The landscape of lending is evolving at a breakneck pace, driven by the convergence of financial services, cutting-edge technology, and shifting consumer expectations. From traditional banks to innovative fintech startups, the lending sector is witnessing a transformation that's reshaping how individuals and businesses access capital.
In 2025, we find ourselves at a pivotal moment in the lending industry. New models of credit assessment, the rise of decentralised finance and the integration of artificial intelligence are just a few of the forces propelling the sector forward. But what does this mean for borrowers, lenders, and the broader financial ecosystem?
To answer these questions and more, we've reached out to a diverse group of industry experts, including our clients, strategic partners, thought leaders, and our own executive team. Their insights shed light on the current state of lending, emerging trends that are set to disrupt the status quo, and potential challenges that lie ahead.
- Regulation and standardisation in the UK
- Tapping into data to demonstrate the value of payments
- A focus on fraud to keep lending safe
- The potential for tackling inefficiency
1. Regulation and standardisation in the UK
Innovate Finance CEO, Janine Hirt
"Following on from the Chancellor’s Mansion House speech, 2025 is set to be a busy – and pivotal – year for payments in the UK. With the publication of the National Payments Vision we now have a north star for the sector; now government, industry, and regulators must move forward on delivering this through updating payments infrastructure and finally realising the promise of Open Banking, with A2A able to be used for e-commerce and retail.
"We also now have a long-awaited draft BNPL regime which will help bring certainty for firms and should enable further growth of the segment, which is already helping many people better manage their money with inherently lower risk.
"One of the most important issues as we look ahead to 2025 is the negative impact of fraud on customers, and also on the new firms that are working hard to give consumers additional choice in payments and better access at cheaper cost.
"While many technological advancements will help to fight fraud, such as AI and Digital ID, the financial services industry cannot solve this problem alone – and the government recognises that. The Chancellor, Home Secretary and Secretary of State for Science, Innovation and Technology, wrote to big tech and telecoms firms asking them to outline what more they’re doing to reduce fraud originating from their services and the impact it’s having. They have given them until March this year to respond, after which the government will publish an updated fraud strategy.
"This will be critical in helping us tackle fraud at its source, protecting consumers while ensuring innovation is able to thrive within the UK payments industry."
2. Tapping into data to demonstrate the value of payments
Hyperlayer head of enterprise sales, Tanya Dyke
"How can we better promote the value of payments? One way is to look at the value of payments data.
"Outside the information collected by ‘big tech’, payments are the richest treasure trove of insights on consumers and small businesses. Indeed, one bank successfully built an experimental credit model using only payments data, and it performed pretty much as well as its existing model.
"This is because payments data provides an insight into the needs and lifestyle of individuals, and how they are connected socially and economically.
"For financial institutions this data is a rich source for things like driving innovation, smoothing the customer experience, and recommending useful and relevant services: a virtuous circle of insights, product fit and delight."
3. A focus on fraud to keep lending safe
Fintech Scotland CEO, Nicola Anderson
"One thing we should be able to look forward to in the near future is better fraud detection and prevention tools.
"That’s thanks in part to clear and proportionate regulation. The National Payments Vision addresses an overlap in responsibilities between the FCA and PSR in relation to fraud policy. The FCA is working to address this, which will be useful for the industry.
"The PSR has also committed to an independent post-implementation review of the authorised push payment fraud reimbursement rules, after 12 months. This is useful given the size of the operational change required to implement the new rules.
"There is also a growing focus on upstream prevention, including intelligence sharing, along with an effort on finding mechanisms and structures that enable it and addressing any barriers for those participating. This is part of the cross-sectoral approach needed to tackle fraud, working across sectors including finance, telecoms and social media.
"Looking to industry, the momentum on fraud detection/prevention tools and partnerships is also continuing at pace. At FinTech Scotland, in partnership with two further UK innovation accelerator programmes across West Midlands and Greater Manchester, we are progressing an innovation programme focused on addressing financial crime and fraud supported by 14 industry partners, to drive collaboration and impactful solution development in detecting and preventing fraud."
4. The potential for tackling inefficiency
Modulr Founder and CEO, Myles Stephenson
"The evolution of embedded payments is poised to fundamentally transform lending operations in 2025. There is tremendous value in deeply integrating payments into lenders' technology stacks, rather than maintaining banking operations as a separate function outside loan management software.
"The new generation of lenders, particularly those born from the recent advances in fintech, are leading this transformation by making payments their competitive advantage. At the heart of this change is the push toward comprehensive automation, which is becoming increasingly crucial in an environment where operational efficiency directly impacts market competitiveness.
"Today's lenders have access to sophisticated disbursement and repayment options that can be seamlessly integrated into their core platforms, significantly reducing manual processing and reconciliation efforts while minimising errors.
"The industry is moving toward real-time payment processing capabilities, with instant disbursements becoming the new standard rather than a premium feature. We're seeing the emergence of sophisticated account structures that enable better loan utilisation tracking and risk management, potentially leading to more competitive rates and broader access to credit.
"This technological evolution is particularly significant as it addresses the fundamental challenge of operational inefficiency that has historically been a drain on traditional lending institutions.
"Such integration represents more than a technical upgrade – it's a strategic shift that's reshaping how lending businesses operate, where technology-first operations become the industry standard rather than the exception."
Not sure what's next for your payments?
If you don't know what the year ahead might have in store for your business, speak to one of our payments specialists to see how faster, automated or more efficient payment capability could make the difference for you.
