The healthcare outsourcing landscape is evolving rapidly as financial pressures, technological advancements, and regulatory shifts drive payers and providers to rethink their operations.  

The outsourcing market is far from immune to these trends, and leading service providers are now actively positioning themselves to stay ahead.  

Reach out to discuss this topic in depth. 

Based on industry developments over the past 18 months, here are three critical trends shaping the future of healthcare payer outsourcing. 

1. Mergers & acquisitions: A market in motion 

Investment activity in the healthcare outsourcing sector has surged, driven by financial pressures and technological disruptions—particularly the rise of Generative AI (gen AI). The market remains highly competitive, with firms aggressively building capabilities through acquisitions to fill gaps and strengthen their offerings. 

Private equity firms are playing a major role in shaping the landscape, especially in prone to disruption areas such as payment integrity—a critical function in reducing fraud, waste, and abuse. Notable transactions include: 

• New Mountain Capital’s US$3 billion consolidation of The Rawlings Group, Apixio’s payment integrity business, and Varis to create a powerhouse leveraging artificial intelligence (AI) to improve payment accuracy. 

• KKR-backed Cotiviti’s expected US$3 billion acquisition of Edifecs, aimed at enhancing administrative and clinical data-sharing capabilities. 

• Sagility’s acquisition of BroadPath Healthcare Solutions (January 2025), adding over 30 clients and strengthening its claims processing, provider credentialing, and member engagement capabilities. 

• TowerBrook Capital Partners and Clayton, Dubilier & Rice’s acquisition of R1 RCM (August 2024): R1 RCM, a healthcare technology company specializing in revenue cycle management, was taken private in a deal valued at $8.9 billion 

• New Mountain Capital’s strategic investment in Access Healthcare (January 2025): This investment aims to accelerate Access Healthcare’s transformation of revenue management for healthcare organizations 

For outsourcing providers, these moves highlight the importance of building robust capabilities in payment integrity, care management, revenue cycle management, and digital health—whether through acquisitions, partnerships, or internal innovation. 

2. Growing adoption of outsourcing by healthcare providers 

Historically, healthcare providers have been slow to outsource, but that is changing as rising administrative costs and razor-thin margins push hospitals to seek external expertise. 

Revenue cycle management (RCM) remains the most visible area for outsourcing, with hospitals increasingly turning to external firms for financial operations. Some of the most significant provider outsourcing deals in 2024 (source: Beckers Healthcare) include: 

• Ensemble Health Partners secured multiple RCM partnerships, including full revenue cycle management services for Independence Health System (PA), Carilion Clinic (VA), Tower Health (PA), and Beebe Healthcare (DE). The partnership with Carilion Clinic involves transitioning 780 employees, while Tower Health will shift 675 employees to Ensemble. 

• Conifer Health Solutions, Tenet Healthcare’s RCM arm, expanded its footprint, securing a 10-year contract with five Alabama hospitals and partnering with Adventist Health to manage its revenue cycle services. 

• The Brooklyn Hospital Center (NY) signed a 10-year deal with Med-Metrix, transitioning its entire RCM workforce to the outsourcing provider. 

• UCI Health’s acquisition of Tenet Healthcare’s Pacific Coast Network included a built-in outsourcing contract with Conifer Health Solutions for revenue cycle management. 

Beyond revenue cycle management, outsourcing is expanding into additional areas: 

• Clinical documentation & AI-driven coding – Companies like Suki and Nuance are reducing physician documentation burdens with AI-driven solutions. 

• Patient engagement & call centers – More hospitals are outsourcing patient outreach and scheduling to improve operational efficiency. 

• Prior authorization automation – Firms like Availity are helping providers speed up approvals and reduce administrative burdens. 

For service providers, this shift opens new opportunities beyond traditional RCM. Providers are actively seeking automation, AI, and efficiency-enhancing solutions—making it a prime time for innovative outsourcing firms to step in. 

3. The rise of partnership-driven ecosystems 

To remain competitive, service providers are increasingly forming strategic partnerships to create integrated, end-to-end solutions. These ecosystems bring together diverse capabilities to address the growing complexity of healthcare operations. 

Key partnership trends include: 

• Data management firms collaborating with tech giants – Healthcare analytics companies are working with platforms like AWS and Google Cloud to develop scalable solutions. 

• Service providers teaming up with system integrators – Traditional outsourcing firms are partnering with Big 4 firms  and others to offer holistic, technology-enabled solutions. 

• Health plans working with AI-driven startups – Payers are leveraging AI and automation to streamline workflows and enhance service delivery. 

These partnerships reflect a broader industry move toward comprehensive, technology-driven solutions that combine multiple capabilities to tackle complex healthcare challenges. 

What next for the sector? 

The healthcare payer outsourcing market is undergoing a major transformation, shaped by a surge in mergers and acquisitions (M&A) activity, increasing provider adoption of outsourcing, and the rise of collaborative ecosystems.  

These developments are not just industry shifts—they represent critical signals that service providers must analyze and respond to strategically. 

For outsourcing firms, the key question is no longer “What is happening?” but rather “What are we going to do about it?” 

• How do these trends impact our competitive position? 

• Where do we need to strengthen our capabilities—through investment, partnerships, or acquisitions? 

• What gaps exist in our service portfolio, and how do we address them proactively? 

• Are we aligning with the technologies and operational models that healthcare organizations are prioritizing? 

Standing still is not an option. Service providers that adapt quickly, innovate aggressively, and build the right alliances will be the ones that thrive in this evolving landscape. Now is the time to think critically, make bold moves, and take a leadership stance in the healthcare outsourcing market. 

If you found this blog interesting, check out our Optimizing Pricing Strategies For Healthcare AI Startups: Expert Insights For Payer And Provider Innovation | Blog – Everest Group blog, which delves deeper into another topic regarding the healthcare sector. 

If your interested in hearing more about healthcare outsourcing trends in 2025 and beyond, please reach out to Ankur Verma (ankur.verma@everestgrp.com).  

Chess has seen a remarkable rise in popularity, reaching a milestone on February 1, 2025, when Chess.com surpassed 200 million members, showcasing its growing global influence. This growing interest in the game has not only fostered a larger competitive community but has also opened doors for chess to create real-world impact, particularly in underserved communities around the globe.

Reach out to discuss this topic in depth.

How chess benefits underserved communities

Chess serves as a compelling case study of how a growing industry can drive social and economic benefits for underserved populations. The game requires minimal resources to play, making it accessible to individuals in even the most disadvantaged regions.

Moreover, its emphasis on strategy, problem-solving, and resilience aligns with skills that are crucial in today’s workforce. As chess expands globally—through online platforms, competitive tournaments, and educational programs—it is creating new career pathways, scholarships, and workforce development opportunities.

Unlike many industries that require substantial infrastructure or investment, chess proves that intellectual capital alone can foster economic mobility. From coaching and streaming to content creation and tournament organization, the growing chess ecosystem is generating employment prospects while simultaneously uplifting disadvantaged communities.

