Is Fintech Poised For A Comeback In 2025?

The fintech industry has had a hard couple of years — but the tide may be changing as we head into 2025, and the new administration takes office.
Lolita Steuber · 10 days ago · 2 minutes read


Fintech Renaissance: The Road to Recovery

Fintech Funding Recapitalization

As the industry grapples with the aftermath of the Silicon Valley Bank collapse, a glimmer of hope is emerging.

In the fourth quarter of 2024, fintech funding rose by 12% to $8.5 billion, signaling a slow decline in the funding drought. Moreover, the annual decline in 2024 was a mere 20%, a significant improvement compared to 48% and 44% drops in 2023 and 2022, respectively.

This surge points to a potential turning point in 2025.

Pro-Innovation Administration

The arrival of the Trump Administration brings a renewed emphasis on innovation. Acting FDIC chairman Travis Hill has outlined plans for "a more open-minded approach to innovation," including transparency in fintech partnerships and engagement in addressing technology costs for community banks.

This shift in regulatory sentiment could provide a much-needed boost to the fintech industry.

IPO Market Revival

Major fintech companies are signaling their plans to go public, including neobank Chime and buy now, pay later giant Klarna. This indicates progress in profitability, as financial scrutiny is a key component of public markets.

As Tyler Griffin, managing partner of Restive Partners, puts it, "I'd bet that every late-stage, privately funded company is exploring an IPO in the near term."

Reinvention and Lessons Learned

The fintech industry has endured several challenges, leading to valuable lessons.

  1. Growth at the expense of profitability is unsustainable.
  2. Compliance is crucial, regardless of direct regulation.
  3. Consumer fintech is fickle and requires a keen understanding of their needs.

As a result, we can expect a focus on value propositions, experienced executives with compliance expertise, and more fintech companies partnering with banks.

A Resilient Future

The setbacks of the past have forged a more resilient fintech industry.

Those companies that have survived or been founded during these trying times recognize the importance of operational efficiency and doing more with less.

The mantra of "We're making banking better" may feel quaint today, but it reflects the industry's evolution and the emergence of stronger, more sustainable fintech companies that are ready to navigate the challenges and opportunities that lie ahead.