December 23, 2025
2026 fintech and venture capital predictions
As fintech enters its next chapter, we continue to see shifting macro conditions, rapid advances in AI, regulatory evolution and maturing business models that are reshaping where value will be created and who will capture it.
In this blog, you’ll hear directly from members of our investment team as they share their predictions for the year ahead. As a global firm, we have the unique advantage of seeing trends across markets, stages and sourcing from conversations with global founders.
The state of venture capital and investing
Amias Gerety | Partner, Head of U.S. Investments
“VC investors are focused on the potential TAM expansion from using AI to automate the work of human operations teams, but the truth is that any cost savings can only create TAM in the short term. If a company replaces a business process outsourcing contract in year one, then an AI company that can replace that work only needs to be cheaper than that contract. But in years two and beyond, the competition is not between AI and a BPO; it’s between two AI companies. Put another way, VCs are missing the power of competition to drive margin down in the age of AI.”
“The venture ecosystem has always lived by the credo that: incumbents will mess up, that brand and capital are no match for passion, insight and fast execution. And yet, many of the largest venture capital firms are responding to AI with the theory that first-mover advantage and brand building are key. Google was not the first search engine, Facebook wasn’t the first social network, Stripe was founded six years AFTER Adyen and Ramp was founded two years AFTER Brex.”
“There’s only so much discussion of a bubble that can occur before prices start to adjust back down. Every conversation in venture these days starts with “prices are crazy but…” Absent a recession, I don’t expect a crash, but peak periods tend to be short-lived.”
Yusuf Özdalga | Partner, Head of U.K. & Europe
"Bond market volatility: Large budget deficits, record national debt to GDP ratios (UK debt/GDP went from 38 percent in 2000 to 103 percent today), politicization of central banks and an overhang of decades of easy money means that we need to be prepared for bond market tantrums where rates swing violently and liquidity pulls a Houdini.
As a result, fintechs that do lending should focus on access to a diverse set of funding sources, while also preparing for rate swings and rising inflation.
For the venture world, we need to internalize that a world of higher rates and longer venture fund durations means our LPs' liquidity and return expectations will only go up.
In closing, as we look at our 2026 predictions, one meta-theme stands out: AI and market forces will increase the capital intensity of fintech, compressing timelines, amplifying volatility and forcing companies to deliver outcomes rather than tools.
Hence, the premium in 2026 will be on capital, speed, resilience and results."
Victoria Zuo | Partner, U.S.
"Investors are investing in AI software businesses the same way we have been underwriting SaaS businesses. In reality, we are experiencing an unprecedented shift in margins and retention, and how stable these may be. When things are growing and changing rapidly, it is hard to predict a business's intrinsic value. When momentary market gaps are not rapidly turned into long-lasting moats, it often leads to businesses with no enterprise value."
Cole Lundquist | Principal, U.S.
"Broadly, investors are not matching their position to market dynamics. From the smallest local pre-seed fund to the largest megafund, VCs are people with a hammer seeing the whole world’s problems as AI nails. Though a modicum of skepticism has snuck back into whispers, without a core AI story it's nigh-on impossible for a company to get funded. This has led to malinvestment, particularly at the earliest high-risk stages, where funds that previously would take fliers on non-consensus deals crowd into “also-ran” AI companies."
"The mass adoption of AI suggested a new class of startups that would leverage tools to run lean and in an extremely capital-efficient manner. There was some initial concern that the pool of opportunities might be smaller, since a startup that would conventionally have to hire large teams to hit scale could now operate with far smaller headcount. This did not really pan out in a meaningful way. Instead, productivity expectations simply increased along with capital requirements, but the upside is that growth that normally took two years was being achieved in six months. The rate of acceleration has been staggering. Venture capital heuristics have had to adapt and finding special teams early has become even more essential."
Shruti Batra | Principal, U.S.
"Investors are mistaking early AI traction for durable advantage and overestimating how much value comes from ‘AI magic’ rather than owning the underlying workflow. AI compresses build cycles so quickly that categories fill with credible-looking entrants within months, meaning early revenue or user growth often signals category immaturity rather than true product-market fit. The real moat isn’t the model - it’s the workflow depth, data rights, integrations and compliance scaffolding required to run in production. In a world where anyone can build, winners will be those who can operate, integrate and earn institutional trust and, as such, investors should underwrite staying power over velocity."
"In certain fintech-adjacent AI markets, I expected clearer differentiation between companies with durable traction and those lifted by the broader enthusiasm to back what the market viewed as a once-in-a-decade platform opportunity. Instead, momentum overwhelmed fundamentals, valuations accelerated indiscriminately and the signal-to-noise ratio collapsed. We responded by leaning into smaller learning checks, avoiding overheated rounds and focusing on markets where traction was actually verifiable. When valuations disconnect this dramatically from fundamentals, patience and FOMO discipline become an advantage - and the companies that endure will come back for capital when the noise clears."
"When thinking about top lessons VCs should take away from this year, 2025 reaffirmed that great technology without great execution doesn’t scale, and distribution is equally important."
What’s in store for fintech
Yusuf Özdalga | Partner, Head of U.K. & Europe
"The visible hand of the government: Our prediction of more government intervention was also quite spot on in 2024. After Q1 2025 was marked by Trump’s “Liberation Day” tariffs, the whole world seemed tuned into government policies for much of the year."
Amias Gerety | Partner, Head of U.S. Investments
"When it comes to the fintech-bank environment, regulators are in their year of yes. Banks and fintechs should go directly to Washington to get feedback on their ideas, they shouldn’t wait for their next exam."
Kshitij Jayakrishnan | Principal, India, Southeast Asia and the broader APAC
"Fintech becomes a horizontal feature across apps: The line between 'fintech' and 'consumer/enterprise apps' will blur completely. We will see a wave of non-fintech platforms monetizing primarily through financial services, forcing incumbent financial institutions to invest in embedding infrastructure rather than just legacy distribution channels."
Compliance and regulation
Amias Gerety | Partner, Head of U.S. Investments
"Just because rule enforcement isn’t happening doesn’t change that companies are obligated to follow the rules. If you can do things that help consumers, proactively talk to regulators about it. But don’t get sloppy just because regulators aren’t checking your work."
Shruti Batra | Principal, U.S.