Real-world examples of chess empowering underserved communities

SOM Chess Academy (Uganda)

Founded by Robert Katende, the SOM Chess Academy has introduced chess to at-risk youth, helping them develop critical thinking skills, resilience, and a pathway to economic empowerment. One of its most inspiring success stories is that of Phiona Mutesi, who rose from the slums of Kampala to international recognition through chess.

Mutesi’s journey exemplifies how structured chess training can unlock economic mobility. Through the academy, she gained access to education, scholarships, and global opportunities. Her chess skills not only enabled her to travel the world but also provided her with employment prospects and a platform to inspire future generations.

Chess in Slums Africa

This initiative is dedicated to teaching chess to children in low-income communities, helping them develop cognitive skills and access educational opportunities. Many participants have secured scholarships, proving that chess can serve as a gateway to skill-building, personal development, and social mobility.

The Gift of Chess Initiative

A global movement that distributes chess sets to schools, prisons, and refugee camps, The Gift of Chess fosters education, rehabilitation, and inclusion. By providing access to chess, the initiative empowers individuals to develop strategic thinking, patience, and discipline—skills that translate into broader career opportunities.

FIDE’s “Chess for Freedom” Program

FIDE, the international chess federation, has launched an initiative aimed at teaching chess to inmates and refugees. The program has demonstrated that chess can improve cognitive abilities, provide structure, and offer career-building opportunities for those seeking reintegration into society.

How industries and organizations can get involved

The success of chess in uplifting undeserved communities presents a model that industries and organizations can adopt to drive meaningful talent development. Businesses in digital services, education and workforce training can integrate similar initiatives into their core talent strategies, creating sustainable pathways for skill-building and economic mobility.

Technology sector

Companies in the technology industry can incorporate chess-based training into their workforce development programs. For example, Google and Microsoft have invested in coding boot camps and artificial intelligence (AI) training programs that prioritize problem-solving and computational thinking—skills also cultivated by chess. Integrating chess into digital literacy programs can also further enhance critical thinking abilities for tech-oriented roles.

Education and scholarships

Universities and scholarship foundations can utilize chess-based assessments to identify students with strong cognitive and analytical skills. Programs like the Chess-in-Schools initiative have shown that students who play chess perform better in Science, Technology, Engineering and Mathematics (STEM) subjects, making them ideal candidates for scholarships in science, engineering, and technology fields.

Corporate professional development

Organizations across industries can integrate chess-inspired training into professional development programs to enhance critical workplace skills. Strategic decision-making, analytical thinking, and pattern recognition, which are core competencies in chess, are also essential in leadership, financial analysis, and operational strategy. Companies like Deloitte and McKinsey value structured problem-solving in leadership training, while firms like Renaissance Technologies emphasize strategic forecasting.

By incorporating chess-based exercises into talent development initiatives, industries can build a stronger and more diverse talent pipeline, equipping individuals with transferable skills for digital services, AI training, and other knowledge-based roles. This approach drives both business success and economic inclusion.

Chess, cognitive skills, and the future of tech services

The technology services sector thrives on problem-solving, adaptability, and strategic thinking—all skills that chess cultivates. As businesses increasingly rely on data analytics, AI, cybersecurity, and digital transformation, the ability to recognize patterns, anticipate challenges, and make strategic decisions is more critical than ever.

Chess-based training provides a structured approach to developing these cognitive skills, making individuals more prepared for roles in AI model training, process automation, data annotation, and Information Technology (IT) support.

The same cognitive skills honed through chess can be leveraged to upskill impact sourcing professionals, enabling them to take on more complex, high-value tasks in the tech services industry.

Impact sourcing—hiring and developing individuals from marginalized communities—offers a sustainable and socially responsible approach to workforce expansion while providing businesses with a diverse, resilient, and highly capable talent pool.

Everest Group has committed to significantly expanding the impact sourcing workforce—connecting hundreds of thousands of marginalized individuals to new job opportunities.

Through research, enablement tools, and best practices, as well as engagement with enterprises, service providers, governments, and Non-Governmental Organizations (NGOs), Everest Group is leading the charge in advancing social impact initiatives.

Everest Group’s Clinton Global Initiative (CGI) Pledge

In 2022, Everest Group outlined a Commitment to Action to grow the impact sourcing market from 350,000 full-time equivalents (FTEs) to 500,000 within three years.

Remarkably, this goal was achieved in just two years, fueling a new ambition: to scale the impact sourcing workforce to 1 million by 2030.

This rapid progress highlights the power of innovative approaches to workforce development. Chess is more than just a game—it is a powerful tool for empowerment, a catalyst for social mobility, and a means to break cycles of poverty.

The same strategic thinking, problem-solving, and adaptability that define chess can be applied to upskilling impact sourcing talent, preparing them for knowledge-intensive roles in the digital economy.

By integrating these principles into workforce development, industries can create meaningful economic opportunities, drive long-term social change, and cultivate a more skilled and adaptable workforce.

If you found this blog interesting, check out our Where Sustainability Unites: Climate Week NYC, UNGA, And CGI blog, which delves deeper into another topic regarding impact sourcing and Everest Group’s CGI pledge.

If your organization is interested in joining this initiative or signing the pledge, please reach out to Rita Soni at rita.soni@everestgrp.com, Ankur Verma at ankur.verma@everestgrp.com, or Sidhaant Nagpal at sidhaant.nagpal@everestgrp.com.

The rising importance of data security in 2024 and beyond

Data security became a critical focus area for enterprises in 2024 due to numerous factors, with the increasing adoption of artificial intelligence (AI) leading the charge.

According to the 2025 World Economic Forum’s Report¹, 20% of enterprises are most concerned about data leaks linked to Generative AI (gen AI) adoption. This places data leaks as the second-highest concern, trailing only adversarial capabilities such as phishing and deep fakes.

To fully grasp this growing concern, it’s essential to explore the fundamentals of data security and its significance in today’s digital landscape, which is what our analysts have done in this latest blog.

Reach out to discuss this topic in depth.

Understanding data security

Data security refers to the practice of protecting data from unauthorized access, theft, or corruption throughout its lifecycle, whether it resides on-premises, in the cloud, or within hybrid environments.

It encompasses a range of measures, from physical safeguards to advanced digital solutions. For this blog, we have focused on the digital aspects of data security.

A widely used framework to define data security is the Central Intelligence Agency (CIA) Triad², which comprises three core principles:

• Confidentiality – preserving authorized restrictions on information access and disclosure, including means for protecting personal privacy and proprietary information
  
  
• Integrity – guarding against improper information modification or destruction and ensuring information non-repudiation and authenticity
  
  
• Availability – ensuring timely and reliable access to and use of information

These principles form the foundation of a robust data security strategy and guide enterprises in securing their sensitive information. With the basics of the CIA Triad established, it’s also critical to differentiate data security from a closely related but distinct concept—data privacy.

