The dollars are not flowing between the big guns in the payments space: Recent announcements of new funding rounds indicate a bit of buoyancy in money flowing to the smaller firms innovating digital payments, in both consumer-facing and B2B settings. And the investment activity, on the part of VCs and private equity firms, has been international in scope.

It’s been widely reported that coming into 2025, FinTech capital raising had hit a nadir in the fourth quarter of last year, with $21 billion representing the lowest level since 2016. More recently, as of this week, the data for the first quarter indicate that, as S&P Global has estimated, FinTechs grabbed about $8 billion, up 46% from last year. The impact of tariffs, and dislocation in the capital markets, we’d note, sharpened in April, and so any recovery may be volatile, to say the least.

Where the Money’s Flowing: From Plaid to Poland

But even amid the tariff and trade wind dramas, recent announcements show that capital raises, though relatively small in terms of dollar amounts, are focusing on international players and platforms. Plaid’s a standout here, having announced a $575 million funding round led by Franklin Templeton, alongside Fidelity Management and Research and others, including existing Plaid investors NEA and Ribbit Capital.

As reported this week, Toku, an accounts receivable SaaS platform focused on Latin America and based in Chile, said it had raised $48 million in Series A funding, bringing its total funding to $55 million. The announcement noted that the firm’s software connects companies’ ERPs with banks and payment rails, enabling payment orchestration and automated collections along with automated reconciliation in the back office. Toku says it increases automated payment methods for enterprises from 10% to 90%.

PYMNTS reported Tuesday (April 15) that South Africa-based payments infrastructure company Stitch raised $55 million in a Series B funding round to expand its offerings for enterprise merchants. The company said it will use the new funding to deepen its in-person payments offering, bolster its online payments suite and move into the acquiring space. Stitch is now expanding its in-person payments solution and said it will add acquiring to its services list soon. The funding round had been led by QED Investors.

In India, Varthana, a FinTech that operates in the education financing space, has gathered $8.7 million in debt funding from B2B platform OfBusiness, through its Oxyzo financial services unit. The funding will reportedly be used to back school loans extended to students.

Separately, Warsaw-based startup BidFinance, the FinTech behind a platform for trading debt portfolios, has raised EUR 1.6 million in funding from venture capital funds 4growth VC, FundingBox, and a group of business angels. The capital will help support international expansion.

A bit closer to home, in the states, as reported here, Deck raised $12 million in a Series A funding round to support its developer infrastructure for accessing any user-permissioned data. The funding round was led by Infinity Ventures. Deck enables users to tap into user-permissioned data from more than 100,000 providers in more than 40 countries to, among other things, automate billing.

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This time around, partnerships dominated the headlines, and earnings season has yet to make its presence felt in the space.

From a macro standpoint, the volatility of the broader markets continued as tariffs were on top of everyone’s minds. But as retail numbers came in showing that, into March and possibly beyond, consumers continued to spend, buy now, pay later companies’ stocks advanced. Sezzle shares were the standout here, as they surged 23%, Affirm’s stock was up 3.3%.

Janover’s shares added 17.6% through the week — supplementing triple-digit gains from earlier in the month after it said it had raised $42 million to bolster its efforts to acquire digital assets in the Solana ecosystem.

Platform Stocks Get a Bump

Platforms — focused on everything from digital banking to digital lending — got a boost through the past several sessions.

nCino shares gathered 2.3%. The company said this week that Zions Bancorporation selected nCino as its technology platform as they digitally transform their loan origination process. The bank will use nCino tools such as Banking Advisor, Commercial Pricing and Profitability and Analysis.

Upstart announced that it has partnered with First Commonwealth Federal Credit Union to expand access to personal loans and better serve its growing membership across Pennsylvania and New Jersey. As an Upstart Referral Network lending partner since December, First Commonwealth can now provide eligible personal loan applicants on Upstart.com with tailored loan offers, according to the announcement. Through Upstart APIs, new member and loan data integrate into First Commonwealth’s core banking platform.

