Fintech Market Insights

What happened in Fintech in 2025 and what’s behind it? Here is my behind-the-scenes summary based on the FT Partners 2025 Annual FinTech Almanac numbers. 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗻𝗴 𝗮𝗰𝘁𝗶𝘃𝗶𝘁𝘆: • Capital is concentrating into fewer, larger rounds as investors back proven platforms over early-stage fintechs. • Profitability and predictable revenue now matter more than growth alone, as higher cost of capital has reset how risk is priced. • Financial Management and WealthTech attract capital because banks and asset managers are still modernising core workflows around data, reporting, risk, and operations. • Crypto funding has shifted from speculation toward infrastructure. • Payments’ reduced share of financing reflects maturity of the core rails, with innovation moving to embedded and vertical-specific use cases. • Banking and lending funding is spread across specialised tools (onboarding, underwriting, compliance, servicing, etc) as most banks choose to modernise in layers and not by replacing their core in one go. • InsurTech investment is rising as insurers face worsening loss ratios (driven by climate volatility, inflation, and fraud) and use software to regain control over pricing, underwriting, and claims. • Capital is increasingly flowing to markets that combine fast-moving regulation, public-sector capital, and national digital rails (real-time payments, digital ID, open finance). • Mega-rounds are returning but mainly for scaled leaders, meaning this is not a generic market trend but focused on a small group of companies that already behave like infrastructure.   𝗠&𝗔 𝗮𝗰𝘁𝗶𝘃𝗶𝘁𝘆: • M&A activity is accelerating because many fintech categories are now mature, making consolidation the fastest way to expand. • Scaled fintechs are increasingly the buyers, using acquisitions to add capabilities faster than they could build internally. • Acquisitions are focused on filling product gaps (risk, data, compliance, embedded payments, fraud) rather than buying growth. • Payments M&A is driven by margin pressure and intense competition, with players buying scale and efficiency rather than chasing new geographies. • Financial Management and WealthTech M&A is driven by demand for platforms that already sit at the centre of financial operations. • Crypto M&A is selective, targeting regulated, compliant infrastructure rather than consumer-facing speculation. • Cross-border M&A is rising as fintechs use acquisitions to enter regulated markets faster than licensing alone would allow. • Private equity is accelerating as many strong fintechs generate cash but lack public-market scale, making them attractive candidates. What are the trends that you see continuing in 2026? What did I miss? Opinions: my own, Graphic source: FT Partners 𝐒𝐮𝐛𝐬𝐜𝐫𝐢𝐛𝐞 𝐭𝐨 𝐦𝐲 𝐧𝐞𝐰𝐬𝐥𝐞𝐭𝐭𝐞𝐫: https://lnkd.in/dkqhnxdg

Two trends have caught my attention and signal a growing trend in the M&A landscape: the rise of equity-funded deals and improving market reaction to M&A.   With valuations at record highs and range-bound interest rates, the cost of equity and debt are converging. Consequently, I’m seeing more boards contemplate equity considerations alongside debt funded cash considerations as a genuine alternative to all cash — enough to push equity-funded deals to 23% of total activity, up from 18% a year ago. It is also notable that this consideration mix is evident in large-scale transactions, with $10bn+ deals making up a larger proportion of M&A volumes this year.   Market and shareholder dynamics are also shifting. In 2022, the median day-one share price move for acquirers in large equity deals was -5.3% relative to the market. This year, it’s closer to -1.5%. For shareholders, ownership is increasingly concentrated among a smaller number of institutional investors, amplifying their influence on deal outcomes. Together, these trends underline: ▪️Day one isn’t destiny. There’s no clear link between the first day’s move and long-term returns – around half of deals see a negative day-one reaction, yet many go on to deliver positive three-year share price performance. ▪️Shareholder makeup is also an important factor. Greater ownership concentration among the largest index investors can amplify share price volatility. Early alignment with key active investors is critical. ▪️Messaging matters. The way a deal is communicated, before and after announcement, can materially shape sentiment, reduce activist risk, and secure shareholder support. This is critical to an effective roll-out strategy. As we head towards Q4, I expect the strongest M&A outcomes will come from a combination of disciplined execution and a compelling strategic narrative.