Data security vs. data privacy

Building on the CIA Triad, it is essential to distinguish between data security and data privacy, as these concepts often overlap but serve distinct purposes. While data security focuses on protecting data from external threats, data privacy addresses how data is handled and shared within organizations. Here’s a simple comparison:

In essence, data security focuses on keeping data safe, while data privacy ensures its ethical and responsible usage. Understanding these distinctions sets the stage for examining the key drivers and challenges shaping the data security landscape.

Drivers and challenges of data security

With a clear understanding of what data security entails, it’s important to examine the factors driving its adoption and the challenges that hinder implementation. This helps contextualize why data security has become a pressing priority.

Key drivers

1. Gen AI adoption – The growing use of gen AI heightens concerns about protecting sensitive data during training and operations. Enterprises are prioritizing measures to prevent intellectual property leaks, unauthorized access, and accidental exposure
2. Increasing cyber threats – Cyberattacks, including ransomware, phishing, and Advanced Persistent Threats (APTs), are becoming more sophisticated. Robust data security is essential to safeguard sensitive information and maintaining business continuity
3. Regulatory compliance pressure – Stringent regulations like General Data Protection Regulation (GDPR), EU AI Act, National Institution of Standards and Technology Artificial Intelligence Risk Management Framework (NIST AI RMF), California Consumer Privacy Act CCPA, and India’s Digital Personal Data Protection (DPDP) Act compel organizations to adopt stringent security protocols. Compliance builds trust and ensures adherence to legal obligations

Major challenges

1. Complex technology landscape – Integrating diverse security solutions across hybrid and multi-cloud environments is challenging, leading to vulnerabilities
2. Evolving threat vectors – Cybercriminals continually refine tactics, making it difficult for organizations to stay ahead without agile security frameworks
3. Resource and budget constraints – Many organizations struggle to allocate sufficient budgets and skilled personnel, limiting their ability to implement effective security measures
   
   

With these drivers and challenges in mind, understanding the types of data security solutions available becomes crucial to overcoming these obstacles effectively.

Types of data security solutions and technologies

For successful implementation of data security, organizations must rely on a structured approach rooted in the CIA Triad. This ensures that all aspects of confidentiality, integrity, and availability are addressed using the right solutions and tools.

This structured approach equips enterprises to secure data effectively while addressing unique organizational needs. Next, we explore the pivotal role of service providers in driving data security initiatives.

What should providers do about data security?

Recognizing the complexities outlined above, providers play a critical role in supporting enterprises as they navigate the evolving data security landscape. Here are actionable strategies for providers:

1. Collaboration with specialized security providers – Enterprises expect service providers to forge strategic partnerships with industry-leading encryption, Data Security Posture Management (DSPM), Data Loss Protection (DLP), and AI-security experts. The complexity of today’s threats demands a robust ecosystem of specialized tools and technologies to ensure comprehensive protection and continuous innovation
   
   
2. Tailored and scalable security solutions – Enterprises demand data security solutions that can adapt to different organizational sizes and industry requirements. From lightweight, cost-effective defenses for smaller entities to advanced, multi-tiered frameworks for large enterprises, providers must deliver a scalable approach that addresses diverse risk profiles
   
   
3. Proactive compliance and regulatory alignment – Organizations expect service providers to stay ahead of global and local regulations, offering proactive advisory services, automated compliance reporting, and real-time monitoring. By anticipating and adapting to legal requirements, they position themselves as trusted partners who ensure organization’s uninterrupted compliance
   
   
4. End-to-end coverage across the CIA triad – Enterprises look to technology providers to deliver integrated solutions that address all facets of the CIA triad. This requires both established capabilities—like encryption and data loss prevention—and emerging innovations, such as DSPM, to cover the full spectrum of modern data security demands
   
   
5. AI-driven innovation for advanced threat detection – Enterprises expect technology providers to harness AI to transform data security. From automated risk assessments and predictive threat intelligence to streamlined incident response, AI-enabled solutions must now offer faster, smarter, and more adaptive defenses that help us outpace evolving cyber risks

What we believe is next…As enterprises navigate the complexities of data security, it’s clear that protecting digital assets is no longer optional—it’s a necessity. The adoption of AI, increasing cyber threats, and regulatory pressures are now reshaping the landscape, demanding innovative and comprehensive solutions. By leveraging advanced tools, focusing on education, and building strong ecosystems, service providers can now lead the way in securing the future of digital information!

If you found this blog interesting, check out our MXDR: A Revolutionary And Comprehensive Solution Transforming Cybersecurity Detection And Response | Blog – Everest Group blog, which delves deeper into another topic regarding data and cybersecurity.

To discuss data security in more depth with our team, please contact Kumar Avijit (kumar.avijit@everestgrp.com) and Arjun Chauhan (arjun.chauhan@everestgrp.com).

1. WEF Report on Cybersecurity Outlook 2024

2. NIST 1800-26

3. This set of technologies is not intended to be exhaustive but aims to provide a broad overview

Corporate communications have undergone a significant transformation over the past 2-3 years, evolving into a pivotal function within Global Capability Center (GCC) operations.

From representing the organization externally to ensuring consistency in messaging and safeguarding the global enterprise brand, corporate communications teams now play a vital role in managing both internal and external engagements.

Here’s what our expert analysts had to say on the topic, as we delve deep into the evolving role of corporate communications in GCCs.

Reach out to discuss this topic in depth.

When I began my GCC advisory journey at Everest Group nearly nine years ago—back when they were still called GICs (Global In-house Centers)—corporate communications was barely on the radar for most GCCs, let alone their parent organizations. It was a different world, where the focus was primarily on cost arbitrage and operational efficiencies. Fast forward to today, and the landscape has transformed dramatically. Most GCCs now either have a dedicated corporate communications role or at least a defined responsibility for it, reflecting its growing importance.

With increasing endorsement for the GCC model, deeper integration with global enterprises, and a value-first mindset driving priorities, there is now a sharper focus on talent, branding, Employee Value Proposition (EVP), and ensuring consistent messaging across internal and external channels. Corporate communications has emerged as a critical function at the intersection of these priorities, playing a pivotal role in shaping perceptions and driving engagement.

An analysis of approximately 200 GCCs across sectors reveals that 25-30% (conservative estimate) now have a dedicated corporate communication role, a significant rise from an estimated 10% just 5-6 years ago. Notably, many of these corporate communication leaders are also taking on global delivery responsibilities within the communications domain.

