HCLTech: Tech Challenges for Banking Enterprises in 2025

While banking enterprises have made progress towards technology integration, there will still be challenges for 2025 that must be addressed for the industry to continue to sustain growth.

From heightened cybersecurity threats and navigating evolving regulatory compliance to the cost and complexity of integrating AI effectively, banks must prioritise their efforts to shift away from legacy systems and move to modernise.

This modernisation will be key to securely handling and analysing vast amounts of data and meeting evolving customer demands sustainably.

Here, we speak to Srinivasan Seshadri, Chief Growth Officer and Global Head, Financial Services at HCLTech, who offers his insights into some of the pressing technological issues banking enterprises might face in 2025.

Investments in the modernisation of IT platforms

Banks must view digital transformation and investment as a long-term strategy rather than a quick fix. Many banks continue to operate on outdated technologies that hinder their ability to innovate, adapt to new market demands and effectively meet customer expectations. 

Transformation is needed to enhance operational efficiency, save costs, improve customer experience and ultimately drive innovation. Investments in AI, cloud, analytics and blockchain are essential to modernising IT platforms, supporting new business models and driving innovation. 

The industry perspective should be on navigating away from legacy platforms and modernising IT infrastructures. 

This can be done by either leveraging strategic partnerships with leading cloud providers such as AWS, Azure and GCP to facilitate the migration of legacy systems to the cloud or by investing in modern technology, including cloud, AI, cloud, analytics and blockchain -- all essential components to modernising IT platforms. 

Staying ahead of the curve by investing in cutting-edge IT solutions or partnering with a cloud provider can future-proof these institutions that will not only deliver unparalleled value to their customers but also be able to adjust to any future shift in demands.

Cybersecurity threats

As banks continue to digitise and actively adopt emerging technologies, they become increasingly vulnerable to cyberattacks. Ensuring that cybersecurity measures are in place to protect sensitive data and maintain customer trust is critical. 

This includes compliance with regulations such as DORA, ISO2022 and SOC2 whilst implementing end-to-end encryption, secure data storage and proactive vulnerability. 

Cybersecurity measures should focus on infrastructure and cloud security, application security, governance, risk and compliance, identity and access management and business continuity/disaster recovery. 

To help mitigate risks, ensure regulatory compliance and maintain customer confidence, banks must implement a holistic approach. 

This approach includes addressing existing challenges and improving automated processing while reducing cost through infrastructure and cloud security, application security, governance, risk and compliance, among others.

Regulatory compliance

With the rapid adoption of modern technologies like AI and blockchain, banks will need to navigate evolving regulatory landscapes efficiently. Balancing innovation with compliance will be a major challenge, especially with growing demands for transparency, third-party risk management and adherence to frameworks like DORA. 

Regulatory bodies are intensifying their focus on liquidity risk management, third-party risk and cybersecurity, demanding robust risk mitigation strategies. It will be essential for banks to develop a comprehensive approach to address these challenges in consultation with compliance subject matter experts. 

This approach should ultimately focus on three points: people, processes and technology, ensuring adherence whilst maintaining the agility needed to continue delivering on business outcomes.

AI integration

It's no secret that Artificial Intelligence (AI) and Generative AI (Gen AI) are driving innovation and operational efficiency across not just the banking sector but all industries. Banks must manage these technologies effectively, ensuring transparency and cost efficiency whilst addressing ethical concerns. 

By leveraging AI-driven analytics and machine learning, banks can enhance fraud detection, streamline customer service with intelligent chatbots and optimise risk management. 

Gen AI, in particular, is transforming operations by automating complex tasks like regulatory reporting and personalised financial advice. However, with all new adoptions, AI adoption must prioritise transparency, traceability, and ethical considerations while leveraging machine learning and natural language processing to improve decision-making processes. 

The perspective on AI implementations should be centred around leveraging technology advancements, fostering strategic partnerships and investing in innovation to drive digital transformation and deliver value to end customers.

Legacy systems and integration challenges

Many banks continue to operate on outdated technologies that hinder their ability to innovate and adapt to new market demands and meet customer expectations effectively. In many cases, banks will have multiple monolithic systems across different business lines or geographic entities, leading to inefficiencies and integration challenges. 

The industry perspective should be on navigating away from legacy platforms and modernising IT infrastructures, leveraging strategic partnerships with leading cloud providers such as AWS, Azure and GCP to facilitate the migration of legacy systems to the cloud. 

This helps untangle complex legacy platforms and ensures scalability, cost efficiency and enhanced operational performance. This approach addresses legacy systems' immediate challenges and positions banks for future growth and transformation.

Scalability and reliability of solutions

Large enterprises demand scalable and reliable solutions capable of handling vast amounts of data and transactions. Fintechs and banking institutions must collaborate to design systems that perform flawlessly under high-demand scenarios. 

Ensuring scalability without compromising speed or functionality is critical to successful digital transformation.

Data management

Managing and analysing vast amounts of data securely and efficiently is pivotal for banks and financial institutions. 

Banks need to have comprehensive and robust data governance frameworks and extensive experience in data management and analytics, focusing on building and managing efficient data pipelines and leveraging advanced technologies to drive business value in a secured environment. 

Financial institutions will need advanced systems and processes to manage data securely, and they will use data analytics to improve risk management and customer service whilst following data protection regulations across different geographies.

Growing fintech ecosystem and technological advancements

Banks and financial institutions face significant challenges from fintechs, who are reshaping the financial landscape with innovative solutions and disrupting traditional banking models. 

Additionally, fintechs excel in personalised financial services, leveraging big data and AI to tailor offerings that traditional banks struggle to match due to legacy systems. 

These rapid technological changes from fintech disruptors force traditional banks to innovate continuously, but how can banks keep up? Banks must innovate continuously to stay competitive by adopting emerging technologies like blockchain, AI, and digital banking solutions. 

Moreover, the cost of digital transformation is substantial for banks as they must invest heavily in upgrading their IT infrastructure to compete with the advanced technologies of fintechs. 

Strategic partnerships with fintechs can help traditional banks enhance digital capabilities and deliver superior customer experiences whilst navigating long sales cycles and aligning operations.

Talent acquisition and upskilling to manage updated IT platforms

As new technology emerges, banks must have talent to manage it. The talent acquisition and upskilling approach in financial services should be deeply rooted in a structured framework designed to meet the evolving demands of modern IT platforms and the evolving technical landscape. 

The commitment to upskilling can be demonstrated through robust training programmes to equip themselves with a capable and future-ready workforce.

The coming year will be a test for banks on how they can best position themselves for growth in the evolving financial and technological landscape. 

These challenges underscore the need for banks to remain agile, innovative, and proactive in adopting new technologies whilst ensuring security and compliance at every step.

HCLTech, with its innovative and diversified offerings, is well-equipped to help banking enterprises effectively navigate big technological challenges we see in the year ahead. 

With Engineering DNA at the core and our deep domain capabilities, HCLTech can accelerate the digital transformation strategy for its banking customers. Our strengths lie across the stack, right from innovation to execution and customer service.

As mentioned above, some technological and regulatory challenges may exist in 2025. 

However, with the right modernisation strategies, adoption of regulatory compliance and cybersecurity, integration of the latest technologies and choosing the right digital partner, we expect banking institutions to grow in 2025 despite the headwinds.

Explore the latest edition of FinTech Magazine and be part of the conversation at our global conference series, FinTech LIVE. 

Discover all our upcoming events and secure your tickets today.

FinTech Magazine is a BizClik brand