Re-Bundling the Bank 💡 Costs are growing for fintechs, but it's not just higher interest rates affecting their margins. Customer acquisition costs (CAC) are also on the rise and contributing to overhead. In response, some fintechs are seeking partners with existing customer bases. In June, for example, eBay and Venmo announced a partnership, allowing shoppers to pay for their purchases with their Venmo balance or methods linked to their Venmo account. Other fintechs, including big names like SoFi, have applied for bank charters. There is also a move to diversify revenue streams, illustrated by Robinhood’s reduced reliance on transaction fees for the bulk of its income. Both trends underscore a clear reality: As fintechs get squeezed, it is less viable for them to offer single, standalone products 💳 At the center of these moves is a focus on customer value. One effective way to reduce CAC is offering customers value on the financial side through products that help build savings or offer rewards. Another strategy is to add products to an existing customers base. Driven by their customers' growing expectations for digital solutions, Large Financial Institutions are increasingly partnering with, investing in and acquiring fintechs, leveraging the functionality and customer bases that fintechs have built in their specialized areas. Acquisitions such as JPMorganChase’s purchase of wePay for payments are one way for retail banks to add capabilities without building them in-house. At the same time, strategic partnerships can create efficiencies in customer acquisition. However, achieving a proper win-win in those relationships can be difficult to strike 🤝 Fintech partnerships are intended to be symbiotic, with tech companies like Chime providing a user-friendly front-end while a chartered partner bank such as The Bankcorp or Stride Bank, N.A. provides the FDIC-insured accounts and handles risk and compliance. This allowed fintechs to walk like a bank and talk like a bank while leaving the actual banking to someone else. In the last decade, deposits in fintech partner banks have skyrocketed, growing 9x faster than deposits in small US banks overall 🚀 Regulators are stepping up their oversight by issuing 50 severe enforcement actions in the last six months. A lopsided number of these actions are targeting partner banks. Startups are responding to the increased regulation by beefing up compliance talent and by reviewing existing processes, in some cases severing ties with partners. That opens the door to AI-native startups who can meet a high bar for regulation. Source: Silicon Valley Bank - https://t.ly/LfKVy     #Innovation #Fintech #Banking #OpenBanking #EmbeddedFinance #API #BaaS #FinancialServices #Payments #Lending #Blockchain #Compliance 

📊 Financial services M&A in H1 2026 is a story of two halves… while the number of transactions rose 3% year-on-year, total value is down. The drop in value is coming from the top end of the market, as fewer megadeals completed in the first half of this year. But looking beneath this, activity levels held up, with deal volume tracking steady across most sectors – continuing the gradual rise over the last decade. That’s consistent with what we see from our clients, who have learnt to operate through uncertainty and volatility. They’re focusing more on how M&A can drive growth and accelerate the delivery of their strategies, rather than using it purely to scale or reduce costs. You can see this in the mix of activity. Asset management continued to generate the strongest deal flow followed by insurance, while value remains concentrated in larger banking transactions. Looking ahead, M&A pipelines are growing and confidence is improving, albeit gradually. For many firms, M&A remains central to how they think about strategic repositioning and growth, and will be key to building out new technology capabilities and securing market talent. Read the full details in our press release: https://lnkd.in/e6x3Unjt Andre Veissid, Jun Li, Nigel Moden, Jonathan Zhao 

𝗕𝗹𝗼𝗰𝗸𝗰𝗵𝗮𝗶𝗻𝘀 𝗳𝗼𝗿 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝗠𝗮𝗿𝗸𝗲𝘁𝘀 With clearer regulation and better infrastructure, on-chain capital markets are accelerating: stablecoins are becoming real payment and settlement rails, real-world assets are scaling from pilots to programs, and “regulated DeFi” is starting to look like institutional market infrastructure—not just experiments. When financial institutions choose a blockchain rail, they optimize for four things: • 𝗦𝗲𝘁𝘁𝗹𝗲𝗺𝗲𝗻𝘁 𝗰𝗲𝗿𝘁𝗮𝗶𝗻𝘁𝘆 (finality, uptime, predictable execution) • 𝗖𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲 𝗰𝗼𝗻𝘁𝗿𝗼𝗹𝘀 (permissions, transfer rules, auditability) • 𝗢𝗽𝗲𝗿𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝘀𝗲𝗰𝘂𝗿𝗶𝘁𝘆 (key management, smart-contract risk, governance) • 𝗘𝗰𝗼𝘀𝘆𝘀𝘁𝗲𝗺 𝗰𝗼𝗻𝗻𝗲𝗰𝘁𝗶𝘃𝗶𝘁𝘆 (custody, venues, liquidity, interoperability) Ethereum remains the default liquidity hub—the deepest ecosystem with the broadest composability. But other networks are gaining relevance by specializing: high-throughput settlement, payments-first stablecoin rails, regulated issuance environments, or institutional governance models. Which networks do you think will become the long-term winners—and why? Source: Yifeng Tian, Ph.D. Global Venturing Labs #Payments #Fintech #PaymentOrchestration #DigitalPayments #EmbeddedFinance #FintechLeadership #ProductStrategy #CardPayments #Issuing #PrepaidCards #CardInfrastructure #Stablecoins #CryptoPayments #OnOffRamp #DigitalAssets

