Fintech’s Next Chapter: Scaled Winners and Emerging Disruptors

The global fintech industry is turning the page to a new chapter—one characterized by the coming of age of a class of scaled fintechs, the emergence and application of new technologies and business models, including AI, and investors’ unrelenting focus on profitable growth.

This class of scaled fintechs can be seen as the “winners” of the first era of fintech. As they continue to entrench themselves into the financial services landscape, they will increasingly be expected to act like mature public companies, navigating increased regulatory scrutiny, public earnings cycles, and intense competition from upstarts. This will require much sharper capital allocation and continuous optimization of their business models in relatively pedestrian domains such as risk management and pricing. Balancing these imperatives with the need to stay agile and innovative will be a key challenge as they seek to expand into product adjacencies and new geographies over the coming years.

Success also means that up-and-coming fintechs will need to seek new competitive ground by addressing pain points thus far unresolved by banks or established fintechs. For example, B2B workflows in areas such as payments and accounting still involve many manual, slow, and costly processes ripe for automation and streamlining. There are also opportunities in areas where fintechs have already gained a foothold. In lending, for instance, they have made some headway in personal unsecured loans, but there is still significant unmet demand for credit from both consumers and businesses.

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In many respects, there has never been a better time to be a fintech founder or investor. Only 3% of global banking and insurance revenue pools have been penetrated by fintechs.

Many holes remain, and emerging technologies and business models will empower fintechs to address these gaps. Most notably, AI, which while just beginning to take root as a productivity lever, promises to fuel even greater innovation on the product side.

However, as we established in our 2024 report, fintechs will not be able to successfully pursue these opportunities with a “growth at all costs” mindset. Sustainable growth will be the yardstick of success against which investors will measure them. When capital markets reopen—if perhaps later than some might hope—there will be a reckoning with this reality. Investors will only welcome players with strong unit economics; and as they recycle capital back into the private markets, earlier-stage fintechs will also be required to demonstrate sustainable growth. While fintechs have dramatically reconfigured the financial services landscape over the last two decades, many opportunities remain.

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“Fintechs are winning in spaces where traditional banks have largely ceded the competitive ground, such as banking for lower-income households and buy now, pay later,” said Nigel Morris, managing partner at QED Investors. “Fintechs are growing three times faster than incumbents as they leverage digital distribution channels and increasingly utilize AI. Having emerged from the last two years with stronger fundamental unit economics and high net promoter scores, it’s easy to see why there’s an appetite for IPO-ready companies that deliver profitable growth. Fintech is ushering in a new era in financial services.”

This report is informed by conversations with more than 60 fintech executives and investors from across the globe and by our own experience, research, and primary analyses. We start with an overview of the current state of fintech, looking at where fintechs have won so far, then share five forecasts of trends that will shape the next chapter. Finally, we explore what actions different players in the ecosystem should be taking.

Among the key findings of the report:

• Fintech revenues surged 21% in 2024, outpacing the 6% growth rate of incumbent financial services players.
• Public fintech profitability jumped, with EBITDA margins rising from 12% to 16%, and 69% of public fintechs now in the black.
• AI is already reshaping the industry:  Many early-stage fintechs are ahead of their larger peers in leveraging AI – particularly for software development. Agentic AI is the next wave of disruption which will change the game in commerce, vertical SaaS and personal financial management.
• IPO-ready, but patient: 150 private fintechs founded before 2016 with over $500 million in cumulative equity remain on the sidelines, many are poised to go public.
• Massive white space remains: fintechs still only penetrate 3% of global banking and insurance revenue pools—leaving vertical and geographic gaps to be filled.
• Challenger banks are scaling fast: 24 institutions with over $500 million in annual revenues are growing deposits at 37% annually—30 percentage points higher than traditional banks.
• Private credit is emerging as a key tailwind for fintech lending, establishing itself as a core funding partner. A $280 billion white-space opportunity remains for private credit funds to acquire fintech-originated loans.