Upstart shares tacked on 6.2%.

PYMNTS reported that Payoneer bought China’s Easylink Payment Co. in a deal that makes Payoneer the third foreign payment platform licensed to offer online payment services in China. Shares were 1.7% higher.

Gen’s acquisition of MoneyLion closed this week, and trading into its final days saw the stock inch up by 1%. Separately, as reported this week, the New York state attorney general sued MoneyLion and another earned wage access provider, DailyPay, accusing them of illegal and deceptive conduct and abusive lending practices. The lawsuits allege that the companies’ services are payday loans and that the fees the companies charge on these short-term loans can amount to annual interest rates of as much as 750%.

Toast’s stock was 2.8% higher in a week that saw an announcement that Applebee’s, one of America’s largest casual dining restaurants, will utilize Toast technology to strengthen operational flexibility, “provide greater ease of use and responsiveness, improve labor efficiency, and enhance the overall guest experience,” the companies said.

Separately, Blend Labs, which lost a scant 0.1%, expanded its partnership with identity and fraud prevention platform provider Alloy. Through the broadened joint efforts, Blend customers can now, according to the announcement, “more seamlessly and cost-effectively” access Alloy’s advanced identity and fraud prevention capabilities into their consumer banking solutions, tied to Blend’s deposit account and consumer lending products.

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But, when you have a company whose shares spike more than 820%, that’s enough to move the whole group upward. That was the case this last week, as the overall Index surged 13.8%.

Janover was the standout here, leaping a staggering 827%.

Janover’s Transformation

Janover’s shares soared on the heels of news that, as PYMNTS detailed, the real-estate focused firm plans to accelerate its acquisition of digital assets after raising $42 million. The company will start by acquiring digital assets in the Solana ecosystem through U.S. public market.

Janover also disclosed that majority ownership in the company has been acquired by a team of former leaders of crypto platform Kraken, who are “dedicated to bridging the liquidity gap between traditional finance (TradFi) and decentralized finance (DeFi),” according to the release.

Two members of the group that acquired Janover have been appointed by the board of directors to roles at the company: former Kraken Chief Strategy Officer Joseph Onorati is now chairman and CEO of Janover, and former Kraken Engineering Director Parker White is now chief investment officer and chief operating officer.

The board has adopted a treasury policy in which the principal holding in its treasury reserve on the balance sheet will be allocated to digital assets, starting with Solana (SOL), and the company will consider acquiring Solana validators and acquiring and staking SOL through them. The firm will continue operating its core real estate platform, and plans to change its name to DeFi Development Corp.

BNPL Names Gain Ground

Affirm shares gathered 6.4% alongside Sezzle’s 13% gain, as BNPL stalwarts proved a safe haven. The conventional wisdom holds that even in an uncertain inflationary environment, paying over time will continue to hold some appeal for consumers mulling how to pay for everyday expenses.

As reported this week, Affirm and Shopify have expanded their pay-later offering beyond U.S. borders. Shopify merchants in Canada who have signed up for early access can begin offering the Affirm-powered Shop Pay Installments program, marking its first availability outside the U.S. Shop Pay Installments will be made available in general access to Shopify merchants in Canada and the U.K. this summer.

Among names that led to the downside, Asia-based companies in the FinTech IPO Index fared poorly (along with whipsaw trading seen on exchanges in the region). Huize and Futu were down a respective 24.6% and 23%. Open Lending, which is focused on the automotive finance market, plunged 28.5%. The auto industry is among the most vulnerable to tariffs and trade wars, and supply chain and pricing shocks too.

In an announcement, Flywire said it had deployed integrations with Ellucian, a software firm focused on the higher education space. The firms said that Flywire’s new integration pathway with Ellucian Ethos, Ellucian’s API layer, enables institutions to accelerate their implementations of Flywire’s solutions.  Flywire shares were down 9.5%.