State of #fintech at the end of Q3’2024 by CB Insights Global Funding Trends: 🔵 Fintech #funding fell to $7.3B in Q3’24, a 25% quarter-over-quarter (QoQ) drop. However, the decline adjusts to 13% when excluding large deals from the prior quarter (e.g., Stripe, AlphaSense) 🔵 The average deal size in 2024 remains steady at $12.7M, reflecting a focus on fewer, higher-value #investments despite a 16% drop in total deal volume, reaching the lowest level since 2017. Geographic Insights: 🟠 Emerging Markets Lead Early-Stage Deals: 52% of early-stage deals occurred outside traditional hubs (e.g., US, UK), favoring regions like India, France, and Kenya Sector-Specific Trends: 🟢 Wealth Tech: Notable funding increase with a focus on solutions targeting niche demographics, such as medical professionals. #Wealthtech saw a 67% increase in funding QoQ, driven by significant deals such as Human Interest ($242M) and Earned Wealth ($200M) 🟢 Digital Lending: Continued activity in Asia and the US, with standout deals like DMI Finance ($334M) and MNT-Halan ($158M) 🟢 Payments and Insurtech: Both sectors experienced declines but retained pockets of high-value activity, particularly in #insurance #innovation Investor and Exit Activity: 🟣 #VentureCapital Shift: VC investments accounted for 29% of deals, highlighting a cautious but persistent interest in fintech 🟣 Exits: M&A dominated the exit landscape, with fewer IPOs or SPACs, indicating a shift toward #consolidation over public market enthusiasm. So what does all this mean for the near future? ♻️ We are entering a consolidation phase: With deal volumes at a historic low, the industry is undergoing a consolidation phase. Expect M&A to drive market realignments, especially in crowded subsectors like #payments and lending. ♻️ Increased focus on Emerging Markets: The shift toward less-crowded geographies reflects the untapped potential in markets like #Africa and parts of Asia. Companies targeting these regions may enjoy less competition and high growth prospects. ♻️ Selective Investment Persists: Investors are prioritizing fewer, higher-quality deals. #Startups will face increased pressure to demonstrate solid unit economics and scalability before securing funding. ♻️ Some Sectoral Bright Spots: The wealth tech boom signals a growing appetite for personalized financial management solutions. #Insurtech and #lending (especially in the small business) innovation remain attractive as they address core pain points with digital solutions. ♻️ Challenges for #Unicorns: The slowed rate of unicorn births underscores a recalibration of valuations. Companies aspiring to cross this threshold will likely need to showcase strong #profitability or growth metrics. Also, some of the existing unicorns 🦄 will lose their wings 🪽 if they test the market

M&A is clearly back on the agenda for many European banks—fueled by stronger earnings, robust capital buffers, and the need to gain scale and diversify revenue streams to deliver sustained profitability. After European bank M&A increased by roughly 20% last year, S&P Global Ratings expects further deals to be announced in 2026 and 2027, with markets such as Italy, the Nordics, and Poland emerging as key hotspots. But bigger doesn't always mean better. While larger banks typically benefit from more diversification, stronger market positions, and better access to funding, mergers are rarely a straightforward upgrade story—not least because potential long-term gains may come with higher short-term risks. The current wave of deals is no exception. Go deeper by reading our latest edition of #CreditWeek below for Giles Edwards and Nicolas Charnay, CFA's subject matter insight.

