The gap between what consumers expect from financial services and where institutions are investing is getting wider. While banks and fintechs tout innovation through AI and embedded services, consumers are asking for something more fundamental: simplicity, clarity, and control. At the heart of it all is a demand for more intelligent, intuitive digital identity in financial services.

Recent research involving thousands of consumers and hundreds of financial executives from the U.S. and U.K. highlights this growing disconnect. Customers crave easier ways to manage their money and protect their data. But financial institutions still invest heavily in buzzworthy technologies without necessarily solving those core user needs.

So how can the industry course correct?

Customers Want Simplicity, Not More Apps

Today’s consumers juggle multiple financial apps. From savings and credit cards to investment tools and budgeting platforms, managing finances has become overwhelming. What people really want is simplification—ideally, in one platform.

The growth of mobile wallets globally—think Alipay, WeChat Pay, and M-Pesa—demonstrates this clearly. These apps bundle multiple financial functions into seamless, user-friendly experiences. Research shows that by 2025, over half of global commerce will happen through digital wallets.

Banks and fintechs that fail to streamline their offerings risk losing relevance. Customers no longer want to jump across platforms to view their balances, track spending, or get financial insights. They expect integrated solutions that reduce friction, not increase it.

Financial Wellness Must Be the Priority

Consumers aren’t just asking for budgeting tips or financial literacy modules. They’re demanding actionable insights to help them save money, avoid pitfalls, and make better choices. This expectation goes far beyond education—it’s about financial empowerment.

Many of the most successful challenger banks and fintechs understand this. They don’t just display numbers; they provide context. They alert users when they’re overspending or when recurring bills might lead to a shortfall. And they do it in real time.

One fintech did this with a simple visual traffic light system: green meant you were on track, red meant you were overspending. This intuitive feedback loop made money management easier, not harder. That’s the kind of experience today’s users expect from their financial providers.

AI Is the Enabler—Not the Selling Point

Interestingly, while financial executives rank AI as a top investment area, consumers rarely cite it as a priority. That’s not because they don’t care—it’s because they don’t understand how AI fits into their lives.

Here’s the reality: AI is most powerful when it’s invisible. When an app suggests you move surplus funds into a savings account or predicts upcoming expenses you might struggle to afford, that’s AI in action. Users don’t care what powers those insights—they care that it works.

In fact, timing matters. One platform discovered that nudging users to save money on Thursday mornings generated the highest response. That’s the kind of behavioral insight that can only come from smart data models and AI-driven personalization.

For financial institutions, the message is clear: invest in AI to improve outcomes, not just to check a box. And when presenting those features to customers, focus on benefits, not technology jargon.

Embedded Finance: A Platform Mindset Is Key

Banks are realizing they can’t do everything alone. Many are turning to embedded finance and open banking APIs to provide more seamless customer experiences. But rather than trying to build the next “super app,” many institutions are focusing on collaboration.

Through open platforms, banks can partner with fintechs to offer third-party services—directly within their own environments. This means users can access budgeting tools, credit score monitoring, or even investment products without ever leaving their bank’s app.

This white-label approach benefits everyone. Customers get a richer experience. Banks retain the relationship. And fintechs gain access to new markets.

The Power of Being the “Home Screen” for Finances

One significant shift is happening quietly: financial institutions are starting to acknowledge that their users may have accounts with multiple providers. Instead of trying to win exclusivity, forward-thinking banks are becoming financial aggregators.

By offering dashboards that show accounts across multiple banks and credit unions, they reclaim the role of “primary financial institution.” They’re not fighting the multi-app mindset—they’re accommodating it.

This mirrors how users think about apps in general. Just as someone might use Spotify for music and Netflix for shows, they’ll use different platforms for financial tasks. But the institution that helps them see the big picture becomes the default.

Regulation and Economic Headwinds Matter—But Can’t Be an Excuse

Economic uncertainty—particularly in the U.S.—has impacted tech spending decisions. Inflation and recession fears have made financial executives more cautious. But tight budgets make it more important than ever to invest in the right areas.

The research showed that while U.K. institutions were also affected, they displayed greater resilience. Regardless of geography, the bottom line is this: when money is tight, investments need to be laser-focused on what truly improves customer experience.

And the most effective way to identify those areas? Listen to users.

Digital Identity in Financial Services: Central to the Future

In today’s digital world, identity is more than a login—it’s the foundation of trust. Companies like Clear are pioneering new models for reusable, secure identity verification that cut across industries.

Originally known for airport security, Clear has expanded into healthcare, employment platforms, and now financial services. By acquiring identity startup Sora ID, Clear is combining KYC (Know Your Customer) compliance with user experience.

This isn’t just about regulation. It’s about helping users verify themselves easily and securely across platforms. Clear aims to offer “verify once, use anywhere” identity tools, merging high assurance with low friction.

In financial services, this could mean faster account openings, fewer abandoned applications, and better fraud prevention—all while respecting privacy.

Reusable Identity: The Final Piece of the Puzzle?

As embedded finance continues to grow, and real-time payments become standard, reusable digital identity will play a key role. It allows users to move across services seamlessly, without re-entering information or undergoing repeated verifications.

LinkedIn has already partnered with Clear to offer verification. Financial institutions are next. With millions of verified users and a trusted brand, Clear is betting big on becoming the default identity layer for the modern digital economy.

It’s not just about knowing your customer—it’s about knowing them once and keeping them known across systems. That’s the future of digital identity in financial services.