"Fintechs need to treat compliance as infrastructure to architect, not a layer to automate. If an AI system can’t show why it took an action, not just what it flagged, it won’t survive an exam. The companies that win in 2026 will be those that embed policy logic, governance and human-in-the-loop controls from day one and engage regulators early rather than retrofitting compliance after product-market fit. Innovation moves fast, but trust compounds slowly; treating compliance as core infrastructure is how you bridge that gap."
The exit market outlook
Nigel Morris | Co-founder and Managing Partner
Exit markets are continuing to heat up. After several years of muted activity, fintech exit markets heated up in 2025. With a strong pipeline of mature, profitable fintechs waiting in the wings, we are slated for this IPO market trend to continue in 2026. M&A activity is also building rapidly. Increasingly, fintechs are acquiring other fintechs to consolidate market share and expand product breadth. The combination of improving revenue multiples, renewed investor appetite, and strategic consolidation suggests a busy year on the horizon for both IPO and acquisition markets.
Yusuf Özdalga | Partner, Head of U.K. & Europe
"A virtuous loop between more M&A and IPOs: Reflecting on 2024’s predictions for 2025, with a mini wave of fintech IPOs in the US, as well as lots of mergers, this prediction was pretty spot on, so let’s give it an A. On the M&A front, Goldman recently reported record-breaking M&A fees for their banking division, and companies like Klarna (where QED had invested and been on the board), Chime, and eToro all went public. The momentum of this prediction should clearly spill over into early 2026, with lots of M&A and IPOs on the horizon."
Chuckie Reddy | Partner, Head of Growth
"The year 2026 will be an execution year. Companies are largely on solid footing. It will be about executing on growth, finding M&A / IPOs and being profitable enterprises. The macro environment remains largely benign, making this the best time to focus on pure execution. While there can always be wobbles, the industry as a whole has been well funded and stabilized/capitalized businesses that have a “right-to-win”. Development is accelerating at the most rapid pace we’ve seen in recent history. The already ‘to ship’ code/product is tremendous."
"With respect to trends in fintech, our dollars have already shifted toward infrastructure. Building the new architecture for the new financial analytics platforms of the coming years is well underway. The continuum and trajectory that we’re on will lead to massive value creation in just the next three to five years. In 2026, it will be a big year in advancement (although likely to accelerate again in 2027)! We will see lots of great “real-world” tests in Quantum. We will see data analytics latency decrease enough to drive efficiencies throughout the financial ecosystem. And, as a hot take, while licenses for custody will matter, the rush for bank licenses likely won’t. Nothing will materially change for those companies."
Laura Bock | Partner, U.S.
"Fintech M&A is pacing toward a record year with 200+ announced deals in 2025. One thing of note is that over half of all acquirers are other fintechs. We expect the corpdev teams at well-capitalized fintechs will be busy next year as we enter a “roll-up” cycle.
After two years of dormancy, 2025 reopened the IPO window with Circle, Klarna and Chime leading the way in fintech. The year 2026 will bring a second wave of public debuts as late-stage fintechs chase liquidity amid stagnant private markets. Companies to watch are: Plaid, Revolut, Monzo, Airwallex and Rapyd."
Artificial Intelligence and financial services
Nigel Morris | Co-founder and Managing Partner
The "AI-ification" of the CFO. The financial back office is shifting from a system of record to a system of intelligence. Rules based workflows such as KYC and AML are poised for vertical AI automation. Beyond basic copilots, autonomous agents will begin managing the lions share of compliance tasks, including risk flagging, report drafting, and resolution of false positives. The result is a collapse in compliance cost curves for incumbents and fintechs alike and the ability for fintechs to scale with leaner teams.
Cole Lundquist | Principal, U.S.
"We’ve seen whipsawing interest between horizontal and vertical solutions as founders and investors have digested the power of AI. When simple agents were cutting-edge, a wave of focused, vertical solutions came to market. Those solutions quickly became commoditized. As agents grew in sophistication and capital surged into the market, interest shifted to horizontal solutions that promised to be everything to everyone and required outrageous sums of capital to get there. While horizontal solutions are well-suited to addressing megafunds' capital deployment needs, it’s unclear where the market equilibrium will settle. As it stands, horizontal solutions command the hype, while verticals attract more tepid interest."
Shruti Batra | Principal, U.S.
"The market is overhyping AI startups that ignore regulatory or compliance feasibility. We’re especially seeing this in fintech, insurance, tax and healthcare, where the real constraint isn’t imagination but operational and regulatory permission. What’s underhyped is AI purpose-built for these environments: auditable, controllable and safe to deploy at scale. These companies grow more slowly at first, but once they clear regulatory gates, they become extraordinarily difficult to displace."
Yusuf Özdalga | Partner, Head of U.K. & Europe at QED
"Thinking about increased clarity on AI use cases & adoption in fintech, investors and companies will better understand where AI can be most transformative and how to best implement it. If 2025 was the dipping of the toe phase, 2026 will be the implementation phase for financial institutions.
As LLMs are very good at processing huge amounts of language but less good at 100 percent accuracy (hallucination is just a fancier word for being wrong), AI use will have big traction in areas where large amounts of language need to be processed, but 100 percent accuracy is not crucial.
In the world of fintech, one salient example will be compliance and audit, which today represents a very large part of the workforce in banks. Instead of auditing a small subset of customer calls or reports as in the past, AI can analyze every single conversation and decision and flag risky or non-compliant ones. Flagged transactions will still be reviewed by internal audit humans, also reducing the risk of false positives, as the audit and compliance function is not customer-facing.
The audit use case of AI will also bring many issues, from pushback against workplace surveillance to potential misuse by totalitarian governments."
Laura Bock | Partner, U.S.
"As OpenAI, Anthropic and other foundation models extend downstream into the application layer, we’ll see entire categories of venture-backed companies wiped out overnight. Moats in AI are tough to come by, but exist for companies that master complex, regulated, auditable processes to become the system of record in their domain."
Amias Gerety | Partner, Head of U.S. Investments
"What’s old is new again. The phrase “system of record” has been displaced by “systems of action” and “systems of thinking”, but I expect 2026 is the year that we learn the real winners are those who use those wedges to become systems of record. Ground truth remains the most important thing for any enterprise."
