Key Takeaways: 2025 Financial Services Industry Outlooks

By Kevin Richards, Audit & Assurance Partner, Deloitte & Touche LLP

Talking points

• Deloitte’s 2025 financial services industry outlook reports explore sector trends for the year.
• Each outlook takes a deep dive into anticipated sector influences and drivers.
• FSI businesses can use the publications as a planning tool throughout 2025.

What’s in store for the financial services industry (FSI) in 2025? Four new Deloitte FSI outlooks answer that question by offering insights into the trends, challenges, and opportunities expected to influence FSI sectors in 2025.

One industry or multiple sectors?

First a comment about the industry: We regularly discuss FSI as a uniform entity, even though it’s made up of many diverse sectors. True, the sectors sometimes behave as a block, reacting in a similar manner to a major market trend. But they can also respond quite differently to the same market forces. Remember, for instance, when interest rate hikes stifled real estate markets while boosting the banking sector?

That’s one reason it’s essential to explore each FSI sector individually. Which is exactly what the new FSI outlooks do. Let’s take a closer look at what the outlooks reveal about four sectors: insurance, investment management, commercial real estate, and banking and capital markets.

Insurance: Balancing profitability and purpose

Deloitte’s 2025 global insurance outlook outlines trends expected to shape the industry in 2025. Among them: balancing profitability with societal purpose amid challenges like extreme weather events and inflation. Here are other insights from the report:

• Mitigation strategies: As regulatory bodies, insurers, vendors, data suppliers, and policyholders align, insurers that transform traditional mindsets and processes in this challenging environment can seize new opportunities to effectively balance profitability with purpose.
• Technological advancements: Leveraging emerging technologies and alternative data sources can help mitigate losses and build trust through transparency.
• Sustainability: Adopting circular economy practices and incentivizing green initiatives may reduce claims costs.
• Regulatory compliance: Adapting to new global tax rules and ensuring compliance can help insurers avoid potential restructuring.
• Artificial intelligence (AI) and talent development: Fostering a culture of responsible AI use and prioritizing digital literacy and AI knowledge in talent strategies can increase insurer success.

Investment management: Alternative investments, AI and more

The 2025 investment management outlook touches on emerging trends in the investment sector—from the growing preference for low-cost funds to the importance of expanding product offerings. Highlights include:

• Low-cost funds: The continued preference for products with a low expense ratio and active management has led to the popularity of exchange-traded funds (EFTs).
• Product-line expansion: Expansion into alternative investments such as private credit and evergreen fund structures is expected to continue.
• AI disruption: Harnessing AI technologies for sales and distribution may enhance revenue.
• Risk management: The sector will have to manage growing risks associated with digital transformation, cybersecurity, and regulatory changes.

Commercial real estate: Optimism amid uncertainty

The 2025 commercial real estate outlook presents a cautiously optimistic view of the coming months, driven by improved economic conditions, interest rate adjustments, and increased transaction activity. Here’s a glimpse:

• Economic outlook: Uneven global economic recovery is expected, with faster gross domestic product (GDP) growth in India and Singapore, but slower growth in Mexico and Japan.
• Revenue and transaction activity: Positive sentiment should continue regarding revenue growth and increased M&A activity.
• Investment priorities: Emphasis on sustainable investment, technology, and AI could enhance financial returns and operational efficiency.
• Sector performance: High-growth sectors include industrial, manufacturing, multifamily, and digital economy properties.
• AI: Enthusiasm for AI will likely continue among real estate companies, and good data will be important to becoming “AI-ready.” Data accuracy and reliability, security, and confidentiality will be crucial for AI adoption and change management.

Banking and capital markets: Macroeconomic shifts and regulatory changes

The 2025 banking and capital markets outlook explores trends that could affect banking and capital markets, highlighting challenges and opportunities such as macroeconomic shifts, regulatory changes, and technological advancements. Takeaways include:

• Impact of Basel III Endgame proposal: It includes lower capital requirements and increased likelihood of M&A among banks with less than $250 billion in assets.
• Boosting noninterest income: This may involve adopting strategies to offset net interest income growth challenges through retail banking pricing innovations, increasing transaction volumes with new payment channels and services, and enhancing wealth management offerings.
• Tech modernization through AI: AI will serve as a catalyst for technology modernization, balancing traditional AI and generative AI, and embedding trust across the AI life cycle.
• Sustainable cost management: Many banks will explore increasing cost transparency, integrating risk controls into transformation initiatives, maintaining robust execution discipline, and scaling AI and automation to reduce inefficiencies.

What role can Deloitte play?

Deloitte’s Audit & Assurance offerings can play an important role in enabling you to take advantage of the trends and opportunities discussed in our 2025 FSI outlooks. For more information, visit our A&A financial services page. And don’t hesitate to contact me with any questions.