Why corporate communications is now key for GCCs

Corporate communications in GCCs has evolved from being a support function to becoming a strategic enabler. Here’s why:

1. Consistent branding message
   GCCs are increasingly seen as integral parts of the enterprise, not merely delivery partners. This shift requires messaging that aligns the GCC identity with the parent brand, while showcasing its unique capabilities.
2. Bridging global and local branding
   For organizations with commercial operations in India or other GCC hubs, maintaining consistency in branding across the GCC and the local business entity is crucial. Many organizations have established policies or guidelines outlining specifics, such as the number of social media posts that can be posted from official handles each month, their frequency, and the topics they should cover to ensure a cohesive and aligned brand presence.
3. Differentiated talent branding
   In competitive markets, talent branding is critical. Corporate communications play a key role in positioning the GCC as an employer of choice by emphasizing its culture, growth opportunities, and alignment with global standards.
4. Leadership branding
   GCC leaders are increasingly stepping into the spotlight, not only to showcase the center’s capabilities, but also to build personal brands. This enhances their visibility and fosters trust within the enterprise and the industry.
5. Compliance and governance
   As the gatekeeper of the company’s brand, corporate communications ensures that all messaging adheres to enterprise standards, protecting the organization’s reputation and identity.

What’s trending in corporate communications teams in GCCs?

Corporate communications teams in GCCs are now taking cues from global best practices, particularly in the U.S. Here are some innovative approaches:

1. Expanding PR avenues
   From showcasing leadership capabilities at high-profile events to sponsoring local initiatives like marathons or cultural festivals, GCCs are leveraging public relations to promote their brand identity.
2. Driving thought leadership
   GCC leaders are increasingly contributing to industry discussions through blogs, panel appearances, and white papers, showcasing their deep business understanding and expertise.
3. Double-hatting roles
   Many GCC communication teams support both local branding efforts and the global corporate communications strategy, often operating in a shared services model.
4. Centralized governance
   Centralized communication teams ensure consistency in PR, branding, and related policies, maintaining high standards across all communication channels for the global enterprise.

What’s next for corporate communications in GCCs

As GCCs continue to grow in complexity and prominence, the role of corporate communications is poised to evolve significantly. While corporate communications teams may remain lean, their strategic importance will increase, driving greater influence on organizational strategy and culture. With this growing maturity, these teams are now likely to adopt more sophisticated tools and methodologies to measure impact, refine storytelling, and enhance stakeholder engagement.

In the future, corporate communications will likely build stronger collaborations with talent acquisition and Corporate Social Responsibility (CSR) functions, fostering a unified narrative that resonates across employees, candidates, and the broader community.

Additionally, deeper integration with shared services and global delivery roles is expected, with corporate communications leaders increasingly “double hatting” to support global initiatives. This could include the establishment of communications-specific Centers of Excellence (CoEs), that are set up to guide the enterprise on best practices, policies, and innovative approaches.

Collaborating and tapping into the experience and knowledge of those we work closest with, I have also discussed with a number of practitioners, who also share incredibly insightful thoughts on the matter at hand.

Hear from leaders…

“Corporate communications has become a strategic enabler for GCCs today. With a growing emphasis on industry and ecosystem collaborations, it ensures companies actively shape and contribute to broader narratives. Strengthening brand reputation and crisis management remains critical in an era of instant responses. Additionally, corporate communications in GCCs plays a pivotal role in aligning global goals with local contexts, enhancing market relevance. Sustainability and ESG communications now serve as a vital avenue to reflect a GCC’s commitments.

The next evolution? Becoming a proactive driver of business strategy—leveraging AI and data to anticipate trends, engage stakeholders creatively, and lead with purpose. Corporate communications must go beyond storytelling to deliver measurable, lasting impact—through people and innovation!”

– Maithili Iyer Roy – Lead – External Communications and Brand – Amadeus

Furthermore….

“With a rapidly growing and transforming GCC environment, corporate communication professionals will be challenged to:

(i) Build differentiation and a distinctive positioning for their respective GCCs in what is evolving into a very cluttered and competitive market, (ii) Look beyond employer branding as the core focus of their communication plans. The inter-connected and more collaborative external ecosystem requires innovative programs that address a larger audience beyond just talent.

“I also believe that collectively, the communication industry needs to address a deep-rooted misconception that GCCs are only tech focused. Many GCCs have evolved much beyond tech, and these stories need to be told.”

– Melissa Arulappan – Director Communication – Target in India

The evolving role of corporate communications in GCCs reflects the transformation of these centers into strategic powerhouses. As branding, leadership visibility, and talent engagement becomes increasingly critical, corporate communications will remain at the forefront, shaping perceptions and driving value for the organization.

For GCCs, investing in a robust corporate communications function isn’t just about keeping up—it’s about leading the way, and I am really excited to see what 2025 and beyond now has in store for this evolution!

If you found this blog interesting, check out our blog focusing on The Evolution And Growth Of Global Capability Centers (GCCs) And The Critical Role Of Providers | Blog – Everest Group, which delves deeper into another topic relating to GCCs.

To learn more about GCCs and other topics relating to the GBS and Shared Services service line, contact Bharath M (bharath.m@everestgrp.com).

With the advent of Generative AI (gen AI), the world now stands on the precipice of a new era, characterised by a more demanding generation of customers, more conscious enterprises, and continuously evolving technology.   

Impacted by all of this, the Customer Experience Management (CXM) industry is experiencing shifting trends, which are exemplified in the Gulf region, due to the dynamic changes occurring therein. 

Reach out to discuss this topic in depth. 

Enterprises are eager to capitalize on the new opportunities that the shifting Gulf landscape offers. Some of the broad trends that the Gulf is experiencing are: 

• Growing tourism: To promote economic diversification and to reduce oil dependence in the Gulf region, the governments in the Gulf have been increasingly focusing on tourism and travel, leading to an influx of people from diverse cultures and an increase in visitor spend. Multiple international events such as GITEX Global 2024 and the Qatar International Food Festival also aim to attract tourists from all over the world 

• Participation in sustainability conversations: The Gulf is set to play a prominent role in the climate change and environmental sustainability conversation in the coming years. The launch of the UAE’s Net Zero commitment by 2050 sets the stage for the Gulf’s participation in environment sustainability actions, with the UAE being the first among the Middle Eastern and African (MEA) nations to set such a target 

• Increasing smartphone and internet penetration: There has been a rapid growth in smartphone adoption across Saudi Arabia, where internet penetration is expected to reach 97% by 2025. Similarly, both UAE and Kuwait are also experiencing a sharp growth in smartphone adoption 

• Growing prominence of African nations: Well-established North African countries such as Egypt are attractive delivery locations for customer experience (CX) services, due to their proximity to continental Europe and the UK. Additionally, the hourly agent rate in Egypt ranges from US $10-12 per hour, which is up to 50% less than rates in the UK and other European locations. Egypt is home to a multilingual workforce of approximately 250,000 full-time equivalents (FTEs), capable of supporting over 20 languages in both voice and non-voice business process services. Furthermore, various government initiatives such as Egypt’s National Strategy for Artificial Intelligence (AI), Digital Egypt Builders Initiative (DEBI), which was launched in 2020, as a scholarship program, and ICT 2030, in which Egypt is set to invest over $3bn in to improve infrastructure, digital transformation, and training programs for capability building, to enhance Egypt’s attractiveness in the CXM space. A growing diverse workforce, technological advancements, and the need for cost efficiencies, also position other upcoming North African countries such as Rwanda and Ghana as attractive delivery locations for CX services. These locations also offer an opportunity to meet impact sourcing goals. 