SoFi lost 1%. The company’s Galileo Technology said that its new Galileo Deposit Sweep facilitates the data exchange and reporting framework for FinTechs that collaborate with a deposit sweep provider and participating banks. The product identifies customer accounts designated for deposit sweeping, automates funds transfers above a defined threshold and ensures the transfer of excess funds into designated high-yield accounts.

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Tariffs, of course, dominated, and once they were real, as of Wednesday night, the stage was set for a plunge Thursday that’s not been seen in years. Investors fled the digital platforms and the buy now, pay later (BNPL) players — many of them international in scope, and dependent on growth in lending or consumer spending.

And within the FinTech IPO Index, which sank more than 11%, not a single name was in the black.

Oportun’s stock sank more than 14.2%.  

The company said this week that it had closed a new warehouse facility, with a $187.5 million total commitment. The warehouse featured Natixis Corporate and Investment Banking as senior lender and Neuberger Berman, on behalf of client funds, as mezzanine lender. There’s a two-year revolving period in place and the warehouse facility is collateralized by Oportun’s unsecured and secured personal loan originations.

nCino Plunges on Earnings

nCino shares gave up more than 30%.

As reported by PYMNTS, guidance anticipates slowing growth in the core cloud banking segments and mortgage markets, though a reacceleration is envisioned for fiscal year 2027.

Management said on the conference call with analysts that first quarter, top-line growth should be in the high single digits year over year, to a range of roughly $139 million to $140.7 million, which would be a slowdown from the 14% growth rate notched in the most recent quarter.

The company also announced the appointment of Sean Desmond as CEO, succeeding Pierre Naudé, who becomes executive chairman. Desmond said on the conference call with analysts that at a high level, “There is no doubt that financial institutions across the globe continue to struggle with inefficiencies caused by legacy infrastructure. Too many of them still rely on fragmented tech stacks and siloed data, making critical processes far too slow and cumbersome” and noted that “while our scale has increased, I don’t believe our execution has kept pace with the full extent of the market opportunity. … Our ability to execute over the past couple of years was significantly impacted by macroeconomic headwinds beyond our control.”

Later in the call he said that customers had paused onboarding decisions; growth also was impacted as “we were also too optimistic in expecting a drop in interest rates to drive an increase in mortgage activity.”

nCino CFO Greg Orenstein said on the call that subscription revenues were up 16% in the fourth quarter; subscription growth should accelerate after the current fiscal year. Though the mortgage business grew in the most recent period by 8%, forward guidance assumes no year-over-year increase in U.S. mortgage subscription revenues.

Affirm’s stock swooned by 17.8%, and the read across here is that a spending slowdown might snare BNPL behemoths.

But in company-specific news noted here, Stride Bank will become a new card issuing partner for the Affirm Card, supporting the growing demand for that payment offering. The collaboration enables Stride Bank to continue expanding its payments programs with FinTech companies and helps Affirm extend its reach to more consumers and merchants, the companies said. The Affirm Card had 1.7 million active cardholders as of Dec. 31.

Katapult’s latest quarterly results detailed that gross originations were $75.2 million, an increase of 11.3%. Total revenue was $63 million, an increase of 9.4%. The company noted that write-offs as a percentage of revenue were 9.6% in the fourth quarter of 2024 and according to the release are within the company’s 8% to 10% long-term target range. Katapult’s stock also was down 30% through the past five trading sessions.

AvidXChange announced several new offerings this past week. In the release, the firm detailed the launch of AI [artificial intelligence] Approval Agent, which lets customers quickly assess how likely an invoice is to be approved by analyzing patterns from past decisions.    

AI PO Matching Agent matches line-item details from invoices to purchase orders.  The company’s release also heralded the expansion of AI capabilities within its Invoice Capture feature, which “continuously learn the unique patterns of the data across invoices, delivering approval-ready invoices that reduce the need for manual touchpoints,” according to the announcement. The stock lost 6.9%. 

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Insurance solutions firm Huize led the slide, down by nearly 16% through the past five sessions.

