2025 is all about digital wallets, tokenisation and crypto

I got a whole load of payments predictions for 2025 … just a shame that it was no one paying me! Seriously though, a lot of people shared a McKinsey report that focuses upon this area, released around Sibos 2024, that opens with:

“The tantalizing vision for global payments has long been that they’d be safe, simple, quick, inexpensive, and ubiquitous. This promise has come closer with each new technological advance. However, instant payments have ushered in the Decoupled Era, a term coined in last year’s Global Payments Report. In this environment, payments are becoming disconnected from accounts, and the number of players is proliferating, fragmenting the value chain, increasing complexity, and endangering the vision.”

Yep. Payments are fragmented. I know this myself when paying across three, four or five providers for just one transaction. Interesting times.

I quite liked this summary of experts views on what’s happening next year in payments. The key trends appear to be:

• Banks and credit unions must prioritise engaging with faster payments now, as transaction volumes continue to grow rapidly and the future of payments increasingly revolves around these systems.
• The industry’s cash crisis as the markets are in a perilous cost position due to the overheads of cash management when the marjoity of customers no longer use cash
• Companies need to be completely payment-agnostic and offer customers all of the options they choose to use to pay, by the method of their choice.
• Digital wallets and the shift to tokenisation means that merchants will no longer have or need access to actual card or account information (embedded payments).
• A big rise in deep fake, phishing and malware, particularly targeted at mobile devices.
• New regulations like the EU’s DORA (Digital Operational Resilience Act) raise the bar for cybersecurity.

This is a non-exhaustive list and, if you want the full Monty, then read a load more of insights over here. These are more than just about payments btw, but about banking in general. A comment I particularly found insightful came from Paul Holland, CEO of Beyond Encryption, who notes that:

A dramatic increase in digital accounts has led to the development of ‘account fatigue’, with 50% of consumers sharing that they feel overwhelmed by the number of portals they have to access. Studies also show that 60% of customers find that financial portals, including those for their pension, mortgage, and insurance, are difficult to navigate and use. This has led to extremely low engagement rates, with 43% saying that they are hesitant to use online services.

Totally agree, which is why I can see consumers moving to aggregation services through open finance to get one view of all of their money.

One of the things I also left out above is the 2025 forecast for what will happen with cryptocurrencies. That’s because The Trade did a good job in this area. Their key view on crypto trends include:

• 2025 will be the year of public and private collaboration for the blockchain industry.
• More financial institutions move into digital assets trading.
• Republican control of the White House and Congress should enable much anticipated legislation, clarifying the role of regulating agencies and providing confidence.
• Europe’s Markets in Crypto-Assets (MiCA) regulatory rules come into force on 30 December 2024, and other jurisdictions will respond with their own versions.

Equally, Brandon Turp summarised Bitwise’s predictions on LinkedIn, and here are a few more for you:

• Bitcoin, Ethereum, and Solana will hit new all-time highs, with Bitcoin trading above $200,000 and, by 2029, will reach $1 million per bitcoin.
• Coinbase will surpass Charles Schwab as the most valuable brokerage in the world, and its stock will top $700 per share.
• 2025 will be the “Year of the Crypto IPO,” with at least five crypto unicorns going public in the U.S.

Now, there’s some optimism.

a16z crypto also released their "2025 Big Ideas" for crypto. Here’s a few key ones:

• AI agents will require crypto wallets to act autonomously, allowing them to transact independent from humans.
• Autonomous chatbots running on decentralized infrastructure could manage assets, generate income, and operate without human control.
• Privacy-preserving proof of 'personhood' will combat impersonation and ensure trust in a world dominated by AI-generated content.
• Enterprises adopt stablecoins, offering significant cost savings and efficiency improvements.
• Tokenized government bonds on blockchains will enhance transparency, efficiency, and participation in financial markets.
• DUNA (Decentralized Unincorporated Nonprofit Association) will provide DAOs with legal legitimacy, fostering decentralized governance and innovation in the U.S.
• UX takes centre stage in crypto.

There’s lots more in all of the links embedded in this update, but the takeaway is that payments is fragmented, diverse, in many forms with many rising. How do you keep up with it all? Keep reading this blog …