Yusuf Özdalga | Partner, Head of U.K. & Europe
"Valuations will normalize: As the best (and worst!) use cases for AI at scale in fintech become clear, AI valuations will also start to normalize. A full understanding of the all-in costs of using AI will become clearer, and AI valuations will be driven more by financial math than in 2025. The cost stack of inference, in terms of tokens, dollars and margins, will force increased discipline and clarity on AI unit economics. This will also be magnified by increasing LP pressure on GPs for returns and liquidity."
Kshitij Jayakrishnan | Principal, India, Southeast Asia and the broader APAC
"AI companions evolve into financial agents: The primary interface for banking will start to shift from a "banking app" (UI) to a "financial agent" (Conversational AI) that acts as a proactive relationship manager, financial advisor or CFO for the individual. Think of personalized AI assistants capable of helping with budgeting, credit score management, and personal finance optimization."
Crypto, stablecoin and cross-border payments
Nigel Morris | Co-founder and Managing Partner
Stablecoins Coming of Age. Stablecoins processed $9 trillion in payments in 2025, an 87% jump from 2024. And the correspondent banking system will face its toughest competition yet in 2026. Increasingly, SMBs in emerging markets across LATAM and MEA will sidestep local currency volatility by settling B2B invoices directly in USD-denominated stablecoins over layer-2 blockchains. Settlement times drop from three days to three seconds. We have been tracking this trend for the past few years, but in 2026 we expect it to increasingly disrupt existing infrastructure.
Yusuf Özdalga | Partner, Head of U.K. & Europe
"As I reflect on our predictions for 2025 on the crypto spring, I’d say this one was quite accurate with Bitcoin hitting new records throughout much of the year, driven in part by more friendly U.S. regulation as we had predicted in late 2024. Prices have come down a bit now, let’s give this one an B+ on aggregate."
Enrique Hausmann | Principal, U.K. and Europe
“B2B cross-border payments are entering a new phase, with traditional players increasingly blending Swift-based infrastructure with stablecoin rails to drive speed, transparency and cost efficiency. Large enterprises are beginning to demand multi-rail solutions that can intelligently route transactions across fiat and blockchain networks.”
“Winning in cross-border payments will come down to a combination of speed, transparency, reliability, and integration. Real-time settlement can transform working capital management compared to traditional Swift T+2 transfers, while price and FX transparency—no hidden fees, predictable margins—builds trust with customers. Regulatory coverage across geographies and robust AML/KYC frameworks are becoming table stakes, ensuring reliability at scale. The real differentiation, however, will come from API-first platforms that integrate seamlessly into ERPs, gig platforms, and treasury systems, enabling embedded FX and automated mass payouts..”
Alex Taub | Principal, Growth
"We’re continuing to see accelerated stablecoin adoption beyond crypto and into broader financial use cases. The killer app today is cross-border payments, where stablecoin rails are already proving to be faster, cheaper and more reliable than traditional correspondent banking for global payroll, supplier payments and remittances (one example is our portfolio company Felixpago). The next wave will be driven by working-capital optimization as businesses unlock their idle cash trapped in settlement delays, reserves and cut-off windows, arguably the lowest-hanging fruit in global finance. Large businesses that rely on high-velocity global money movement will benefit, while legacy intermediaries and processors whose economics depend on slow, fee-heavy settlement rails will have to adapt."
Trends we’re tracking
Nigel Morris | Co-founder and Managing Partner
"Expect the rise of dynamic credit scoring. As underwriting models become more capable of interpreting alternative data streams (such as banking & transaction data or rent & utility payment information), lenders will be able to assess borrower risk dynamically. This approach is already gaining traction in developing markets. We will be monitoring for the burgeoning of a “Streaming Credit Score” system, particularly for gig economy workers and borrowers with thin files, which updates continuously rather than quarterly or monthly."
Nigel Morris | Co-founder and Managing Partner
"We should prepare for quantum disruption. The quantum breakthrough has not yet fully arrived, but forward looking banks will begin major infrastructure transformation to prepare. The future winners will include hardware innovators and software providers offering cryptographic agility solutions that enable institutions to swap out encryption algorithms without breaking core systems. The countdown to a quantum-transition has effectively begun."
Yusuf Özdalga | Partner, Head of U.K. & Europe
"Staying on the theme of looking at which of our 2024 predictions came to fruition, let’s discuss the climate tech boom. This prediction was not as close to the mark, but not entirely wrong either so perhaps we give ourselves a B- here. Climate focused innovation continued, but was overshadowed by lots of climate sceptics, and no big venture stories emerged globally. We did, however, invest in Cloover’s funding round in Germany (solar panel finance), so as QED Europe we continue to be excited about the possibilities here, and will make it a theme for 2026 under Solution-as-a-Service topic below."
Laura Bock | Partner, U.S.
“Accounts Receivable (AR) and Accounts Payable (AP) are interesting because they sit right where money actually moves through a business. They touch every customer and vendor relationship, yet workflows remain painfully manual. That mix of volume and financial consequence makes them perfect for automation: a small improvement in how invoices are sent, collected, approved or paid can free up cash, reduce errors and meaningfully improve working capital.”
“Most wealth advisors, insurance brokers, and tax accountants spend the majority of their time on admin work—onboarding, compliance, data entry—rather than with their clients. New AI tools can change that balance, helping them serve far more people with less friction. The result will be better access to advice that is more tailored.”
Alex Taub | Principal, Growth
"Banks and large financial institutions will start seeing tangible quantum advantage in areas where classical computing methods fall short - risk modeling, fraud detection, optimization, etc. Advantage will be driven by improving hardware and the convergence of quantum processing and AI models."
Shruti Batra | Principal, U.S.
"I’m interested in the emerging ‘commercial infrastructure’ layer for AI agents-the rails that let software safely act on behalf of users across the messy, non-API parts of the web. As agents move from demos to real workflows, they’ll need a compliant way to read, write and transact across online systems that weren’t built for automation. In 2026, this becomes foundational fintech infrastructure: whoever enables safe, permissioned access to the web will naturally fit into the flow of underwriting, collections, identity verification, bill pay and B2B payments."
Amias Gerety | Partner, Head of U.S. Investments
"Real marketplaces and businesses with real network effects: there really isn’t a moat from incremental features, but that means business models with real network effects will be all the more important."
