Future of Fintech Report – ai video

Today, the sector is defined by disciplined efficiency and a shift toward structural transformation.

Following the market reset in 2022, the best fintechs have money in the bank. Companies overhauled their strategy to prioritize efficiency.

• Profitability is up: The median EBITDA margin for a cohort of formerly VC-backed public companies moved from negative 5% in Q1 2021 to positive 4% in Q1 2025.
• Net Margin Improvement: The percentage of fintech companies with positive net margins has risen from 8% at the end of 2022 to 22% today.
• Cash Burn Control: Fintechs have consistently cut their cash burn every quarter since mid-2023.

This efficiency comes with a trade-off: revenue growth, while stabilized, is slower than the “go-go years” of 2020–2021.

VC: Higher Hurdles and Crypto Dominance

Fintech VC funding has normalized, now trending in line with the long-term trend since 2018, as if the Web3 hype cycle didn’t happen.

• Loss of Premium: Fintech has lost its valuation premium compared to overall VC, which is partly attributed to the sober approach to fintech investing and the skyrocketing valuations of AI companies in other sectors.
• Higher Expectations: Investors now demand more. The revenue bar for a Series A round has jumped from $1 million to $4 million. Companies are taking roughly 10 months longer between funding series to meet these higher benchmarks.
• The Crypto Edge: Crypto-focused funds represent two-thirds of all fintech funds. These funds are overperforming, with a 30% top quartile Internal Rate of Return (IRR), surpassing the 22% IRR for all VC funds. Stablecoins, in particular, are rapidly emerging as potential replacements for conventional payment rails.

Exit Velocity is Heating Up

M&A activity and IPO filings are signaling strong exit momentum.

• Record M&A: M&A deals are pacing toward an all-time high of over 200 announced deals in 2025, set to surpass the 2021–2022 frenzy. A notable trend is that nearly half of all fintech M&A is executed by current VC-backed companies engaging in “roll-up” acquisitions to diversify and consolidate.
• IPO Window Reopens: The public exit window is wide open in 2025, driven by successful offerings like Circle and Klarna. The pressure is mounting for private companies to go public, aiming to unlock the $690 billion worth of value locked in private fintech unicorns—three times more value than has ever gone public.

In summary, the sector is focusing on sustainable fundamentals, leveraging digital assets for future infrastructure, and executing strategic consolidation. Find the explanatory video below!

source : https://www.svb.com/globalassets/trendsandinsights/reports/future-of-fintech-report-2025.pdf