Mark Casady
Through this article, Casady revisits predictions made a year ago about the future of financial services, assessing where expectations met reality and where the pace of innovation fell short. He also acknowledges that while none of the forecasts were completely off the mark, the industry’s deeply entrenched nature has slowed progress in some areas.
Learning comes from introspection and assessment. Last January, I shared our team’s ten predictions for the future of financial services. While none of our predictions missed the mark completely, we can now see that we overestimated the pace of innovation. We often hope for faster progress, but in the entrenched world of financial services, change can take time.
Here are some areas where we fell short:
● Harnessing voice technology: While voice technology is on track for improving customer service, it hasn’t yet evolved into a robust voice interface for generative AI (GenAI) and the diverse functions it could serve in financial services. There’s still work to be done in this space.
● The state of InsurTech: InsurTech hasn’t fully bounced back yet, but it’s in a much healthier place. Many startups are still following the traditional Managing General Agent (MGA) model or relying on oversimplified, geography-based analysis. Even so, the sector remains vibrant, with more insurers seeking productivity gains through innovation.
● Sustainable business models in GenAI: While sustainable business models have emerged across various areas of FinTech, GenAI fundamental technology remains an outlier. Valuations for pre-revenue companies building large language models (LLMs) and the supporting tech stack are astonishing. While we wouldn’t call it a bubble just yet, it’s certainly where excess capital is flowing.
“While none of our predictions missed the mark completely, we can now see that we overestimated the pace of innovation. We often hope for faster progress, but in the entrenched world of financial services, change can take time”
On the other hand, we saw strong alignment with many of our other predictions. Here are some notable examples:
● The value of small language models: Exciting advancements in smaller LLMs are showing significant progress. These models are proving their worth, especially when paired with unique datasets that grow in value as they generate insights.
● Distribution as a key driver: For our portfolio companies, effective distribution continues to be the cornerstone of success. Getting this right early on often determines a firm’s trajectory and ultimate outcomes.
● RegTech and WealthTech advancements: RegTech is flourishing, with a multitude of startups entering the space. While many offer surface-level solutions, the truly exciting players are diving deep into the tech stack to drive massive productivity gains. This progress aligns with our perspective on WealthTech, where we’re seeing productivity improvements that benefit Registered Investment Advisors (RIAs), Independent Broker-Dealers (IBDs) and local financial advisors alike.
● Growth in cybersecurity, payments and c-suite tools: Our predictions in these areas have proven accurate, creating significant investment opportunities. The innovation we’ve observed is fueling growth and enhancing productivity across the board.
As we look ahead to 2025, we believe these ten trends will continue to shape impactful innovation in the financial services industry. Who knows? By early 2026, we might even be discussing these developments with the help of an agentic AI solution.
Here’s to another year of learning, adapting and pushing the boundaries of what’s possible!