Cole Lundquist | Principal, U.S.
"The Great Wealth Transfer will remain a macro theme, but a significant portion of it will be absorbed by healthcare costs and inflation. The higher end of the wealth spectrum is adequately insulated from rising costs, so they are unlikely to feel much pain, but an increasing range of families are dipping into their assets to subsidize their expenses. Access to GLP-1s and statins are likely to shift longevity expectations further, which will exacerbate these headwinds. There are well over 60 million Baby Boomers today, so this trend is likely to be a multi-decade one."
Yusuf Özdalga | Partner, Head of U.K. & Europe
"The emergence of Solution-as-a-Service: Rather than selling Software-as-a-Service, there will be a switch towards selling all-in solutions that encompass software, automation, humans, as well as capital (where needed). Whereas in the past the product was a dashboard, the product of the future will be a result.
A good example of this in fintech is expense management. Whereas old solutions provided workflows, approvals and receipt upload, the solution-focused model will provide automatic processing of receipts (with duplicates caught), VAT filed & reclaimed, policy enforced and end-of-month close handled. And as a further step, if any capital is needed (to pay VAT say), that will be included in the solution as well."
Kshitij Jayakrishnan | Principal, India, Southeast Asia and the broader APAC
The rise of "Hyper-personalized" wealth management: We will see a behavioral shift in which mass-affluent users demand institutional-grade investment strategies. This will drive the creation of at-scale platforms that don't just offer access, but offer customization - tailoring asset classes dynamically to individual risk appetites.
“The unbundling of the generalist bank: Generic lending & banking products will lose market share to specialized vertical plays. We will see "niche" become "scale," as vertical platforms use segment-specific insights and moats to serve these segments better than any generalist bank can.”
“Demand for consumer-grade 'B2B' tools: India’s cross-border digital remittance volume is surging. As individuals and businesses transact globally, their tolerance for friction is disappearing. Winners will be those who can layer "consumer-grade" transparency onto complex B2B flows. We will see increased demand for tools that offer real-time visibility and instant settlement for cross-border trade, mirroring the UPI experience that domestic users are used to.”
Geo-specific insights
Yusuf Özdalga | Partner, Head of U.K. & Europe
"Now let’s look at our 2024 prediction for the European & UK wake-up call on public listings. This one gets a C-. The soul-searching and public debates did materialize as predicted, but the tangible changes we hoped for did not, and instead we just got more taxes in the UK."
Enrique Hausmann | Principal, U.K. and Europe
"SME neobanking continues to mature as a space in the European ecosystem, with national champions such as Qonto, Tide and Finom reaching meaningful scale and moving upmarket into payments, lending and treasury. At the same time, a new generation of AI-native players is emerging, building from the ground up with automation, embedded credit and cash-flow forecasting at their core. It will be interesting to see which of these models prove sustainable as capital efficiency and monetization discipline become key differentiators."
"When it comes to geopolitical and currency shifts influencing fintech expansion strategies, over the last 12 months I’ve seen more Chinese investors trying to get into European companies. I could see them investing more in Europe / Latam / broader EM given that they are deploying less in the US."
Amias Gerety | Partner, Head of U.S. Investments
"As the head of U.S. investments, when looking at success in international fintech markets where the U.S. can learn I am watching PIX in LatAm, Europe’s success on enabling payment innovation from nonbanks and LatAm’s efforts from E-invoicing."
Kshitij Jayakrishnan | Principal, India, Southeast Asia and the broader APAC
“AI spend in BFSI will double: Indian banks will step up on tech spending, creating a massive, high-velocity spend pool for B2B AI startups serving the BFSI sector, specifically those bridging the gap of legacy banking stacks to modern tech stacks, and those helping automate onboarding, risk, compliance, collections workflows, as well as mid office & back office operations.”
“The Country Tech Stack approach- for example India stack. India has built gargantuan digital public infrastructure (UPI, DigiLocker, Account Aggregator, BBPS) that drives efficiency at a population scale. Other countries should move away from fragmented, private-sector-only solutions and look toward building interoperable public "stacks”, which can act as a force multiplier for private innovation."
For fintech founders
Amias Gerety | Partner, Head of U.S. Investments
"Even in the Age of AI, the old lessons are often still the best. The biggest mistake founders are making is forgetting that scarcity is the most important and enduring source of value. This insight has been widely understood for a long time and is at the heart of untangling the difference between a moat and a wrapper. In the age of large language models (LLMs), we see two leading CEOs, Sam Altman at OpenAI and Aravind Srinivas at Perplexity, trying to reframe the question of moats vs. wrappers."
Bill Cilluffo | Partner, Head of global early stage investments
"When it comes to the biggest mismatch I’m seeing right now between founder expectations and investor reality, I’d say that we’re in a very bi-frucated market, especially in the US. AI companies are getting funded very easily with high valuations, and “regular fintechs,” even when performing well, are struggling to get funded. This creates meaningful mismatches in expectations for now."
"There are many things I admire about the founders I meet today, one thing being the pace of change of what’s possible in the world is easily the fastest in my 30 years in business. AI is allowing things that weren't possible three years ago, and the pace of that change is staggering. I am floored on how well most founders are able to stay on top of this, and leverage these new tools so well. And there is a lot more to come!"
Yusuf Özdalga | Partner, Head of U.K. & Europe
"As we head into 2026, I’d like founders to keep in mind capital as a moat. Access to capital will become an increasingly important competitive moat. Many factors drive this phenomenon: One, as AI is replacing labor on the margin, capital is becoming a more important factor of production. Two, as companies and solutions become easier to spin up, the competition will shift to providing all-in solutions (see below) for customers, and this will also require capital. Three, copying winning solutions will be easier, so scale and capital will be needed as moats.
In the world of fintech, this will translate to lenders being able to bundle their solutions, thus extracting more value. We can expect the valuation gap between a company like JPMorgan and Meta to narrow on a relative basis as a result."
Kshitij Jayakrishnan | Principal, India, Southeast Asia and the broader APAC
“The shift: Indian founders will fundamentally recalibrate their ambition. [Optional: $100M in revenue will no longer be viewed as the finish line, but as the basecamp.] Founders will increasingly build with a global-first mindset, aiming for global growth rates and outcomes that rival those of their counterparts in Silicon Valley.”