Huize’s shares plummeted on the heels of its earnings report. The company’s investor materials revealed that gross written premiums facilitated across the company’s platform were the equivalent of $142.9 million in the fourth quarter of 2024, a decrease of 16.2% year over year. Renewal premiums accounted for 46.5% of total written premiums a decrease of 41.3% from the year ago period.

Operating revenue was $39.2 million in the most recent period, up more than 21%.

Down 5.1%, Marqeta announced that it launched a collaboration with retail technology firm Upside. Marqeta customers will integrate Upside’s cash-back offers into their consumer debit and prepaid card programs. The firms said in the release that consumers use cards based on the rewards they’ll get back. By adding Upside’s cash-back offers, businesses can direct a shift in spending, giving users more reasons to consider them first at checkout.

Oportun’s stock slid 2.5%. Findell Capital Management, which owns more than 9% of the shares outstanding, has sought a reorganization of the company’s board. The open letter to management contends that operating costs are too high, among other areas that need to be addressed.

Affirm’s Ambitions

Affirm’s stock was off by a bit more than 1%.

As PYMNTS reported this past week, the buy now, pay later (BNPL) player is expanding its pay-later offering via a new agreement with J.P. Morgan Payments. Affirm’s solutions become available to merchants on the J.P. Morgan Payments network in the U.S., letting them offer the company’s BNPL options.

Separately, in an interview this week with PYMNTS CEO Karen Webster, Affirm CEO Max Levchin said that “we’re a payments network.”

“We are, today, in the world of network comparable like American Express … I’ve often compared Affirm to a sort of aspirational Amex,” Levchin said. “We want to be thought of as the company that stands behind the consumer in a way that goes above and beyond.”

The news of the JPMorgan partnership comes nearly a week after Affirm announced it would begin furnishing information about all of its payment plans to Experian starting April 1.

Lemonade said in an announcement that it has surpassed the $1 billion of In Force Premium (IFP) milestone, 8.5 years after selling its first policy. Shares dipped 2%.

Robinhood’s stock was up 0.8%. The company announced that it has launched a wealth management service targeting its less-wealthy clients. “Robinhood Strategies” is operating as a wealth management service for its premium “Gold” customers. The service comes with a 0.25% annual fee, capped at $250. The company is also rolling out “Robinhood Banking,” a private banking service for Gold members launching later this year.

nCino’s 3.8% gains were among the most notable this past week. The company said Credit Union 1, which operates nationwide, has selected the company to implement multiple nCino solutions across the credit union’s commercial, consumer and indirect lending businesses. The pact seeks to speed Credit Union 1’s lending activities. Through the nCino Platform, Credit Union 1 can deliver what the companies termed a “connected and convenient lending experience across multiple lines of business” as loan volumes grow.

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Although comments from the central bank pointed to slowing growth and higher inflation, the FinTech IPO Index was up 4.3% and almost all of its components marched higher.

Robinhood’s stock led the companies that posted positive stock market performance, gathering more than 21%.

Late this week, Robinhood said that it added a prediction markets hub to its app, allowing users to trade on the outcomes of events. The first contracts began rolling out this week, and were aimed at the upper bound of the target Fed funds rate — and where things will stand in May. Other contracts touched on upcoming college basketball tournaments. The prediction markets hub and the corresponding contracts will initially be available in the U.S. through Kalshi, an exchange regulated by the Commodity Futures Trading Commission.

dLocal’s 13.7% surge helped push platforms, as a group, higher. A new partnership between dLocal and Temu is focused on 14 emerging markets in Africa, Asia and Latin America, expanding localized payment solutions for Temu customers.

Futu shares gained 1.5%. The stock rose on results that showed a huge leap in sales, surging more than 86% year over year (YoY) to $570.6 million in revenue, as the firm’s 25 million global users tallied at the end of the year were up 16%. Total client assets were up 53% to $95.7 billion. The quarter’s trading volume, at $371.5 billion, was an all time high, and trading volumes for U.S. stocks surged by 195% YoY to peak of over $267 billion.