#Blockchain : Key predictions for blockchain technologies and business models  1. Prediction Markets - Prediction markets are a form of collective intelligence that leverage market mechanisms to incentivize large numbers of individuals to make forecasts about future uncertain events. Implications: Prediction markets may prove to be the first mainstream application for governance protocol for blockchain, cryptocurrencies and decentralized finance (DeFi). 2. Cloud Computing - In cloud computing, blockchain can create a decentralized network of nodes that share data and processing power. Enterprises can rely on a distributed network of computers that are not under the control of any one company. Implications: The technology can be used to create a verifiable computing environment, allowing users to delegate computations and then optionally ask for proofs that specific computations at randomly selected checkpoints were done correctly, allowing for a decentralized cloud computing market. 3. #Cybersecurity - Blockchain offers a different path toward greater security. This approach reduces vulnerabilities, provides strong encryption, and more effectively verifies data ownership and integrity. Implications: The decentralized nature of blockchain makes it particularly ideal for organizations in need of highly secure technology. With blockchain, all information stored on the network is verified before being encrypted with a cryptographic algorithm. 4. Smart Multi Signature Escrow - Blockchain technologies allow multi-signature transaction contracts which require a specified number of signatures out of a given set of keys to authorize the spending of funds in an automated, safe manner. Implications: Smart multi-signature escrow allows for more granularity in the number of keys which can authorize spending of funds along with daily limits. 5. Crop Market Insurance & Derivatives - Blockchain technology properties such as distributed ledger provides storage of both static and dynamic transactions, without the need for a centralized authority, along with a consensus mechanism which helps in the validation of the transactions. Implications: In addition to crop-based insurance, a financial derivatives contract can be developed using a data feed of the weather instead of any price index. This concept can be further expanded to natural disaster insurance generally. EmpowerEdge Ventures

In this edition of Fintech Wrap Up, I explore the expansion of real-time payment networks globally, the strategic importance of launching robust card programs, and the transformative impact of banking licenses on fintech companies. We begin with the rapid acceleration of cross-border payments, driven by the success of real-time payment (RTP) systems in over 80 countries. Initiatives like Project Nexus and cross-border links in ASEAN markets are revolutionizing international transactions by leveraging existing RTP infrastructures. These efforts are not just about speed—they’re fostering financial inclusion by bringing unbanked populations into the digital economy and reducing reliance on cash. Next, I delve into the growing significance of APIs in the fintech ecosystem. APIs have become critical for businesses looking to innovate and expand their services. They are the digital connectors that allow enterprises to integrate their operations seamlessly into new applications, driving both local and global growth. Understanding the API economy’s value chain is crucial for enterprises to maximize the potential of these technologies, from developer engagement to the end-user experience. The edition also covers the essentials of launching a card program, emphasizing the need for real-time controls and a robust technical onboarding process. Dynamic spend controls, like those implemented by Monzo and Santander, are becoming standard, allowing customers to manage their spending preferences directly, which enhances security and user experience. I also discuss the strategic advantages of fintechs like Revolut obtaining banking licenses. For companies focused on financial services, becoming a bank is a game-changer. It improves lending economics, offers greater control over regulatory processes, and allows for more strategic market positioning. This trend is a clear signal of the maturation of the fintech sector, where the ability to offer banking services directly can set companies apart in a crowded market. Klarna’s business model is another focus, particularly its ability to generate revenue through its Buy Now, Pay Later (BNPL) services. Klarna’s short-duration loans allow it to recycle capital quickly, driving profitability despite the high capital intensity of the model. This efficiency is a key reason why Klarna has managed to thrive in the competitive BNPL market. Lastly, I highlight some significant news, including Zilch’s impressive milestone of reaching profitability with over $130 million in revenue, Revolut’s launch of crypto payment cards integrated with Apple Pay and Google Pay, and the explosive growth of UAE-based fintech Ziina. These stories reflect the dynamic nature of the fintech industry and the continuous innovation that keeps pushing the boundaries of what’s possible in digital finance. #fintech #bnpl #payments Prasanna Marcel Richard Panagiotis Tony Efi Nicolas Arjun Dr Ritesh

The Insurance Industry Is at an Inflection Point – and AI Is Leading the Charge From outdated systems and unstructured data to rising customer expectations and talent shortages — insurers are under immense pressure. But with Generative AI, there’s finally a real way out. What’s Changing? 1. 60% of operational costs are still manual – AI can slash that. 2. 80% of data is untapped – GenAI reads, learns, and leverages it. 3. Only 18% of insurers currently use AI – but that’s about to change. Key Impact Areas: ✅ Underwriting: 90% data accuracy + new product models. ✅ Claims: 70% of simple claims can be auto-resolved + up to 50% faster processing ✅ Customer Experience: 48% higher NPS, 85% faster resolutions ✅ Fraud Detection: AI flags 75% of fraudulent claims in real time ✅ Sales & Distribution: AI agents, personalized funnels, smarter upsells ✅ Policy Admin: Real-time compliance, automated changes, predictive lapse alerts ✅ New Products: From behavior-based insurance to once “uninsurable” tech like drones & autonomy It’s not just about automating workflows. It’s about rethinking the very DNA of insurance using AI-first foundations. And those who don’t adapt — risk becoming obsolete. Whether you're transforming an incumbent or building the next vertical AI unicorn — the time is now.