As fintech enters its next chapter, we continue to see shifting macro conditions, rapid advances in AI, regulatory evolution and maturing business models that are reshaping where value will be created and who will capture it.
In this blog, you’ll hear directly from members of our investment team as they share their predictions for the year ahead. As a global firm, we have the unique advantage of seeing trends across markets, stages and sourcing from conversations with global founders.
The state of venture capital and investing
Amias Gerety | Partner, Head of U.S. Investments
“VC investors are focused on the potential TAM expansion from using AI to automate the work of human operations teams, but the truth is that any cost savings can only create TAM in the short term. If a company replaces a business process outsourcing contract in year one, then an AI company that can replace that work only needs to be cheaper than that contract. But in years two and beyond, the competition is not between AI and a BPO; it’s between two AI companies. Put another way, VCs are missing the power of competition to drive margin down in the age of AI.”
“The venture ecosystem has always lived by the credo that: incumbents will mess up, that brand and capital are no match for passion, insight and fast execution. And yet, many of the largest venture capital firms are responding to AI with the theory that first-mover advantage and brand building are key. Google was not the first search engine, Facebook wasn’t the first social network, Stripe was founded six years AFTER Adyen and Ramp was founded two years AFTER Brex.”
“There’s only so much discussion of a bubble that can occur before prices start to adjust back down. Every conversation in venture these days starts with “prices are crazy but…” Absent a recession, I don’t expect a crash, but peak periods tend to be short-lived.”
Yusuf Özdalga | Partner, Head of U.K. & Europe
"Bond market volatility: Large budget deficits, record national debt to GDP ratios (UK debt/GDP went from 38 percent in 2000 to 103 percent today), politicization of central banks and an overhang of decades of easy money means that we need to be prepared for bond market tantrums where rates swing violently and liquidity pulls a Houdini.
As a result, fintechs that do lending should focus on access to a diverse set of funding sources, while also preparing for rate swings and rising inflation.
For the venture world, we need to internalize that a world of higher rates and longer venture fund durations means our LPs' liquidity and return expectations will only go up.
In closing, as we look at our 2026 predictions, one meta-theme stands out: AI and market forces will increase the capital intensity of fintech, compressing timelines, amplifying volatility and forcing companies to deliver outcomes rather than tools.
Hence, the premium in 2026 will be on capital, speed, resilience and results."
Victoria Zuo | Partner, U.S.
"Investors are investing in AI software businesses the same way we have been underwriting SaaS businesses. In reality, we are experiencing an unprecedented shift in margins and retention, and how stable these may be. When things are growing and changing rapidly, it is hard to predict a business's intrinsic value. When momentary market gaps are not rapidly turned into long-lasting moats, it often leads to businesses with no enterprise value."
Cole Lundquist | Principal, U.S.
"Broadly, investors are not matching their position to market dynamics. From the smallest local pre-seed fund to the largest megafund, VCs are people with a hammer seeing the whole world’s problems as AI nails. Though a modicum of skepticism has snuck back into whispers, without a core AI story it's nigh-on impossible for a company to get funded. This has led to malinvestment, particularly at the earliest high-risk stages, where funds that previously would take fliers on non-consensus deals crowd into “also-ran” AI companies."
"The mass adoption of AI suggested a new class of startups that would leverage tools to run lean and in an extremely capital-efficient manner. There was some initial concern that the pool of opportunities might be smaller, since a startup that would conventionally have to hire large teams to hit scale could now operate with far smaller headcount. This did not really pan out in a meaningful way. Instead, productivity expectations simply increased along with capital requirements, but the upside is that growth that normally took two years was being achieved in six months. The rate of acceleration has been staggering. Venture capital heuristics have had to adapt and finding special teams early has become even more essential."
Shruti Batra | Principal, U.S.
"Investors are mistaking early AI traction for durable advantage and overestimating how much value comes from ‘AI magic’ rather than owning the underlying workflow. AI compresses build cycles so quickly that categories fill with credible-looking entrants within months, meaning early revenue or user growth often signals category immaturity rather than true product-market fit. The real moat isn’t the model - it’s the workflow depth, data rights, integrations and compliance scaffolding required to run in production. In a world where anyone can build, winners will be those who can operate, integrate and earn institutional trust and, as such, investors should underwrite staying power over velocity."
"In certain fintech-adjacent AI markets, I expected clearer differentiation between companies with durable traction and those lifted by the broader enthusiasm to back what the market viewed as a once-in-a-decade platform opportunity. Instead, momentum overwhelmed fundamentals, valuations accelerated indiscriminately and the signal-to-noise ratio collapsed. We responded by leaning into smaller learning checks, avoiding overheated rounds and focusing on markets where traction was actually verifiable. When valuations disconnect this dramatically from fundamentals, patience and FOMO discipline become an advantage - and the companies that endure will come back for capital when the noise clears."
"When thinking about top lessons VCs should take away from this year, 2025 reaffirmed that great technology without great execution doesn’t scale, and distribution is equally important."
What’s in store for fintech
Yusuf Özdalga | Partner, Head of U.K. & Europe
"The visible hand of the government: Our prediction of more government intervention was also quite spot on in 2024. After Q1 2025 was marked by Trump’s “Liberation Day” tariffs, the whole world seemed tuned into government policies for much of the year."
Amias Gerety | Partner, Head of U.S. Investments
"When it comes to the fintech-bank environment, regulators are in their year of yes. Banks and fintechs should go directly to Washington to get feedback on their ideas, they shouldn’t wait for their next exam."
Kshitij Jayakrishnan | Principal, India, Southeast Asia and the broader APAC
"Fintech becomes a horizontal feature across apps: The line between 'fintech' and 'consumer/enterprise apps' will blur completely. We will see a wave of non-fintech platforms monetizing primarily through financial services, forcing incumbent financial institutions to invest in embedding infrastructure rather than just legacy distribution channels."
Compliance and regulation
Amias Gerety | Partner, Head of U.S. Investments
"Just because rule enforcement isn’t happening doesn’t change that companies are obligated to follow the rules. If you can do things that help consumers, proactively talk to regulators about it. But don’t get sloppy just because regulators aren’t checking your work."
Shruti Batra | Principal, U.S.