OneConnect’s stock gathered 3.5%. The company’s fourth-quarter results detailed that revenues from Ping An and Lufax were 44.6% lower to RMB 190.8 million (about $26.3 million); revenues from third-party customers slipped by 19% to RMB 224.4 million (about $30.6 million). Within the digital banking segment, sales were 62.7% lower to RMB 92.2 million (about $12.7 million).

BNPL Names Gain Ground

Affirm’s stock was 2.3% higher through the past few sessions.

As reported this week, the buy now, pay later (BNPL) provider says it plans to begin furnishing information about all of its payment plans to Experian as of April 1. This move will expand Affirm’s credit reporting to Experian to include its pay-over-time products, in addition to the monthly installments of longer-term loans that are already reported to Experian. The activity reported will include biweekly payment plans, Pay in 30 (single installment), Pay-in-2 and Pay-in-6 offerings.

Separately, payments platform Adyen and Affirm have extended their partnership into the U.K. Under the expanded collaboration, Adyen’s merchant customers in the U.K. can now integrate Affirm’s installment payment services directly into their checkout systems.

Also within the BNPL space, and as noted by PYMNTS earlier in the month, Sezzle added new shopping features to its platform. The new features include Sezzle On-Demand, created in response to what the company says was a strong demand for a non-subscription version of its subscription product. Shoppers can create a single-use virtual card for a set amount, allowing them to split payments “without being limited to partnered merchants,” Sezzle said. Moreover, the platform includes personalized recommendations and instant price drop alerts. The company has also introduced an “auto couponing” feature. Sezzle’s shares added 6.7%.

Flywire’s stock was up a scant 0.2%.

In an announcement, Haman Group, an inbound tour operator in Scandinavia, said that it had selected Flywire as its exclusive international payments partner for Authentic Scandinavia and Authentic Europe, two of the Haman Group’s travel brands. The joint efforts will see Flywire into the company’s booking system for efficient payment processing and reconciliation. Payment reminders are sent automatically, and all payment processes are digitized, according to the release.

SoFi’s 11% leap came as hotel rewards program Wyndham Rewards partnered with Galileo Financial Technologies, SoFi’s technology platform, to launch a debit card that features rewards as cardholders accrue points for purchases that include everyday spending.

The companies said the points can be redeemed for a wide range of rewards, and cardholders are also eligible for perks like complimentary Wyndham Rewards Gold level membership, hotel booking discounts and an annual point bonus. The Wyndham Rewards Debit Card is powered by Galileo Financial Technologies, issued by Sunrise Banks N.A. and backed by Mastercard as the payments network, the firms said.

Janover’s fourth-quarter results detailed a 488% YoY increase in Software as a Service subscription revenue, boosting overall consolidated top line to $629,000. Platform fees gathered 39% to about $440,000. Janover’s shares declined 7.4%.

Open Lending’s shares plummeted 27.8%, having postponed its fourth-quarter earnings results, while it works to finalize its financial statements, file its SEC documents and reschedule its results “as soon as practicable.” Sell-side firm Jefferies downgraded the stock from buy to hold, and cut its price target to $3.70 from $8, citing “operational uncertainty.”

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The FinTech IPO Index fared no better through the past five days, sinking 4.8%, and there were few positive returns to be seen among the downdraft.

Macro concerns — particularly on tariffs and the as-yet-untold impact of a trade war — ruled the week. Financial sector names were among the hardest hit, particularly those with a presence in crypto markets, and Robinhood’s shares were more than 19.5% lower.

nCino shares slipped 8.6%.

The company said this past week that Československá obchodní banka, which operates as a subsidiary of KBC Bank NV, has chosen the nCino Platform to digitize and streamline its Commercial and SME Lending operations. The pact broadens nCino’s reach into more than 10 European countries.

Payments-related names were lower, too, as investors weighed recent inflation data and cautious comments were issued on consumer spending from the likes of Kohl’s and the airlines.