AI policies and initiatives shaping the CXM industry in the Gulf 

Therefore, businesses in the region are focusing on providing innovative solutions, catering to the changing consumer expectations amidst the technological advancements taking place. Some CX trends anticipated to shape the CXM industry in the Gulf are: 

• AI-driven hyper-personalization: Constant engagement and speedy responses are no longer enough to retain customers. Customers are looking for businesses that can personalize and build a relationship with them. The UAE has also established its National Strategy for Artificial Intelligence 2031, wherein it aims to develop AI technologies across multiple industries and adopt AI across customer communications. Tools and solutions powered by AI that utilize vast pools of data to provide hyper personalization, contextualization, and an understanding of linguistic nuances with a human touch, are expected to become the key differentiators for businesses while they engage with customers 

• Omnichannel experience: Increased access to smartphones and internet availability opens pathways to leverage mobile experiences. With most of the population having access to smartphones and the internet, mobile / digital marketing, and digital experiences will present opportunities for growth and outreach. Rampant penetration of the internet has led customers to access a variety of new services, such as telehealth and on-demand services such as food delivery and ridesharing, which were unavailable until now. Customers will continue to look for more integrated and seamless experiences for engagement and interactions across multiple touchpoints  

• Accent neutralization, translation, and transcription: With an increased focus on travel and tourism, technologies focusing on accent neutralisation, language translation, and transcriptions, seem to be natural CX trends on the cards. Increased cross-pollination and tourism will also provide an opportunity for enterprises to serve customers from varied cultures who speak diverse languages 

• Sustainability: With the participation of the Gulf in multiple climate change initiatives such as the COP28, which was held in the UAE in 2023, enterprises are looking for solutions that are aligned with their Environmental, Social and Governance (ESG) and sustainability goals. Businesses will now be encouraged to have more accountability and differentiate themselves through sustainable solutions 

• Growth of non-voice channels: As the gen Z population takes up the role of a customer, non-voice channels are projected to witness a significant increase in demand. This provides a tangible growth opportunity to develop and leverage non-voice channels such as AI-powered chatbots. The widespread use of smartphones will broaden opportunities to interact with the customer through a variety of mediums, such as social media, video, chat, and other applications 

• Responsible AI: Even though the benefits of AI have been experienced across industries and domains, it is paramount to understand the limitations and challenges that it brings. Just how a world without AI in the future is unthinkable, it is also unwise to function without responsible AI. Unchecked AI can lead to biases, illogical responses, and harmful outputs, impacting the reputation and credibility of businesses. Having AI as a part of the customer experience will no longer be a differentiator, rather having AI that is credible and responsible will be an indicator of leading businesses 

Future outlook 

With evolving times, it is only natural that the geographic and cultural trends of the Gulf will shape the CX industry in the region. It is crucial for enterprises in the Gulf, and for those looking to expand in the region, to be mindful of these trends to align with the transformative changes occurring in the region and position themselves for long-term success. 

If you found this blog interesting, check out our blog focusing on The Top 10 Predictions That Will Revolutionize CXM In 2025 | Blog – Everest Group, covered by the CXM program. 

To learn more about these 2025 CXM trends and to hear about the evolution in the CXM landscape, contact Aishwarya Barjatya (aishwarya.barjatya@everestgrp.com) or Akshara Vaidhyanathan (akshara.vaidhyanathan@everestgrp.com). 

Cybersecurity has rapidly ascended the priority list for enterprises worldwide, and for good reason. As digital transformation accelerates, organizations find themselves managing countless user endpoints, cloud deployments, and data touchpoints—all of which are enticing targets for cybercriminals.  

High-profile breaches and ransomware incidents over the last few years have made cybersecurity concerns a boardroom agenda. Beyond merely avoiding data loss or regulatory fines, companies now appreciate how trust and reputation hinge on robust security measures.  

In this environment, cybersecurity spending has soared, often outpacing broader Information Technology (IT) budgets. Entering 2025, cybersecurity is no longer seen as an overhead cost; it is recognized as an indispensable enabler of innovation, competitiveness, and brand confidence, as our analysts have explained in this latest blog. 

Reach out to discuss this topic in depth. 

With 2024’s turbulent conditions setting the stage, enterprises anticipate an uneven global services rebound in 2025. Cybersecurity consistently identified as a top investment priority—second only to Generative AI (gen AI) in our recent Key Priorities Study 2025—stands at the forefront of enterprise agendas.  

Understanding how shifts in threats, technologies, and regulations will reshape cybersecurity services in 2025 is crucial for informed strategic decision-making. By anticipating these emerging patterns, businesses can then proactively safeguard their operations, allocate budgets more effectively, and capitalize on new growth opportunities.  

In essence, knowing what lies ahead in cybersecurity can be a decisive factor for both protection and progression in the services industry. 

Five key cybersecurity predictions for 2025 

1.Cyber resiliency will overtake basic cybersecurity measures – The CrowdStrike black swan event has reiterated the need for resilient businesses, resurfacing the mandate of having a cyber-resilient organization. Approximately 35% of organizations report insufficient cyber resilience. In 2025, enterprises will pivot toward a cyber resiliency mindset, focusing on business continuity and rapid recovery. This pivot arises from the reality that even the best defensive strategies can falter under sophisticated threats. 

The shift toward resiliency-driven solutions will expand the scope of cybersecurity services. Service providers will have to focus on comprehensive offerings that encompass threat intelligence, incident response planning, and post-breach recovery. 

As the bar rises for minimum viable defenses, cybersecurity teams and outsourcing partners will see heightened demand for solutions that ensure minimal operational downtime—pushing them to develop specialized frameworks that guarantee resilience even amid large-scale attacks. 

2.Securing AI and data governance will become mission-critical – The rapid adoption of gen AI across critical operations means organizations will rely heavily on algorithmic decision-making. While artificial intelligence (AI) helps automate processes and unlock new business value, it also presents new vulnerabilities—think malicious AI model manipulation or data poisoning. 

Cybersecurity providers will have to craft services specifically tailored to safeguard AI pipelines—ranging from model development and training to deployment and ongoing optimization.  

Enhanced data governance solutions will emerge to ensure the integrity and confidentiality of the data that trains these AI models. Providers who can combine cybersecurity, data privacy, and AI competencies stand to differentiate themselves, offering holistic solutions that facilitate innovation while safeguarding against AI-centric threats. 