"Fintechs need to treat compliance as infrastructure to architect, not a layer to automate. If an AI system can’t show why it took an action, not just what it flagged, it won’t survive an exam. The companies that win in 2026 will be those that embed policy logic, governance and human-in-the-loop controls from day one and engage regulators early rather than retrofitting compliance after product-market fit. Innovation moves fast, but trust compounds slowly; treating compliance as core infrastructure is how you bridge that gap."
The exit market outlook
Nigel Morris | Co-founder and Managing Partner
Exit markets are continuing to heat up. After several years of muted activity, fintech exit markets heated up in 2025. With a strong pipeline of mature, profitable fintechs waiting in the wings, we are slated for this IPO market trend to continue in 2026. M&A activity is also building rapidly. Increasingly, fintechs are acquiring other fintechs to consolidate market share and expand product breadth. The combination of improving revenue multiples, renewed investor appetite, and strategic consolidation suggests a busy year on the horizon for both IPO and acquisition markets.
Yusuf Özdalga | Partner, Head of U.K. & Europe
"A virtuous loop between more M&A and IPOs: Reflecting on 2024’s predictions for 2025, with a mini wave of fintech IPOs in the US, as well as lots of mergers, this prediction was pretty spot on, so let’s give it an A. On the M&A front, Goldman recently reported record-breaking M&A fees for their banking division, and companies like Klarna (where QED had invested and been on the board), Chime, and eToro all went public. The momentum of this prediction should clearly spill over into early 2026, with lots of M&A and IPOs on the horizon."
Chuckie Reddy | Partner, Head of Growth
"The year 2026 will be an execution year. Companies are largely on solid footing. It will be about executing on growth, finding M&A / IPOs and being profitable enterprises. The macro environment remains largely benign, making this the best time to focus on pure execution. While there can always be wobbles, the industry as a whole has been well funded and stabilized/capitalized businesses that have a “right-to-win”. Development is accelerating at the most rapid pace we’ve seen in recent history. The already ‘to ship’ code/product is tremendous."
"With respect to trends in fintech, our dollars have already shifted toward infrastructure. Building the new architecture for the new financial analytics platforms of the coming years is well underway. The continuum and trajectory that we’re on will lead to massive value creation in just the next three to five years. In 2026, it will be a big year in advancement (although likely to accelerate again in 2027)! We will see lots of great “real-world” tests in Quantum. We will see data analytics latency decrease enough to drive efficiencies throughout the financial ecosystem. And, as a hot take, while licenses for custody will matter, the rush for bank licenses likely won’t. Nothing will materially change for those companies."
Laura Bock | Partner, U.S.
"Fintech M&A is pacing toward a record year with 200+ announced deals in 2025. One thing of note is that over half of all acquirers are other fintechs. We expect the corpdev teams at well-capitalized fintechs will be busy next year as we enter a “roll-up” cycle.
After two years of dormancy, 2025 reopened the IPO window with Circle, Klarna and Chime leading the way in fintech. The year 2026 will bring a second wave of public debuts as late-stage fintechs chase liquidity amid stagnant private markets. Companies to watch are: Plaid, Revolut, Monzo, Airwallex and Rapyd."
Artificial Intelligence and financial services
Nigel Morris | Co-founder and Managing Partner
The "AI-ification" of the CFO. The financial back office is shifting from a system of record to a system of intelligence. Rules based workflows such as KYC and AML are poised for vertical AI automation. Beyond basic copilots, autonomous agents will begin managing the lions share of compliance tasks, including risk flagging, report drafting, and resolution of false positives. The result is a collapse in compliance cost curves for incumbents and fintechs alike and the ability for fintechs to scale with leaner teams.
Cole Lundquist | Principal, U.S.
"We’ve seen whipsawing interest between horizontal and vertical solutions as founders and investors have digested the power of AI. When simple agents were cutting-edge, a wave of focused, vertical solutions came to market. Those solutions quickly became commoditized. As agents grew in sophistication and capital surged into the market, interest shifted to horizontal solutions that promised to be everything to everyone and required outrageous sums of capital to get there. While horizontal solutions are well-suited to addressing megafunds' capital deployment needs, it’s unclear where the market equilibrium will settle. As it stands, horizontal solutions command the hype, while verticals attract more tepid interest."
Shruti Batra | Principal, U.S.
"The market is overhyping AI startups that ignore regulatory or compliance feasibility. We’re especially seeing this in fintech, insurance, tax and healthcare, where the real constraint isn’t imagination but operational and regulatory permission. What’s underhyped is AI purpose-built for these environments: auditable, controllable and safe to deploy at scale. These companies grow more slowly at first, but once they clear regulatory gates, they become extraordinarily difficult to displace."
Yusuf Özdalga | Partner, Head of U.K. & Europe at QED
"Thinking about increased clarity on AI use cases & adoption in fintech, investors and companies will better understand where AI can be most transformative and how to best implement it. If 2025 was the dipping of the toe phase, 2026 will be the implementation phase for financial institutions.
As LLMs are very good at processing huge amounts of language but less good at 100 percent accuracy (hallucination is just a fancier word for being wrong), AI use will have big traction in areas where large amounts of language need to be processed, but 100 percent accuracy is not crucial.
In the world of fintech, one salient example will be compliance and audit, which today represents a very large part of the workforce in banks. Instead of auditing a small subset of customer calls or reports as in the past, AI can analyze every single conversation and decision and flag risky or non-compliant ones. Flagged transactions will still be reviewed by internal audit humans, also reducing the risk of false positives, as the audit and compliance function is not customer-facing.
The audit use case of AI will also bring many issues, from pushback against workplace surveillance to potential misuse by totalitarian governments."
Laura Bock | Partner, U.S.
"As OpenAI, Anthropic and other foundation models extend downstream into the application layer, we’ll see entire categories of venture-backed companies wiped out overnight. Moats in AI are tough to come by, but exist for companies that master complex, regulated, auditable processes to become the system of record in their domain."
Amias Gerety | Partner, Head of U.S. Investments
"What’s old is new again. The phrase “system of record” has been displaced by “systems of action” and “systems of thinking”, but I expect 2026 is the year that we learn the real winners are those who use those wedges to become systems of record. Ground truth remains the most important thing for any enterprise."
