Global Fintech Sector Enters New Era of Growth and Maturity, Driven by AI and Emerging Technologies

Where the fintech sector is headed next: QED-BCG Global Fintech Report 2025

Fintech may still be a small slice of global finance, but it's scaling fast. A new report reveals five big trends -- from smarter AI to rising onchain finance -- that are reshaping the landscape. With fintech revenues growing 21% year-on-year, it's clear the sector is outpacing traditional financial services.Fintech may still make up only a small slice -- just 3% -- of global banking and insurance revenue, but its impact is growing fast. A recent QED-BCG Global Fintech Report reveals that fintech revenues rose 21% year-on-year, outperforming the broader financial services sector, which grew just 6%. Public fintechs also saw better profitability, with 69% now in the black -- up from less than half the previous year. In an exclusive interview with ET, QED Investors cofounder Nigel Morris said, "Regulators are now internalising that fintech is here to stay." Fintechs have a role to play in the future of how financial services are delivered, he added. Here are five key trends the report says will shape the next wave of growth. Agentic AI Many top fintech firms are just starting to move from testing generative AI to full-scale use. But the next big step is agentic AI, a type of AI that acts more independently and intelligently. This tech could be as revolutionary as the internet or smartphones, the report claimed. For now, it's helping earlier-stage fintechs speed up software development and cut costs. In the long run, it could transform everything from personal finance apps to business software. The report puts it clearly: "Agentic AI will change the game . . . eventually." Onchain finance is gaining momentum -- but there's work to do Blockchain isn't just about crypto anymore. With better technology and more regulatory clarity, the stage is set for onchain finance to grow. Onchain finance refers to financial activities and transactions performed on blockchain. Currently, stablecoins are helping smooth cross-border payments. But, as per the report, the real opportunity lies in asset tokenisation -- turning things like property, private funds, and bonds into digital assets. This could cut costs, speed up settlement times, and open up huge new markets. However, a few key challenges still need to be addressed: Financial giants are already testing the waters, but mass adoption will take time. Challenger banks should grow deep, not wide Challenger banks, which are digital-first financial institutions, now bring in $27 billion in fintech revenue. To keep growing, they're adding new products, increasing deposits, and targeting wealthier customers. But expanding into new countries? That's trickier. Different regulations, cultures, and fierce competition make international moves risky. So, for now, focusing on serving existing markets better is the smarter bet, the report opines. Fintech lending has fresh momentum "Lending remains a significant opportunity for fintechs, given that they have only penetrated about 3% of the $2 trillion in global lending revenues," the report said. Right now, fintechs manage $500 billion in loans -- a drop in the ocean compared to $18 trillion in US household debt alone. But things are changing. Fintechs are getting better at underwriting and have more seasoned customer data. With $1.7 trillion in assets under management and increasing interest in fintech-backed loans, there's an estimated $280 billion growth opportunity for private credit funds in this space. Still, there's one unknown: how well these new lending models will hold up through a full economic downturn. The next big growth wave: B2B(2X), infrastructure, and lending The first fintech boom gave us big names in digital wallets, buy-now-pay-later, crypto trading, and challenger banks. While there's still room to grow, it's getting harder to break into these areas. The report says that the next phase will focus on three fresh spaces:

Global fintech sector enters new era of maturity

This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author. In 2024, fintech revenues grew by 21% -- up from 13% in 2023 -- marking a threefold acceleration over the financial services industry at large. Meanwhile, the average EBITDA margin of public fintechs climbed to 16%, and 69% of public fintechs are now profitable. Importantly, much of this performance is being driven by a new class of scaled players generating $500 million or more in annual revenue. These now account for approximately 60% of total fintech revenues. "A class of scaled fintechs is coming of age. Investors are demanding greater maturity, and regulators want more accountability," said Deepak Goyal, a managing director and senior partner at BCG. "Meanwhile, emerging disruptors are harnessing next-generation technologies like agentic AI and pioneering new business models, pushing established players to continuously innovate." As Revenues Jump, Fintech Is Ready for Even More Growth 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, and will change the game in commerce, vertical SaaS, and personal financial management. Fintechs are IPO-ready, but patient: 150 private fintechs founded before 2016 with over $500 million in cumulative equity remain on the sidelines, with many poised to go public. Massive white space remains: Fintechs still penetrate only 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. "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." 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 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. Banks should partner with fintechs in areas like financial infrastructure where it makes strategic sense. At the same time, they must embrace AI with purpose and the desire for experimentation. Banks should also have a strategy for digital assets.