3.Global Capability Centers (GCCs) will spur demand for specialized cybersecurity – The rising emphasis on cost optimization and control is driving enterprises to set up or expand GCCs. These GCCs serve as operational hubs, handling core and specialized functions, including cybersecurity. As approximately 57% of Global Business Services (GBS) clients list cybersecurity among their top three focus areas, the urgency for advanced security frameworks embedded within GCC operations will skyrocket. 
 
Cybersecurity service providers have a significant growth opportunity here. Enterprises will look for partners who can design and run robust security infrastructures for distributed global teams. Providers capable of offering scalable, high-quality managed security services—from setting up secure development operations to incident response across multiple locations—will thrive. This trend will also heighten the importance of multi-jurisdictional compliance expertise, as GCCs need to navigate privacy and data protection regulations worldwide. 

4.AI-driven attacks will grow in sophistication – Just as enterprises leverage AI to bolster security operations, threat actors use AI-driven techniques to elevate the complexity of cyberattacks. From automated vulnerability scanning and exploit generation, to highly personalized phishing campaigns and deepfakes, AI can significantly amplify the scale and efficacy of malicious efforts. 
 
The arms race between cybercriminals and defenders will intensify. Cybersecurity providers must innovate rapidly, deploying AI-powered detection and response systems that can counter advanced threats in real time. Partnerships with specialized AI security technology providers will become common, and training programs for cybersecurity professionals will emphasize AI literacy. This evolution will push the industry toward more proactive, predictive cyber defense strategies—those that anticipate emerging AI-fueled threats rather than simply react to known threat vectors. 

5.Service providers will embrace Gen AI—and prepare for Agentic AI – Generative AI has already begun reshaping how cybersecurity services are delivered, particularly in areas like threat analysis. Companies like DeepSeek have proven how gen AI costs can be significantly reduced, while still maintaining a high degree of accuracy in complex tasks. By late 2025, we can expect the emergence of Agentic AI, an evolution beyond gen AI that enables more autonomous decision-making in cybersecurity workflows.  
 
Service providers will increasingly adopt gen AI to streamline labor-intensive processes and improve service responsiveness. As Agentic AI starts to take form, providers will differentiate themselves by offering more autonomous and self-optimizing security solutions. This shift could dramatically lower costs, reduce reliance on manual oversight, and enable faster, on-demand adaptability to new cyber threats. Service providers that incorporate both gen AI and emerging Agentic AI capabilities into their service delivery will be better positioned to compete in an industry seeking not just security, but also agility, efficiency, and innovation. 

The cybersecurity landscape of 2025 promises to be as dynamic as ever, shaped by AI innovations, global expansion of cybersecurity service capabilities, and the relentless pursuit of cyber resiliency.  

Navigating these changes demands both flexibility and foresight. By proactively embracing specialized services, forging strategic partnerships, and focusing on holistic solutions, enterprises can transform cyber threats into opportunities for growth. In the end, a prepared and adaptable organization is better poised not just to defend itself, but to thrive in a world where security empowers innovation. 

If you found this blog interesting, check out two of our recent blogs Exploring The Importance Of Post-quantum Cryptography: An Unbreakable Vault To Protect Enterprises Against Advanced Cyberattacks, Part 2 | Blog – Everest Group and Decoding Quantum Computing: Uncovering Its Potential Impact And Opportunities, Part I | Blog – Everest Group, which delve deeper into other topics regarding cybersecurity. 

To discuss these cybersecurity predictions for 2025 in more depth, please contact Kumar Avijit (kumar.avijit@everestgrp.com) and Arjun Chauhan (arjun.chauhan@everestgrp.com). 

It’s fascinating to see how DeepSeek currently seems to be everywhere on our social media feeds throughout the last couple of days. 

Unsurprisingly, it’s now sparking a mix of excitement and anxiety across the industry. For some, it’s a revolutionary breakthrough. For others, it’s raising serious concerns (and the deep correction in most tech stocks on NASDAQ on January 27^th only confirms that). 
 
The big debate: Whether DeepSeek is truly better than what OpenAI, Anthropic, or others have achieved. The internet is still split over which model outdoes the others. Some early tests do indicate that DeepSeek R1 manages to outscore its peers on some of the testing benchmarks. 

Reach out to discuss this topic in depth. 

Benchmark performance of DeepSeek-R1

Image source: DeepSeek-R1: Incentivizing Reasoning Capability in LLMs via Reinforcement Learning

Sheer compute power isn’t the only lever artificial intelligence (AI) creators have. An AI model can stand out in two ways in the current market – firstly by being state-of-the-art or secondly, by being almost as good but far cheaper. DeepSeek appears to have mastered the latter, and that’s what makes it such a revolution right now. 

Its founders claim to have developed DeepSeek with a budget of under US$6 million. And it took them less than two months to do that. Secondly, all the training was done on older NVIDIA hardware rather than using the most expensive chips – H100s.

While there are some questions being raised about the authenticity of that number (such as possibly not accounting for all the hardware costs because the hedge fund that owns DeepSeek was already in possession of the hardware, or DeepSeek being built off of Open AI and Anthropic models, thus significantly bringing down the costs), DeepSeek has clearly shown that you don’t need multi-billion dollar budgets or the most shiny hardware in the market to build truly competitive AI models anymore.  

It’s not just the development costs: What makes DeepSeek interesting is not just the development cost, but also the fact that it delivers the best that any AI company out there has to offer for free, at least for personal use. For commercial use, the cost per million tokens is considerably less at $0.55 per million input tokens and $2.19 per million output tokens, compared with OpenAI’s Application Programming Interface (API), which costs $15 and $60, respectively.  

What’s more? It is open source. Everything it has achieved is documented and available for others to replicate. This means that it should open the path for more such models to come up on the market, further putting pressure on pricing.  
 
Only good news for enterprises: For those who’ve been eager to embrace AI but held back by the high costs, DeepSeek might be the breakthrough they’ve been waiting for. Imagine a future where you don’t need to budget millions to train and run AI agents, don’t need super sophisticated hardware, and don’t need large, AI-skilled teams!  

DeepSeek might also open doors for self-hosting soon, which so far hasn’t been possible because of the hardware and computer costs associated with it. And it’s not just DeepSeek either, there are others out there, such as Kimi k1.5, Alibaba’s Qwen, and 01.AI. These newer models could lead to faster adoption, even among Small and Mid-Sized Businesses (SMBs). The eureka moment for Generative AI (gen AI)  might be now. These are exciting times for AI. With DeepSeek, it’s become clear that innovation in this space doesn’t require billion-dollar-deep pockets anymore and that is what truly makes it a game changer.

If you found this blog interesting, check out our blog focusing on AI-Powered Coding Assistants: Shaping The Future Of Software Development | Blog – Everest Group, which delves deeper into another topic relating to AI. 

To learn more about DeepSeek, what it may mean for the services industry, and the evolution of AI, please contact Aishwarya Barjatya (aishwarya.barjatya@everestgrp.com) or Sharang Sharma (sharang.sharma@everestgrp.com).  

