incorporating disruptive strategies, biometric solutions can be a differentiator in markets where privacy and user experience are key competitive battlegrounds. They also mitigate risks around data breaches—an increasingly critical factor as banks expand digitally.

Robotic Process Automation (RPA)

RPA automates rules-based tasks using software robots. In banking, it has become a go-to solution for processes such as customer onboarding, loan processing, and regulatory reporting. Key benefits include:

• Cost Reduction: By minimizing manual intervention, banks can lower operational expenses and accelerate turnaround times.
• Improved Accuracy: Automation mitigates human errors in data entry and other repetitive tasks.
• Employee Reallocation: Freed from mundane tasks, bank employees can focus on higher-value services, such as advisory or relationship management.

As a disruptive lever, RPA is often more about boosting efficiency within existing processes than transforming entire business models. However, combined with AI and advanced analytics, RPA can become a foundation for more transformative automation and “intelligent operations.”

Quantum Computing

Though still in its infancy, quantum computing has the potential to disrupt banking by enabling vastly more powerful data analysis, risk modeling, and cryptography. Early proofs of concept suggest quantum’s utility for:

• Portfolio Optimization: Quantum algorithms can evaluate exponentially complex scenarios that are beyond the reach of classical computing.
• Risk Assessment: Faster, more accurate simulations of market volatility, stress-testing, and credit risk.
• Cryptography: Quantum computers may eventually break current encryption standards, pressing banks to adopt quantum-safe cryptographic measures.

From a disruptive strategy perspective, quantum computing is a longer-horizon play but merits careful consideration today to future-proof security protocols and maintain a competitive edge. Early movers could establish themselves as industry leaders in quantum-safe operations and advanced analytics.

Charting a Disruptive Path Forward

Each of these six key emerging technologies can be harnessed to transform how banking services are designed, delivered, and consumed. Strategy consultancies specializing in disruption often map out a phased approach. For instance, a bank might start by automating back-office tasks via RPA and ML, then build a robust data architecture, adopt open APIs for ecosystem integration, and eventually experiment with blockchain-based digital asset products.

The essence of disruptive strategy consulting is to integrate these technologies into a broader strategic narrative. Instead of chasing every trendy innovation, banks must identify which solutions will truly deliver competitive advantage, align with their brand, and meet evolving customer needs. Similarly, prudent planning involves establishing “ambidextrous” capabilities, where one part of the organization focuses on incremental improvements to core operations while another part aggressively explores bold, disruptive opportunities.

By balancing near-term enhancements with longer-term transformative initiatives, incumbent banks can proactively shape the future of finance rather than merely react to it – a key message from Igor Mikhalev’s presentation at the Digital Finance Conference 2025.