There are five specific trends the report forecasts that will shape the next chapter in fintech. With over $13 trillion in banking and insurance revenues at play, the future looks bright for both established fintechs and those in the next generation.

1. Agentic AI Will Change the Game . . . Eventually: Great expectations have been raised by AI since its beginnings, particularly following the emergence of GenAI in the last two years. But for all the excitement, many fintechs are still early in the adoption cycle and there has been limited product innovation at scale outside of a few select leaders. Skepticism is a fair response. But while the pace of AI-driven change is often overstated, the transformational impact of this technology should not be.

To date, GenAI in fintech has been largely used to cut costs and boost productivity, with the most common use cases being in software engineering, AML and KYC (know your customer) automation, marketing, and customer support. Many scaled fintechs are still in pilot mode with AI, while others have only just started to move to at-scale deployments. In contrast, earlier-stage fintechs are incorporating the technology more rapidly into the core of their business models, driven in part by investor expectations to do more with less. Indeed, AI-powered fintechs are already raising 15% less equity on average in seed or angel rounds and receiving 49% of total equity funding versus their “fair share” of 23%. And just as fintechs start to incorporate GenAI into their business models, the next phase of the technology is beginning to emerge, with agentic AI.

2. Onchain Finance Has Promise, but Hurdles Remain: Despite years of promise, onchain finance—financial activities and transactions performed on blockchain—hasn’t yet achieved product market fit at the scale needed to truly disrupt traditional financial infrastructure. However, recent advancements in blockchain scalability and growing regulatory clarity suggest an inflection point is near. Major deals like Stripe’s acquisition of Bridge ($1.1 billion) and Ripple’s purchase of Hidden Road ($1.3 billion), along with US ambitions to become a crypto powerhouse and Europe’s implementation of the Markets in Crypto-Assets (MiCA) regulation, underscore this momentum. The crucial next step is to find tipping-point use cases, triggering the network effects needed to initiate a material shift.

Stablecoins: What’s the Use Case? To date, the primary use cases for stablecoins have been crypto-trading and decentralized finance, but consistent growth in sending wallet addresses, despite crypto market volatility, indicates that stablecoin use is starting to decouple from crypto-native activity. So far, the most evident use case has been as a store of value in high-inflation markets with stronger demand than supply for US dollars due to limited reserves and exchange restrictions. In this context, US dollar– pegged stablecoins (>98% of all stablecoins) provide unrestricted access to a global pool of US dollar liquidity—making it cheaper and easier for consumers and SMBs to hold dollars, particularly relative to cash. This helps explain the rapid adoption of stablecoins in high-inflation markets. In Turkey, for example, stablecoin purchases accounted for 4.3% of the country’s GDP in the year leading up to March 2024, according to Chainalysis.

In some markets, there is an open question about how sustainable this use case is given the potential for currency substitution. For example, India’s Reserve Bank has expressed strong opposition to stablecoins, citing risk to the sovereignty of the Indian rupee. Given that markets with greater than 10% inflation represent a little over 7% of global GDP, while there is evidently strong demand in these markets to access the US dollar, this use case alone is unlikely to be the tipping point needed for wider onchain finance adoption.

3. Challenger Banks: Product and Customer Segment Expansion Have Higher Odds of Success Than Going Global:

Challenger banks, once emerging disruptors, have solidified their position within the global banking ecosystem, especially in major markets like Brazil, the UK, South Korea, and China. In each of these markets, challenger banks account for more than 10% of total bank market capitalization. With Revolut and Nubank reporting revenue growth in 2024 of 72% and 58%, respectively, it is clear that challenger banks can no longer be dismissed as inconsequential.

Of course, not all challenger banks are thriving. As of Q1 2025, 92 out of 650 global challenger banks are profitable, with only 24 generating revenues above $500 million annually. Notably, these 24 are experiencing robust annual revenue growth of around 59%, significantly outperforming the 26% growth rate of their smaller peers. Given the slowing growth rate in new challenger banks—dropping to 8% annually over the last five years (2019–2024) from 28% in the previous five years (2014–2019)—we expect consolidation around a smaller group of scaled leaders.