In today’s competitive landscape, innovation centers have become indispensable for forward-thinking organizations. But how many of these centers deliver real, transformative outcomes? For enterprises and service providers navigating this terrain, the question isn’t whether to invest in innovation centers, but how to maximize their value to ensure they serve as catalysts for meaningful business transformation.

Innovation centers are more than just places for experimentation – they are strategic engines driving the future of business success. They must evolve to address challenges, deliver value, and stay at the forefront of disruption.

At Everest Group, we’ve examined how innovation centers are transforming into engines of strategic advantage. Based on our latest research, we see clear opportunities – and challenges – for businesses looking to leverage these centers to stay ahead of the curve. Let’s dive into the key insights and guidance that can help shape your future strategy.

Learn more in my blog on Forbes

The global wealth management industry is undergoing a seismic shift, as regional nuances increasingly shape market strategies.

With the rise of digital transformation evolving client demands, and regulatory complexities, regions across the globe present distinct opportunities and challenges.

At the heart of this evolution are technology providers, enabling tailored solutions to meet the unique needs of each geography.

This blog explores regional trends, the role of leading technology providers, and publicly announced deals that exemplify these dynamics, read on to find out more.

Reach out to discuss this topic in depth.

North America – Focus on digital innovation and high-net-worth individuals (HNWI)

North America continues to dominate the global wealth management market, driven by its mature client base and an emphasis on HNWIs. The region prioritizes digital advisory platforms and seamless client engagement tools, with firms increasingly leveraging artificial intelligence (AI) and data analytics to offer hyper-personalized services.

Leaders such as Broadridge and FIS are spearheading this transformation. For example, Broadridge has integrated AI-powered solutions to enhance portfolio management and client advisory capabilities. Recently, the company has also partnered with leading financial institutions to deploy its wealth management platform, exemplifying the region’s emphasis on technological agility. Similarly, FIS’s expansion of cloud-native wealth solutions showcases its commitment to scalability and innovation.

UK – Driven by hybrid advisory models and regulatory focus

The United Kingdom’s wealth management sector on the other hand, is heavily influenced by stringent regulatory requirements and evolving client expectations. Hybrid advisory models, which combine human expertise with digital tools, are gaining traction in this market.

Prominent players like FNZ and SEI are key drivers in this space. FNZ’s end-to-end platform simplifies compliance and enhances operational efficiency, while SEI focuses on scalable technology solutions, tailored to the UK market.

FNZ recently collaborated with leading banks to offer ESG-compliant investment portfolios, highlighting its innovative approach, while SEI’s partnership with boutique wealth firms underscores its flexibility in catering to diverse client needs.

EMEA – Transforming with sustainability, innovation, and governance

The wealth management landscape in EMEA is shaped by evolving client expectations and a focus on diversification. In Europe, firms are prioritizing Environmental, Social, Governance (ESG)-aligned portfolios and leveraging AI-driven platforms and data analytics, in order to deliver hyper-personalized advisory experiences.

Thematic investments, including sustainable energy and technology-focused portfolios, are gaining traction, reflecting the region’s sophisticated investor base.

In the Middle East, intergenerational wealth transfer and the rise of Sharia-compliant investment products are driving growth, alongside increasing demand for global real estate and private equity opportunities.

Wealth managers in the region are adopting hybrid advisory models, balancing traditional relationship-driven approaches with digital tools to engage a younger, tech-savvy clientele.

Across Europe, the Middle East and Africa (EMEA), regulatory frameworks continue to play a crucial role, fostering transparency and accountability while shaping the future of wealth management. These trends highlight the region’s diverse and dynamic approach to addressing the needs of its unique client segments.

APAC – Fueled by mass affluents, wealth transfer, and mobile-first solutions

The Asia-Pacific (APAC) region is rapidly becoming a key growth market for wealth management, fueled by the rising mass affluent segment and significant intergenerational wealth transfer.

Mobile-first platforms and scalable solutions are crucial in addressing the diverse needs of this dynamic client base. Japan, for example, is seeing a shift toward digitization in wealth advisory, with a focus on catering to aging populations while engaging younger, tech-savvy investors.

In markets like India and Southeast Asia, wealth managers are tapping into opportunities presented by first-generation wealth creators, leveraging personalized robo-advisory tools and hybrid advisory models.

Additionally, thematic portfolios such as technology-focused investments and healthcare related assets are increasingly popular, aligning with the region’s evolving investor priorities. These developments underline APAC’s strategic role in shaping the future of global wealth management.

LATAM – Localized Solutions and Family-Centric Wealth Management  

Wealth management in Latin America is increasingly shaped by localized, culturally nuanced solutions that cater to the region’s linguistic and social diversity.

Family-centric wealth strategies, including the rise of family offices, reflect the strong emphasis on legacy and community, while fintech-driven platforms are expanding access to emerging affluent segments with tailored, mobile-first offerings.

Providers in Latin America are increasingly leveraging localized messaging and culturally sensitive advisory practices to appeal to a clientele that values personal connections and community ties. This focus on nuanced communication and cultural alignment sets wealth management providers apart in a region as dynamic and diverse as Latin America.

Insights from the Wealth Management Products PEAK Matrix® Assessment and key regional trends fueling growth.

The wealth management landscape is marked by the rapid adoption of digital tools, personalized client experiences, and a heightened focus on sustainability.

Market segmentation reveals significant regional nuances. North America leads with a commanding 40-45% of the total market, followed by Continental Europe at 25-30%, the United Kingdom at 20-25%, and the Asia-Pacific region emerging with 15-20%. These figures underscore the need for geography-specific approaches.

Several key themes are driving regional strategies in wealth management. Technology-driven personalization is reshaping client engagement, with hybrid advisory models and AI-driven insights becoming central to operations.

Regulatory-driven adaptation is particularly evident in the UK and Europe, where compliance requirements influence technology adoption. Innovation in ESG investing is a central theme in Europe and North America, as wealth managers strive to meet growing investor demands for sustainability.

Technology providers driving innovation in wealth management

Technology providers are shaping the future of wealth management by addressing region-specific needs. Providers such as Broadridge, Avaloq, and Temenos are known for their innovative platforms.

Broadridge’s AI-powered advisory tools and robust platforms enhance advisor-client relationships. Avaloq’s integration of cloud-based solutions also enables real-time wealth management insights, while Temenos specializes in modular platforms that adapt to regional needs, with a focus on open banking.

FNZ and SEI deliver end-to-end platforms tailored for compliance and operational efficiency, while CGI bridges traditional wealth practices with modern digital solutions. Intellect Design Arena and GBST leverage innovative solutions to address specific market challenges. Intellect Design Arena’s innovative approaches to client onboarding and GBST’s cost-effective tools for smaller firms exemplify their contributions.

