INTRODUCTION Contributed by: Johannes de Jong, Osborne Clarke N.V.
Introduction The year 2025 will be another exciting and dif - ficult time for the global banking industry. Even though the effects of the COVID-19 pandemic may have ended, the industry still has to deal with a mix of economic, regulatory, and techno - logical challenges. Political tensions and trade problems between major economies make things even more uncertain. Most banks must navigate the full implementation of Basel III standards by next year, which will increase capital require - ments and leverage ratio standards. Additionally, the rise of open banking and advancements in artificial intelligence and blockchain technology will further disrupt traditional banking models. Furthermore, the growing importance of environ - mental, social, and governance (ESG) factors will compel banks in most jurisdictions to integrate sustainability into their business strategies and risk management frameworks. Emerging Trends and Regulations Digital transformation remains a top priority for banks as they strive to improve operational efficiency, enhance customer experience, and mitigate cyber threats. Investments in mobile banking, artificial intelligence, and cloud-based technologies are becoming increasingly essen - tial for banks to remain competitive. Open banking, a trend that has gained significant momentum in recent years, will further disrupt the banking industry in 2025. By allowing third- party providers to access customer data, open banking has created new opportunities for inno - vation and competition which are now starting to materialise. Banks that can leverage open bank - ing to offer enhanced products and services will be well-positioned to meet evolving customer expectations. ESG factors are gaining prominence in the bank - ing industry on a global level. The Basel Com -
mittee on Banking Supervision, which devel - oped Basel III, has acknowledged the growing importance of ESG factors in the financial sector in the past years. This recognition has led to a focus on incorporating ESG risks into banks’ risk management frameworks and capital require - ments by banks, particularly in the EU, with the introduction of CRR3 and CRD6 starting in 2025 (also referred to as Basel IV ESG). Next to regula - tory pressures, investor demands and societal expectations are driving banks to integrate ESG considerations into their business strategies and risk management frameworks. Banks that can demonstrate a strong commitment to sustain - ability and ethical practices may benefit from enhanced reputation and increased investor confidence in certain parts of the world. Emerg - ing markets as well as – to a certain extent – the UK and the USA are less stringent in implement - ing requirements for ESG measures at banks and as such a lack of consensus remains on a global level. Cryptocurrency and blockchain technology con - tinue to evolve, presenting both opportunities and challenges for banks. While some banks are exploring ways to integrate these technolo - gies into their offerings, others remain cautious about the associated risks. The potential impact of cryptocurrencies and blockchain on the tra - ditional banking system remains a subject of ongoing debate in the banking industry. Of par - ticular interest in 2025 will be the rise of e-money tokens and asset-referenced tokens pegged to major currencies such as the US dollar or the EU euro. With 83.5 billion USDT stablecoins in circulation in 2024, stablecoins play a big role in the US market and a similar trend is visible in other parts of the world. Bolstered by new regulations in the EU, these types of stablecoins are also expected to play a significant role as an alternative means of payments by fintechs in the
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