Technology is quietly reshaping the banking system, modernising its core infrastructure and redefining how financial services are delivered, writes Peter Knight.
Banking has always been a conservative business. Scale, regulation and trust have long kept the pace of change slow. Yet beneath the surface, the sector is being transformed by technology in ways that would have seemed unlikely even a few years ago.
Legacy infrastructure, complex regulation and risk-averse cultures have traditionally limited innovation across the industry. But these constraints are now creating opportunity. The scale of disruption and unmet demand for faster, smarter banking solutions is vast — and, through our network, we’ve seen first-hand how new technology-driven models are reshaping a system once thought too entrenched to change.
Modernising the core
The most significant advances in banking today are not necessarily the ones customers can see. They are happening in the infrastructure — the systems that power every transaction, payment and balance sheet.
In the UK, where 87 per cent of adults now use online or remote banking, a new generation of providers is helping institutions modernise the machinery of finance1. Thought Machine is one example. Its cloud-native platform allows banks to build and deploy products far more quickly and reliably than before, replacing outdated technology that has constrained innovation for decades.
Another is Modulr, whose “payments-as-a-service” technology enables instant, embedded transactions between banks, fintechs and corporates. The global payments-as-a-service market is projected to grow from $14.5 billion in 2025 to $58.8 billion by 2030, a compound growth rate of over 32 per cent2. By integrating directly into clients’ systems, Modulr has helped make real-time payments an everyday reality.
These firms are not replacing the banking system; they are modernising it — helping long-established institutions compete, improve efficiency and meet customer expectations in a digital world.
From rapid growth to sustainable models
Fintech’s first wave promised to upend the financial system. The second is proving that long-term success depends as much on sustainability as on scale.
After years of abundant capital, the market has become more selective. KPMG reports that global fintech investment in the first half of 2025 fell 5 per cent year-on-year to $7.2 billion, the lowest level since 2020 . Yet profitability is improving: Boston Consulting Group notes that nearly a third of scaled fintechs are now profitable4.
This maturity is particularly visible in the UK. Challenger banks are reaching a threshold where margins, not user growth, define progress. Monzo’s first annual profit in 20245 highlighted how digital banks are moving beyond acquisition to deliver viable, sustainable economics.
It’s a sign of an industry growing up — one that continues to innovate, but with greater discipline and a clearer sense of purpose.
Focused innovation
Technology is also enabling new entrants to serve sectors that larger banks have stepped away from.
Oxbury Bank is one such example. Built around a proprietary digital platform, it focuses on the agricultural economy — a £23 billion market that remains vital to the UK yet historically underserved by mainstream finance. Oxbury’s lending book grew to £1.15 billion in 2024, giving it around 5 per cent of the national agricultural lending market and generating positive pre-tax profit6. It shows how specialist banks can pair deep sector knowledge with efficient technology to operate profitably at scale.
Elsewhere, Liberis is using data-driven underwriting to provide embedded lending to small businesses. The company has now funded $1.5 billion across 60,000 transactions, serving 2.2 million businesses monthly across 16 countries7. By integrating directly with payment and e-commerce platforms, it allows SMEs to access finance quickly and responsibly — extending credit to areas traditional lenders often overlook.
Together, these models show how innovation can strengthen rather than displace the established banking system.
The next phase: finance everywhere
The evolution of embedded finance takes this a step further. Financial services are increasingly being built into the platforms people and businesses already use — from online marketplaces to accounting software.
The global embedded-finance market is projected to grow from $146 billion in 2025 to $690 billion by 2030, a compound rate of 36 per cent8. The World Economic Forum estimates that embedded finance could ultimately account for around US $7 trillion in global revenue by 20309.
Customers no longer need to go to a bank to access financial products; those products now come to them. Yet as opportunity expands, so does responsibility. PwC has highlighted the growing regulatory focus on embedded finance and the need for clear accountability as the model scales10.
Innovation and oversight must progress together if this new phase is to fulfil its promise.
Looking ahead
Banking has always evolved, but this time the change feels deeper. The boundaries between banks, technology firms and the wider economy are dissolving. Finance is becoming infrastructure — the connective tissue that powers commerce and underpins growth.
That shift poses a question worth watching: if banking becomes invisible, built seamlessly into the world around it, what does that mean for competition, regulation and value creation? The next wave of innovation may not come from the banks or even the fintechs, but from the industries learning how to make finance part of their own DNA.
Important note
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Sources
- CoinLaw / Mobile Banking Statistics, 2025
- Mordor Intelligence, Payments-as-a-Service Market Forecast, 2025–2030
- KPMG, Pulse of Fintech H1, 2025
- Boston Consulting Group, Fintech’s Scaled Winners and Emerging Disruptors, 2025
- Financial Times, Digital bank Monzo reports first annual profit, 3 June 2024
- Oxbury Annual Report / Defra Agricultural Lending Data, 2024
- Liberis corporate data, 2024
- Fintech Futures, Global Embedded Finance Forecast, 2025
- World Economic Forum / Dealroom, Embedded Finance Market Outlook, 2025
- PwC, Regulating the Rise of Embedded Finance, 2025