Future of wealth management

The wealth management industry’s future lies in understanding and addressing regional dynamics. From North America’s emphasis on personalization to Europe’s ESG-driven approaches and Asia-Pacific’s scalability needs, each region presents unique challenges and opportunities.

Technology providers are at the forefront, driving innovation and market growth. As the industry continues to evolve, tailored regional strategies and partnerships will remain critical to success in 2025 and beyond.

For a closer look at the leading providers shaping the wealth management technology, explore our Wealth Management Products PEAK Matrix® Assessment 2024 report.  

If you found this blog interesting, check out our From Banking Giants To Tech Innovators: FNZ’s New Leadership, 1-billion-dollar Investment, And Its Impact On The Wealth Management Industry | Blog – Everest Group blog, which delves deeper into another topic regarding wealth management.

To learn more about wealth management, please contact Ronak Doshi, (ronak.doshi@everestgrp.com), Kriti Gupta, (kriti.gupta@everestgrp.com), and Pooja Mantri, (pooja.mantri@everestgrp.com). 

Digital Credit

In the latest supervisory overview, the Consumer Financial Protection Bureau (CFPB) has noted the rapid expansion of Buy Now, Pay Later and earned wage, access options in recent years.

The Buy Now, Pay Later (BNPL) model has gained significant prominence recently, partly due to the CFPB’s Section 1033 mandate, which emphasizes the importance of consumer access to financial data in digital credit.

This regulatory focus has accelerated the push for transparency and fair lending practices, reinforcing the legitimacy of BNPL, as a viable alternative to traditional credit options and drawing attention to its transformative potential in the financial landscape.

Reach out to discuss this topic in depth.

Driving market factors for BNPL

The explosive growth of BNPL in the U.S. is underpinned by a convergence of influential factors. Firstly, millennials and Gen Z consumers, who value flexibility, transparency, and simplicity, have driven demand for payment solutions that align with modern, debt-conscious lifestyles. Unlike traditional credit cards, BNPL offers interest-free installments, fostering its appeal among these demographics.

The rise of e-commerce has also further accelerated BNPL adoption. Seamless integration with online retailers enhances the shopping experience, reduces cart abandonment, and drives higher order values. Economic pressures, including inflation and stagnant wages, have made BNPL a compelling alternative to high-interest credit cards, empowering consumers to manage their cash flow more effectively.

Merchants are also capitalizing on BNPL to remain competitive, attract customers, and boost conversion rates. Additionally, technological innovations, such as intuitive platforms and advanced data-driven credit assessments, have broadened access to BNPL, extending its reach to consumers with limited credit histories.

Aggressive marketing strategies and social media influences have heightened awareness, while limited regulatory scrutiny has enabled rapid innovation and expansion. Collectively, these factors have positioned BNPL as a driving force in the evolution of the U.S. financial landscape.

Should large banks embrace BNPL?

Large banks cannot afford to ignore BNPL’s transformative potential either. This payment model is redefining consumer expectations and challenging traditional credit products. Younger consumers, who demand transparency and flexibility, increasingly favor BNPL over conventional credit cards. By integrating BNPL into their offerings, banks can stay relevant, address evolving customer needs, and regain market share from nimble fintech disruptors.

BNPL also provides banks with strategic advantages, such as strengthening merchant relationships by offering payment solutions that enhance customer loyalty and conversion rates. Moreover, it opens up lucrative revenue streams through interest income, transaction fees, and cross-selling financial products.

Neglecting BNPL risks losing ground in a fast-growing market and allowing fintech competitors to erode banks’ dominance within consumer finance. Embracing BNPL is not just a competitive necessity but now a critical step toward future-proofing banking operations in an evolving financial landscape.

The impact of regulatory changes

The CFPB interpretive rule issued in May 2024, mandating BNPL lenders to provide consumers with the same protections as traditional credit cards, marks a significant shift. By enforcing transparency, fair lending practices, and robust dispute resolution mechanisms, the rule enhances consumer trust and aligns BNPL products with established credit standards.

However, this regulatory alignment increases compliance costs, potentially straining smaller providers and driving market consolidation. Traditional financial institutions stand to benefit, as regulatory parity levels the playing field, creating opportunities for banks and credit card issuers to expand their presence in the BNPL market. This development underscores the need for BNPL providers to balance compliance with innovation to maintain their competitive edge.

BNPL’s outlook for 2025

Following the record-breaking BNPL usage during the 2024 holiday season, the outlook for 2025 remains optimistic. Lower interest rates create a favorable environment for consumer spending, making BNPL an attractive option for flexible payment solutions. Providers are also expanding their offerings and entering new markets, capturing both new and existing users.

The CFPB’s regulatory mandate is expected to bolster consumer trust, driving broader adoption. However, challenges such as market saturation, changing consumer behaviors, and economic uncertainties could temper growth.

While 2025 is poised for robust BNPL activity, surpassing 2024’s performance will depend on sustained consumer demand and providers’ ability to innovate and differentiate in an increasingly competitive market.

Technology priorities amid legal scrutiny

Recent legal scrutiny surrounding major BNPL players like PayPal, Affirm, and Klarna is likely to shape their technology priorities in 2025. Compliance, transparency, and consumer protection will take center stage. These companies are expected to enhance their compliance systems with automated monitoring and reporting tools to meet evolving regulations.

Efforts to make user interfaces more transparent, with clear communication of terms, fees, and repayment obligations, will help reduce regulatory risks and build consumer trust. Scalable infrastructure will be essential for adapting to evolving product offerings, such as interest-bearing options or updated payment terms. Additionally, these companies may invest in tools to educate users on responsible borrowing and financial well-being. While regulatory challenges present obstacles, they also offer an opportunity to adopt a more consumer-centric and compliance-driven approach that balances innovation with accountability.

Conclusion

BNPL is reshaping the financial landscape, driven by shifting consumer preferences, technological advancements, and economic pressures. For large banks, embracing BNPL is not just about staying competitive, but about leading innovation in an evolving market. Regulatory changes and legal scrutiny add complexity, but also present opportunities for the sector to mature and build trust.

BNPL has come a long way since its inception in the early 2000’s. The exhibit below shows the journey of BNPL over the years.

As BNPL continues to grow, providers must navigate challenges like compliance costs and market saturation, while leveraging opportunities to innovate and expand. The future of BNPL lies in its ability to adapt to regulatory frameworks, meet consumer expectations, and redefine the way financial services are delivered in a dynamic market.

If you found this blog interesting, check out our blog focusing on Agentic Artificial Intelligence (AI): The Next Growth Frontier – Can It Drive Business Success For Banking & Financial Services (BFS) Enterprises? | Blog – Everest Group, which delves deeper into another topic covered by the BFSI service line.

To learn more about core banking and other topics relating to BNPL, contact Pranati Dave (pranati.dave@everestgrp.com) or Saumil Misra (saumil.misra@everestgrp.com)