Yusuf Özdalga | Partner, Head of U.K. & Europe
"Valuations will normalize: As the best (and worst!) use cases for AI at scale in fintech become clear, AI valuations will also start to normalize. A full understanding of the all-in costs of using AI will become clearer, and AI valuations will be driven more by financial math than in 2025. The cost stack of inference, in terms of tokens, dollars and margins, will force increased discipline and clarity on AI unit economics. This will also be magnified by increasing LP pressure on GPs for returns and liquidity."
Kshitij Jayakrishnan | Principal, India, Southeast Asia and the broader APAC
"AI companions evolve into financial agents: The primary interface for banking will start to shift from a "banking app" (UI) to a "financial agent" (Conversational AI) that acts as a proactive relationship manager, financial advisor or CFO for the individual. Think of personalized AI assistants capable of helping with budgeting, credit score management, and personal finance optimization."
Crypto, stablecoin and cross-border payments
Nigel Morris | Co-founder and Managing Partner
Stablecoins Coming of Age. Stablecoins processed $9 trillion in payments in 2025, an 87% jump from 2024. And the correspondent banking system will face its toughest competition yet in 2026. Increasingly, SMBs in emerging markets across LATAM and MEA will sidestep local currency volatility by settling B2B invoices directly in USD-denominated stablecoins over layer-2 blockchains. Settlement times drop from three days to three seconds. We have been tracking this trend for the past few years, but in 2026 we expect it to increasingly disrupt existing infrastructure.
Yusuf Özdalga | Partner, Head of U.K. & Europe
"As I reflect on our predictions for 2025 on the crypto spring, I’d say this one was quite accurate with Bitcoin hitting new records throughout much of the year, driven in part by more friendly U.S. regulation as we had predicted in late 2024. Prices have come down a bit now, let’s give this one an B+ on aggregate."
Enrique Hausmann | Principal, U.K. and Europe
“B2B cross-border payments are entering a new phase, with traditional players increasingly blending Swift-based infrastructure with stablecoin rails to drive speed, transparency and cost efficiency. Large enterprises are beginning to demand multi-rail solutions that can intelligently route transactions across fiat and blockchain networks.”
“Winning in cross-border payments will come down to a combination of speed, transparency, reliability, and integration. Real-time settlement can transform working capital management compared to traditional Swift T+2 transfers, while price and FX transparency—no hidden fees, predictable margins—builds trust with customers. Regulatory coverage across geographies and robust AML/KYC frameworks are becoming table stakes, ensuring reliability at scale. The real differentiation, however, will come from API-first platforms that integrate seamlessly into ERPs, gig platforms, and treasury systems, enabling embedded FX and automated mass payouts..”
Alex Taub | Principal, Growth
"We’re continuing to see accelerated stablecoin adoption beyond crypto and into broader financial use cases. The killer app today is cross-border payments, where stablecoin rails are already proving to be faster, cheaper and more reliable than traditional correspondent banking for global payroll, supplier payments and remittances (one example is our portfolio company Felixpago). The next wave will be driven by working-capital optimization as businesses unlock their idle cash trapped in settlement delays, reserves and cut-off windows, arguably the lowest-hanging fruit in global finance. Large businesses that rely on high-velocity global money movement will benefit, while legacy intermediaries and processors whose economics depend on slow, fee-heavy settlement rails will have to adapt."
Trends we’re tracking
Nigel Morris | Co-founder and Managing Partner
"Expect the rise of dynamic credit scoring. As underwriting models become more capable of interpreting alternative data streams (such as banking & transaction data or rent & utility payment information), lenders will be able to assess borrower risk dynamically. This approach is already gaining traction in developing markets. We will be monitoring for the burgeoning of a “Streaming Credit Score” system, particularly for gig economy workers and borrowers with thin files, which updates continuously rather than quarterly or monthly."
Nigel Morris | Co-founder and Managing Partner
"We should prepare for quantum disruption. The quantum breakthrough has not yet fully arrived, but forward looking banks will begin major infrastructure transformation to prepare. The future winners will include hardware innovators and software providers offering cryptographic agility solutions that enable institutions to swap out encryption algorithms without breaking core systems. The countdown to a quantum-transition has effectively begun."
Yusuf Özdalga | Partner, Head of U.K. & Europe
"Staying on the theme of looking at which of our 2024 predictions came to fruition, let’s discuss the climate tech boom. This prediction was not as close to the mark, but not entirely wrong either so perhaps we give ourselves a B- here. Climate focused innovation continued, but was overshadowed by lots of climate sceptics, and no big venture stories emerged globally. We did, however, invest in Cloover’s funding round in Germany (solar panel finance), so as QED Europe we continue to be excited about the possibilities here, and will make it a theme for 2026 under Solution-as-a-Service topic below."
Laura Bock | Partner, U.S.
“Accounts Receivable (AR) and Accounts Payable (AP) are interesting because they sit right where money actually moves through a business. They touch every customer and vendor relationship, yet workflows remain painfully manual. That mix of volume and financial consequence makes them perfect for automation: a small improvement in how invoices are sent, collected, approved or paid can free up cash, reduce errors and meaningfully improve working capital.”
“Most wealth advisors, insurance brokers, and tax accountants spend the majority of their time on admin work—onboarding, compliance, data entry—rather than with their clients. New AI tools can change that balance, helping them serve far more people with less friction. The result will be better access to advice that is more tailored.”
Alex Taub | Principal, Growth
"Banks and large financial institutions will start seeing tangible quantum advantage in areas where classical computing methods fall short - risk modeling, fraud detection, optimization, etc. Advantage will be driven by improving hardware and the convergence of quantum processing and AI models."
Shruti Batra | Principal, U.S.
"I’m interested in the emerging ‘commercial infrastructure’ layer for AI agents-the rails that let software safely act on behalf of users across the messy, non-API parts of the web. As agents move from demos to real workflows, they’ll need a compliant way to read, write and transact across online systems that weren’t built for automation. In 2026, this becomes foundational fintech infrastructure: whoever enables safe, permissioned access to the web will naturally fit into the flow of underwriting, collections, identity verification, bill pay and B2B payments."
Amias Gerety | Partner, Head of U.S. Investments
"Real marketplaces and businesses with real network effects: there really isn’t a moat from incremental features, but that means business models with real network effects will be all the more important."
