Fintech’s Next Chapter: From Growth at All Costs to Sustainable Success
The global fintech industry is entering a new era, one marked not by breakneck growth at any cost but by a sharper focus on profitability, resilience, and responsible innovation. According to the Global Fintech Report 2025 by BCG and QED Investors, while the sector has weathered market turbulence, a "Fintech Spring" is officially underway. For financial institutions, investors, and fintech leaders, this moment offers both opportunities and lessons that will shape the next decade of financial services.
A Resilient Comeback: Fintech in Numbers
After years of volatility, fintech is back on a growth trajectory. Global fintech revenues surged by 21% in 2024, outpacing the 6% growth of the broader financial services sector. Key segments such as challenger banks, trading platforms, and insurance saw remarkable gains, with fintechs capturing 60% of the industry’s revenue through scaled players like Nubank, Revolut, and Coinbase.
Importantly, profitability has returned to the spotlight. The sector’s average EBITDA margins improved to 16%, and nearly 70% of public fintechs became profitable in 2024, compared to less than half the year before. This shift from “growth at all costs” to “profitable growth” is setting a new standard for market players and investors alike.
The Fintech Opportunity: Plenty of Holes in the Swiss Cheese
Despite these wins, fintechs still penetrate only 3% of the global banking and insurance revenue pools. The so-called "Swiss cheese" effect highlights vast untapped potential across verticals and geographies. Payments remain the dominant fintech success story, accounting for 55% of scaled revenues, followed by challenger banks and crypto trading platforms.
However, areas like insurance, wealth management, and secured lending remain largely untouched by fintech disruption. This signals that the next wave of growth will come from addressing neglected customer pain points and automating underserved processes, especially in B2B financial workflows, embedded finance, and credit markets.
Five Trends Shaping Fintech’s Future
The report identifies five transformative trends that will define the next chapter of fintech:
Agentic AI: The shift from reactive AI tools to autonomous AI agents promises to fundamentally reshape financial services—from automated personal finance management to real-time risk monitoring and payment optimization. Early movers in AI are already raising disproportionate levels of investment.
Onchain Finance: While blockchain has yet to find its “killer app,” advancements in stablecoins, asset tokenization, and cross-border payments could bring onchain finance into the mainstream. Regulatory clarity (such as Europe’s MiCA regulation) and scalable infrastructure are key enablers.
Challenger Bank Maturity: As the initial land grab slows, successful challenger banks will focus on product diversification, increasing deposit balances, targeting wealthier customers, and expanding selectively into new geographies. However, international growth remains challenging due to regulatory complexity and competition.
Fintech Lending Evolution: Lending represents a massive growth area, with fintechs only penetrating 3% of the global $2 trillion lending market. Partnerships with private credit funds are emerging as the next funding frontier, offering fintech lenders the scale and stability they need to grow sustainably.
The Return of M&A: With the IPO window still cold, M&A is becoming the strategic lever for both fintech consolidation and expansion. Strong players will acquire niche innovators or regional champions to gain scale, while weaker fintechs may face consolidation or exit.
The Geographic Story: Fintech Still Has Room to Grow Globally
The US and China dominate fintech revenues, but regions like Europe (8%), Asia-Pacific (10%), and Latin America (10%) hold significant growth potential. Markets in the Middle East and Africa are also beginning to see momentum, especially in mobile-based financial services for the unbanked.
For Europe in particular, regulatory fragmentation remains a key barrier to scaling fintechs beyond national borders. Yet, success stories such as Revolut, Klarna, and Monzo demonstrate that targeted growth, combined with best-in-class digital experiences, can still unlock value.
The new fintech reality offers both inspiration and caution for incumbents and disruptors alike. The key takeaways:
Profitable Growth is Non-Negotiable: Capital markets are rewarding sustainable economics, not just top-line growth.
AI is No Longer Optional: Those who fail to adopt AI at scale risk falling behind both in efficiency and customer experience.
Embedded Finance is the Next Battleground: B2B fintech infrastructure and embedded services are where many future winners will emerge.
Global Mindset, Local Execution: Scaling across geographies requires deep market understanding and regulatory agility.
Final Thoughts: Fintech’s Best Days Are Ahead, But Only for the Prepared
The fintech story is far from over. With only a tiny fraction of global financial services disrupted, the sector’s growth potential remains immense. Yet success will favor those who can balance innovation with operational excellence, agility with compliance, and vision with discipline.
At Contextual Solutions, we help fintechs, financial institutions, and investors navigate this complex landscape with actionable strategies for market entry, product development, AI adoption, and regulatory compliance, with a special focus on Europe and cross-border growth.
👉 Ready to shape your fintech strategy for 2025 and beyond? Contact our team at Contextual Solutions to discover how we can help you unlock new opportunities.