BNPL Names Slip

The buy now, pay later (BNPL) names we track as part of the FinTech IPO Index were no exception, though news surrounding those companies were tied to partnerships and new features. As reported by PYMNTS, Affirm has teamed with resale marketplace StockX. Through the joint efforts, eligible StockX shoppers in the U.S. can access Affirm’s payment plans when purchasing products from brands such as Adidas, Supreme and Gucci.

Affirm shares gave up 10.9%.

Also within the BNPL space, Sezzle shares sank 3.8%, in a week that saw the company announce that it had added improved shopping features to its platform. Among the new offerings is Sezzle On-Demand, created in response to what the company said was a strong demand for a non-subscription version of its subscription product. This new product lets shoppers create a single-use virtual card for a set amount, allowing them to split payments. Other features include personalized recommendations and instant price drop alerts.

Among the platform names in our pantheon, Marqeta said that it has become the issuer processor for Spendesk Financial Services (SFS) in Europe. SFS will integrate Marqeta’s card processing services into its core banking platform, giving customers both physical and virtual cards. The announcement also detailed that Spendesk’s B2B spend management with controls that let businesses screen and approve expenses in real time. Marqeta shares dipped 1.4%.

In SoFi-related news, where the stock lost 8.5% on the week, the company has finalized an agreement with Blue Owl Capital worth at least $5 billion. SoFi will expand its loan platform business, which refers pre-qualified borrowers to loan origination partners and originates loans on behalf of third parties as part of a two-year deal. The news comes on top of an announcement earlier this year that it had closed a $697.6 million secularization of loan platform business volume.

Hippo Insurance reported fourth-quarter results that detailed revenues surging 58% to $102 million, and insurance as a service growth was 22%. The company’s gross loss ratios improved year on year to 50%; the company’s stock lost 10.9%.

Paymentus was one of the few firms to wind up in the green this past week, as shares gathered 12.5%. Company materials detailed that in the fourth quarter, consolidated revenues were 41.9% higher, to $257.9 million. Transactions grew by 33% as management pointed to onboarding of larger clients, and guidance for the current quarter implies top-line growth of around 33% at the midpoint.

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So: It wasn’t all about tariffs this past week.

Earnings Continue to Roll In

In its latest quarterly report, Opendoor Technologies noted that in the fourth quarter, the firm delivered $1.1 billion of revenue, up 25% versus the same quarter last year, representing 2,822 homes sold. On the acquisition side, the company purchased 2,951 homes in the fourth quarter, versus 3,683 homes in the fourth quarter of 2023. The company posted guidelines for Q1 2025 of $1 billion to $1.075 billion. Opendoor shares sank 17.5%.

Blend Labs saw its shares slip 12.9%. At the end of last week, the company’s fourth-quarter results showed $41.4 million in consolidated top lines were up by $5.3 million, or 15% from the same period last year, as Blend Platform segment revenue of $30.1 million and Title segment revenue of $11.3 million were driven by a 6% increase in Mortgage Suite revenue, to $18.2 million. The company also logged a 48% increase in Consumer Banking Suite revenue, to $9.5 million, and 10% increase in Professional services revenue, to $2.5 million.

dLocal’s shares lost a staggering 32.7% on the heels of its earnings report, where the firm expects total payments volume (TPV) growth of 35% to 45% in the current year, and revenue growth of 25% to 35%. That guidance comes after the firm reported that TPV in the fourth quarter reached a record 51% year over year to $7.7 billion, adding 51%. Revenues in the quarter came to $204.5 million, up 9% year over year. Cross-border TPV increased by 67% year over year and 23% quarter over quarter to $3.7 billion. Cross-border volume accounted for 48% of the TPV in the fourth quarter of 2024.

Riskified grabbed its share of attention this week, as the firm has been rumored to be exploring a sale, and as it posted its fourth-quarter earnings detailing a 12% rise in gross merchandise volumes to $39 billion, and revenues that gained 11% to $93.5 million. The company’s stock was 4.7% lower.

In other (possible) acquisition activity, OneConnect Financial Technology shares soared by more than 46%, as the company said this past week that its controlling shareholder, Ping An Group, has made a bid to take the company private in a deal that would offer a 72% premium over OneConnect’s closing price at the end of last month.