Cole Lundquist | Principal, U.S.
"The Great Wealth Transfer will remain a macro theme, but a significant portion of it will be absorbed by healthcare costs and inflation. The higher end of the wealth spectrum is adequately insulated from rising costs, so they are unlikely to feel much pain, but an increasing range of families are dipping into their assets to subsidize their expenses. Access to GLP-1s and statins are likely to shift longevity expectations further, which will exacerbate these headwinds. There are well over 60 million Baby Boomers today, so this trend is likely to be a multi-decade one."
Yusuf Özdalga | Partner, Head of U.K. & Europe
"The emergence of Solution-as-a-Service: Rather than selling Software-as-a-Service, there will be a switch towards selling all-in solutions that encompass software, automation, humans, as well as capital (where needed). Whereas in the past the product was a dashboard, the product of the future will be a result.
A good example of this in fintech is expense management. Whereas old solutions provided workflows, approvals and receipt upload, the solution-focused model will provide automatic processing of receipts (with duplicates caught), VAT filed & reclaimed, policy enforced and end-of-month close handled. And as a further step, if any capital is needed (to pay VAT say), that will be included in the solution as well."
Kshitij Jayakrishnan | Principal, India, Southeast Asia and the broader APAC
The rise of "Hyper-personalized" wealth management: We will see a behavioral shift in which mass-affluent users demand institutional-grade investment strategies. This will drive the creation of at-scale platforms that don't just offer access, but offer customization - tailoring asset classes dynamically to individual risk appetites.
“The unbundling of the generalist bank: Generic lending & banking products will lose market share to specialized vertical plays. We will see "niche" become "scale," as vertical platforms use segment-specific insights and moats to serve these segments better than any generalist bank can.”
“Demand for consumer-grade 'B2B' tools: India’s cross-border digital remittance volume is surging. As individuals and businesses transact globally, their tolerance for friction is disappearing. Winners will be those who can layer "consumer-grade" transparency onto complex B2B flows. We will see increased demand for tools that offer real-time visibility and instant settlement for cross-border trade, mirroring the UPI experience that domestic users are used to.”
Geo-specific insights
Yusuf Özdalga | Partner, Head of U.K. & Europe
"Now let’s look at our 2024 prediction for the European & UK wake-up call on public listings. This one gets a C-. The soul-searching and public debates did materialize as predicted, but the tangible changes we hoped for did not, and instead we just got more taxes in the UK."
Enrique Hausmann | Principal, U.K. and Europe
"SME neobanking continues to mature as a space in the European ecosystem, with national champions such as Qonto, Tide and Finom reaching meaningful scale and moving upmarket into payments, lending and treasury. At the same time, a new generation of AI-native players is emerging, building from the ground up with automation, embedded credit and cash-flow forecasting at their core. It will be interesting to see which of these models prove sustainable as capital efficiency and monetization discipline become key differentiators."
"When it comes to geopolitical and currency shifts influencing fintech expansion strategies, over the last 12 months I’ve seen more Chinese investors trying to get into European companies. I could see them investing more in Europe / Latam / broader EM given that they are deploying less in the US."
Amias Gerety | Partner, Head of U.S. Investments
"As the head of U.S. investments, when looking at success in international fintech markets where the U.S. can learn I am watching PIX in LatAm, Europe’s success on enabling payment innovation from nonbanks and LatAm’s efforts from E-invoicing."
Kshitij Jayakrishnan | Principal, India, Southeast Asia and the broader APAC
“AI spend in BFSI will double: Indian banks will step up on tech spending, creating a massive, high-velocity spend pool for B2B AI startups serving the BFSI sector, specifically those bridging the gap of legacy banking stacks to modern tech stacks, and those helping automate onboarding, risk, compliance, collections workflows, as well as mid office & back office operations.”
“The Country Tech Stack approach- for example India stack. India has built gargantuan digital public infrastructure (UPI, DigiLocker, Account Aggregator, BBPS) that drives efficiency at a population scale. Other countries should move away from fragmented, private-sector-only solutions and look toward building interoperable public "stacks”, which can act as a force multiplier for private innovation."
For fintech founders
Amias Gerety | Partner, Head of U.S. Investments
"Even in the Age of AI, the old lessons are often still the best. The biggest mistake founders are making is forgetting that scarcity is the most important and enduring source of value. This insight has been widely understood for a long time and is at the heart of untangling the difference between a moat and a wrapper. In the age of large language models (LLMs), we see two leading CEOs, Sam Altman at OpenAI and Aravind Srinivas at Perplexity, trying to reframe the question of moats vs. wrappers."
Bill Cilluffo | Partner, Head of global early stage investments
"When it comes to the biggest mismatch I’m seeing right now between founder expectations and investor reality, I’d say that we’re in a very bi-frucated market, especially in the US. AI companies are getting funded very easily with high valuations, and “regular fintechs,” even when performing well, are struggling to get funded. This creates meaningful mismatches in expectations for now."
"There are many things I admire about the founders I meet today, one thing being the pace of change of what’s possible in the world is easily the fastest in my 30 years in business. AI is allowing things that weren't possible three years ago, and the pace of that change is staggering. I am floored on how well most founders are able to stay on top of this, and leverage these new tools so well. And there is a lot more to come!"
Yusuf Özdalga | Partner, Head of U.K. & Europe
"As we head into 2026, I’d like founders to keep in mind capital as a moat. Access to capital will become an increasingly important competitive moat. Many factors drive this phenomenon: One, as AI is replacing labor on the margin, capital is becoming a more important factor of production. Two, as companies and solutions become easier to spin up, the competition will shift to providing all-in solutions (see below) for customers, and this will also require capital. Three, copying winning solutions will be easier, so scale and capital will be needed as moats.
In the world of fintech, this will translate to lenders being able to bundle their solutions, thus extracting more value. We can expect the valuation gap between a company like JPMorgan and Meta to narrow on a relative basis as a result."
Kshitij Jayakrishnan | Principal, India, Southeast Asia and the broader APAC
“The shift: Indian founders will fundamentally recalibrate their ambition. [Optional: $100M in revenue will no longer be viewed as the finish line, but as the basecamp.] Founders will increasingly build with a global-first mindset, aiming for global growth rates and outcomes that rival those of their counterparts in Silicon Valley.”