Deloitte today has officially published the results from its “2025 Financial Services Industry Predictions” report, which outlines some of the most significant emerging trends that are set to govern the financial services industry over the next three to five years.
Going by the available details, these insights arrives on the scene bearing a particular focus on the potential impact of new technology adoption, evolving business models, and emerging investment opportunities.
Talk about the same on a slightly deeper level, we begin from the expectation of exponential growth in regards to retail investors’ private capital allocations. In essence, Deloitte forecasts such allocations to go from $80 billion to a staggering $2.4 trillion by the year 2030.
As for the drivers of this growth, they relate to expanding product offerings and regulatory changes that will come together to enhance the accessibility of private capital for retail investors.
Next up, Deloitte expects tokenization to transform cross-border payments. In fact, if we entrust the given word, one in every four large-value international money transfers will be settled on tokenized currency platforms by 2030. The stated transition to tokenization should reduce the cost of corporate cross-border transactions by 12.5%, potentially saving businesses more than $50 billion.
You see, tokenized currencies like stablecoins and digital cash instruments will tread up a long distance to facilitate faster, more secure, and cost-effective transactions, while simultaneously transforming the way banks and businesses handle international payments.
Another trend coming into play here is for insurance industry to adopt predict and prevent models at scale. With these companies tipped to embrace fee-based risk management services, Deloitte foresees a future where U.S. property and casualty insurers may witness a growth in their fee-based revenues, from $21.6 billion in 2023 to $49.5 billion.
This growth will come from insurers offering services that can help customers prevent losses before they occur through advancements in technology like smart home devices and generative AI. Such a proactive approach will bolster customer resilience, as well as create new revenue streams for insurers.
Then, there is a piece of data claiming that real estate investment is likely to reroute itself to alternative properties. Deloitte predicts that, by 2034, nearly 70% of industry portfolio values will be comprised of alternative properties, including data centers, cell towers, life sciences, health care facilities, and senior housing. The stated change would mark a substantial increase from the instrument’s current 40% equity.
Alongside alternative properties, active ETF growth is also poised to empower investment managers in the context of tapping into a $11 trillion market. This translates to how Deloitte estimates that assets under management for active exchange-traded funds (ETFs) in the U.S. will grow from $856 billion in 2024 to $11 trillion by 2035, a 13x increase.
The increase in question is expected to be driven by investors shifting from mutual funds to active ETFs, something which can offer greater transparency, flexibility, and lower costs.
We referred to how tokenization will likely revamp cross-border payments, but what we haven’t mentioned yet is that real estate tokenization will also transform the field of asset management. In this regard, Deloitte’s report forecasts that the global market for tokenized real estate will reach $4 trillion by 2035, hinting at a substantial increase from less than $300 billion observed during 2024.
This growth is expected to be driven largely by the adoption of blockchain technology, which enables fractional ownership of real estate assets.
Hold on, there is more, considering we haven’t yet touched upon how AI could revolutionize software engineering in banking. Here, Deloitte predicts that bringing AI into the mix will cut down on software investment costs by 20% to 40%. Hence, Banks that deploy AI tools across the software development life cycle can very well realize cost savings of up to $1.1 million per engineer.
Revising the insurance sector, the new report also expects AI to play a massive role in reducing insurance fraud. Basically, by implementing AI-driven technologies across the claims life cycle and integrating real-time analysis from multiple modalities, property and casualty insurers can save between $80 billion and $160 billion by 2032.