SoFi’s Securitization

Elsewhere, as PYMNTS reported this week, SoFi closed a $697.6 million secularization of loan platform business volume, billed as a “co-contributor securitization” with collateral made up chiefly of loans previously placed with loan platform business partners.

SoFi shares gave up 11.5%, as the announcement marks the first securitization of new collateral in SoFi’s Consumer Loan Program since 2021 and the first using collateral originated in the loan platform business.

nCino said this week that San ju SanBank, a regional Japanese bank, will implement the nCino Mortgage Solution. By implementing the nCino Platform for mortgage operations, San ju San Bank will replace manual tasks with digital, paperless processes leading to more efficient workflows. Through the past week, nCino shares slipped 2.7%.

Marqeta said that its customers and their users can now make cash deposits at Green Dot’s network of more than 95,000 locations across the U.S. The joint efforts are part of a new partnership between the two firms, where the partnership will facilitate Marqeta’s cash load offering, according to the announcement at the end of last month. The shares declined 4.5%.

And in other partnership news, BNPL provider Affirm, which saw its stock give up 14.7%, said that it started a partnership with online personal styling service Stitch Fix. Under the terms of the agreement, Stitch Fix clients who want to use the pay later method can choose Affirm at checkout and go through an eligibility check. If approved, these customers can choose a monthly payment plan that suits their own needs.

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New data from S&P Global Market Intelligence released Monday (March 3) showed that the sector attracted $21.5 billion in venture capital (VC) investment last year, the lowest level of funding since 2016.

Several factors fueled the decline, including a drop in FinTech valuation and slowing growth rates, including in terms of factors like headcount, the report said. It has led many VC investors to turn their focus to companies in generative AI.

“With AI ‘revolutionizing’ multiple industries, venture capital is flowing where the next big breakthrough is expected,” John Clark, partner with FinTech-centric investment bank Royal Park Partners, said in the report.

The 30 FinTechs that drew last year’s largest funding rounds also saw their headcounts stagnate in late 2022 and early 2023, per the report. When growth resumed in the middle of 2023, the median year-over-year growth rate continued to fall, dropping from 82% in December 2021 to 10% three years later.

“Young companies are under pressure to demonstrate leaner operating costs and a clear path to profitability,” Sophia Furber, a FinTech analyst at 451 Research, a technology research group that is part of Market Intelligence, said in the report.

Late last year, HSBC Innovation Banking found that VC funding in the United States had moved to AI firms at an “unprecedented” rate, with the scale of investment in those companies approaching that allocated to the rest of the venture market.

According to HSBC, 42% of U.S. venture capital was invested in AI companies in 2024, up from 36% in 2023 and 22% in 2022, with 20 AI companies having each raised at least $2 billion.

“Venture capital has always gravitated toward transformative industries, but the level of consolidation we’re seeing within one category is unprecedented,” HSBC U.S. Innovation Banking Head Dave Sabow said at the time.

Meanwhile, Will Artingstall, head of digital asset payments and eCommerce services at Citi Services, told PYMNTS in an interview posted last week about the challenges facing FinTechs.

“It’s not just the old nature of FinTechs competing with FinTechs,” he said. “What you’re often now starting to see is neobanks entering the space. You’re seeing banks themselves offering more digital services.”

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That’s true for FinTech and financial services, where executives are finding themselves striving to keep pace with technological advancements while also facing intensifying demands for transparency and solvency.

The convergence of these challenges, navigating the dual pressures of innovation and regulatory scrutiny, is reshaping the very definition of what it means to be a FinTech or financial services company.

“The competitive landscape has shifted pretty dramatically in the last couple of years,” Will Artingstall, head of digital asset payments and eCommerce services at Citi Services, told PYMNTS during a discussion for the series “What’s Next In Payments: What Does It Mean to Be a FinTech in 2025?”

“It’s not just the old nature of FinTechs competing with FinTechs,” Artingstall said. “What you’re often now starting to see is neobanks entering the space. You’re seeing banks themselves offering more digital services.”