Despite their scale relative to other fintechs, these leaders still have significant white space to expand into—only 2% of banking deposit revenue pools have been penetrated. As they look for ways to sustain their rapid growth and further disrupt traditional retail banks, we expect challenger banks to focus on four strategies in the coming years: diversifying beyond fee income, growing average deposit balances, moving into more affluent customer segments, and expanding into new geographic markets.

4. Fintech Lending: New Tailwinds, but the Model Remains Untested Through a Credit Cycle:

Lending remains a significant opportunity for fintechs, given that they have only penetrated about 3% of the $2 trillion in global lending revenues. We estimate that there is approximately $500 billion in outstanding loan balances originated by fintechs globally. For comparison, in the US alone, according to the Federal Reserve Bank of New York, household debt stands at $18 trillion.

Where fintechs have made inroads in lending, they have seen success only under specific conditions. For example, scaled fintech lenders in China (like Lufax, Ant, WeBank) tend to be part of large conglomerates with massive balance sheets. In North America and Europe, monoline lenders (for example, SoFi and Lending Club) are relatively rare and focus primarily on personal unsecured loans. Vertical SaaS players are offering embedded lending facilities, but it remains a proportionally small revenue stream. A notable exception is BNPL players like Affirm and Klarna, which have been scaling rapidly. Nonetheless, outside of personal unsecured consumer lending, fintech penetration remains less than 1% in other domains such as secured loans and business loans.

This relative lack of penetration in lending is driven in large part by the competitive advantages banks hold: access to low-cost funding via deposits and the ability to leverage these deposits through fractional reserve banking. For fintechs, becoming a depository institution is difficult and costly—not a viable option for a sub-scale entity. This leaves fintech lenders with three options: use of equity capital—feasible in the very earliest stages but not scalable; securitization—which can work well but can also be a slow and inflexible funding source; and bank partnerships, which compress unit economics and can also present challenges when moving into riskier lending segments.

Banks have the added advantages of vast pools of seasoned customer data and a long history of lending activity they can use to optimize their underwriting models. Taken together, it is difficult for fintech lenders to compete, despite their evident ability to acquire customers and originate loans. The challenge is often compounded by the fact that venture capital investors can lack the patience needed to grow lending books while maintaining credit quality.

5. Emerging Fintechs to Drive Future Fintech Growth in B2B(2X), Financial Infrastructure, and Lending: In the first chapter of the fintech story, successful fintechs scaled in digital wallets, acquiring and vertical SaaS, challenger banking, retail crypto trading and brokerage, and BNPL/POS lending. (See Exhibit 12.) While there is still room for a handful of players to scale in these verticals, it will be increasingly difficult to displace the established winners, as they deepen their market position through M&A and expand into adjacencies.

Three key indicators can help us narrow down where the scaled winners of tomorrow may emerge from: the distribution of scaling fintechs in the $50 million to $500 million revenue range by vertical; the allocation of equity investments in the last three years by vertical; and an assessment of where major customer and business pain points remain.

Strategic Imperatives for the New Chapter of Fintech

The report outlines clear calls to action for fintech founders, investors, regulators and banks—each critical to unlocking the next phase of industry growth:

• For fintechs: Scaled leaders must double down on the fundamentals and focus on their home markets, all while embedding AI at the heart of their business models. Fintech players should also remain alert to the right M&A opportunities.  
• For investors: Capital should diversify into underpenetrated areas like financial infrastructure, and in regions that are primed for growth (Middle East, Africa, parts of Latin America and Asia-Pacific.). Investors should push for faster AI adoption and disciplined growth.  
• For regulators: Clarity, speed, and harmonization are now essential. Without agile regulation around AI and digital assets, innovation is at risk of stagnating. Governments also have a unique opportunity to spur growth through digital public infrastructure.
• For banks:  Partner with fintechs in areas like financial infrastructure where it makes strategic sense. At the same time, embrace AI with purpose and the desire for experimentation. Banks should also have a strategy for digital assets.