The crowded market is driving FinTechs to refine their value propositions, focusing on cost, speed and transparency, three pillars that Artingstall said are essential for differentiation.

“The ability to drive differentiation and operate and drive a value proposition that attracts consumers is a unique thing for every single FinTech that’s out there,” he said.

Scaling Smartly in a Saturated Market

Artificial intelligence (AI) is a transformative force in many industries, and FinTech is no exception. Artingstall described Citi’s approach to integrating AI, saying it’s not a “side project” but a core part of the company’s strategy.

AI’s potential in the FinTech sector spans compliance, automation and enhanced customer experiences. By automating routine processes and improving compliance mechanisms, FinTechs can streamline operations and reduce costs.

However, Artingstall cautioned against seeing AI as a silver bullet, comparing it to the earlier hype around robotic process automation.

“If you have a bad process, RPA doesn’t fix a bad process,” he said. “You still need to have a good fundamental process.

“We are making AI technology available to our colleagues in a thoughtful and measured way that allows us to assess the impacts and the benefits in real time of it,” he added.

For FinTechs, achieving scale remains a critical goal, particularly in a market with thousands of competitors. For Citi, collaborating with FinTech partners on solutions like Citi® Payments Express — a scalable, cloud-enabled commerce solution — has been central to fostering growth and driving efficiency.

“We’ve invested across the board in cross-border payments, domestic payments, and much of our banking-as-a-service capabilities to help support that scale-based activity,” Artingstall said, adding that the Citi Payments Express platform, operational in over 18 markets, reflects Citi’s commitment to meeting the demands of digital commerce.

Navigating Demographics, Regulations

While FinTechs have traditionally attracted millennials and Generation Z consumers, the appeal of app-based financial services is growing among older demographics as well, challenging companies to cater to a broader, more diverse audience while maintaining a competitive edge.

“There’s a big drive toward app-based transacting and app-based usage,” Artingstall said. “Most folks are going to tend to be multi-app driven … multi-platform usage is the way consumers view the world.”

“Mobile apps are also making it quite easy to select more than one provider, compare them in real time, then flip over into which one you would like,” he added.

As FinTechs innovate, they must also navigate a complex and evolving regulatory environment. This balancing act is particularly crucial as major regulatory changes loom in both the United States and Europe. FinTechs should adopt a proactive approach to compliance by understanding regulatory priorities, particularly around financial crime and financial inclusion, Artingstall said.

“In the past year, I think we’ve seen a huge amount of increased scrutiny around fin crime from regulators,” he said. “There’s been several regulatory actions that are targeting mitigating activities like KYC [know your customer] and AML [anti-money laundering] practices within financial companies.”

The upcoming transition from PSD2 to PSD3 and PSR1 in Europe is also a focus for FinTechs. These changes will likely introduce stricter standards and reduce exemptions, increasing the compliance burden on companies operating in the space. The challenge is not limited to Europe; in the U.S., the inconsistency between state and federal regulations adds another layer of complexity.

“There’s definitely a push that we’re seeing from multiple different bodies that are thinking about how to help support a more consistent approach when they’re thinking about the regulation within the U.S.,” Artingstall said.

Partnerships Drive Success

Looking ahead, partnerships between banks and FinTechs will likely play a role in the industry’s evolution, Artingstall said. Citi itself has adopted a co-creation model, working closely with FinTechs and other partners to develop tailored solutions. The focus on co-creating products ensures that solutions are not only market-ready but also closely aligned with client needs.

“We found significant success in that space,” he said. “Not only do we tend to find the deals are a little bit stickier, but they’re also a little bit larger in size and scale really well.”

As FinTechs continue to adapt to a rapidly changing market, their success will hinge on the ability to deliver cost, speed and transparency while balancing innovation with compliance, scaling effectively and delivering differentiated value.

“Overall, in our minds, it’s absolutely clear that those differentiators are the things to look for,” Artingstall said.

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