5 Key Fintech Trends for 2025: Navigating Funding Shifts, Wallet Race, and Economic Changes

2024 was a challenging year for fintech startups, as VC funding dropped to its lowest point in years. Investors have become more selective, backing only companies with a clear path to revenue. At the same time, growing regulatory pressure drives up legal and compliance costs, adding more strain to already tight budgets.

On the positive side, the macroeconomic conditions are stabilizing, especially in the Eurozone, where improved consumer sentiment is fueling growth in BNPL and lending solutions. Meanwhile, wallet integrations and strategic partnerships take a centre stage in the race for new consumers.

In this article, we break down the key fintech trends shaping 2025 to help you navigate what’s next and stay ahead of the curve.

Trend 1: Fintechs Must Bridge Growing Talent Gap as VC Funding Shrinks

In 2024 the fintech sector continues to feel the effects of a sharp decline in VC funding. By the end of 2023, global fintech VC investment had dropped by 74% compared to early 2022, with the number of funding rounds falling by 69%.

While investors are still injecting over $7 billion into fintech startups each quarter, the focus has shifted. Funding is now directed primarily toward companies with proven scalability and resilience—those that can navigate economic uncertainty and deliver clear, sustainable returns.
North America maintained its position as the primary hub for fintech investment, attracting $10.4 billion. Investments in the EMEA (Europe, Middle East, and Africa) region totaled $9 billion, while the Asia-Pacific region received $6 billion in fintech funding.

Comparing 2024 rounds with 2023, North America (-39% YoY) and Asia Pacific (-30% YoY) experience the harshest turmoil.

EMEA managed to reverse the trend with +11% YoY growth, even as deals dropped by 25%. LATAM stood out, with +124% YoY funding growth, despite the 24% drop in total transactions.

Surprisingly, fintech job market is booming

Software engineering job openings in the UK rebounded strongly in 2024, increasing by 66.1% after a sharp decline in 2023. This indicates a rising demand to integrate AI capabilities into existing products. Job openings have grown significantly, while median salaries increased modestly by 6.25% year-on-year to £85,000.

As demand for tech talent grows amid tougher fintech funding conditions, companies must shift resources from other areas to fill the talent gap or accelerate AI integration using existing teams.

2025 Outlook: identifying resource-effective ways to build tech talent

In 2025, fintech startups must continue to develop and scale AI-driven solutions while facing a shortage of skilled talent and reduced funding. They face two strategic options:

Option A: Actively recruit top AI talent while upskilling existing engineers and using AI software development tools to boost efficiency.

For companies without prior AI experience, hiring top talent can bring essential vision and practical expertise for successful AI integration. These experts can quickly guide internal teams through AI projects. However, securing experienced AI specialists is highly competitive and challenging, while training existing employees requires considerable time, potentially delaying AI implementation.

Read next: Using AI in software development: How to accelerate CI/CD pipeline by 55%

Option B: Hire external vendors who provide robust, ready-to-deploy AI infrastructure.

This strategy offers faster deployment, predictable costs, and reduced internal workload. Outsourcing partners can efficiently handle AI setup, help determine and build a roadmap for your AI use cases, and quickly deploy end-to-end AI solutions.

This approach eliminates the difficulty of competing for scarce AI talent and assembling a dedicated internal team. However, companies must accept trade-offs such as vendor dependency.

Read next: Nearshore Software Development: How to Achieve 5x Cost Savings and Accelerate Project Delivery

Trend 2: Fintech Funding Shifts from High Risk, High Reward Profiles to Stable and Profitable Revenue Models

Shrinking VC funding prompts fintech companies to search for more stable partners such as private equity firms, hedge funds, and traditional financial institutions. Amid economic uncertainty, new investors prioritize a clear path to revenue, sustainability, and business models with tangible assets.

For example, Spanish Buy-Now-Pay-Later (BNPL) provider SeQura secured €410 million from Citi, M&G, and Chenavari, signaling strong investor appetite for asset-backed fintech models with clear paths to revenue.

Similarly, Splitero, a US fintech company allowing homeowners to get money for a share of their home’s future value, attracted $300 million led by private equity firm Antarctica Capital.

This indicates a broader industry transition—away from risk-intensive, rapid-growth ventures toward businesses demonstrating clear profitability, steady cash flows, and proven resilience to economic downturns. Fintech leaders must now align their strategies with investor expectations by showcasing robust risk management, predictable revenue generation, and capital efficiency.

2025 Outlook: prioritizing stable revenue models over hypergrowth

As fintechs face increased scrutiny from investors prioritizing stable returns, companies should proactively reshape their business strategies. Leaders need to emphasize profitability, operational efficiency, and tangible revenue generation to attract strategic funding.

Fintechs operating in capital-intensive sectors like lending and payments may benefit most, as they naturally align with the expectations of private equity and traditional financial institutions. Startups with speculative or growth-only models, such as many crypto and early-stage neobanks, may encounter greater fundraising challenges. To succeed, fintech companies should clearly demonstrate how they provide tangible value and stable financial returns during times of uncertainty.

Trend 3: Consumer Lending Bounces Back with AI and Economic Recovery

In 2025, Eurozone bank lending is expected to surge by 3.1% following several years of stagnation. As the economy rebounds and consumer confidence returns, strengthening growth and falling interest rates present promising opportunities for fintech platforms as consumer preferences shift toward digital lending solutions.

The consumer credit market is projected to grow by ~3% in 2025 (from 1.6% in 2024 to 4.5% in 2025), with fintech offerings such as BNPL (Buy Now Pay Later), point-of-sale financing, and salary advance platforms leading this resurgence.

Gen Z consumers are particularly influential in this shift, increasingly moving away from traditional credit cards toward interest-free payment alternatives and account-to-account (A2A) payments. Fintech companies are also expanding into sectors like automotive financing, offering installment plans that alleviate the need for traditional long-term car loans.

Fintech platforms provide appealing alternatives to traditional lenders, especially for younger consumers. For example, among Baby Boomers, captive lenders originated 42% of car loans. In contrast, for Gen Z borrowers, captive lenders accounted for only 30%, with 29% choosing credit unions, 24% opting for banks, and 9% selecting monoline lenders—highlighting the diversification of the automotive lending landscape.

2025 Outlook: Fintechs Must Prioritize Advanced Loan Origination and Management Infrastructure

With rising consumer credit demand anticipated in 2025, fintech companies must invest in upgrading loan origination and loan management platforms. Customers expect a seamless, swift, and frictionless experience, from initial application to approval.

Incorporating GenAI can help lenders quickly establish pre-screening criteria and process underwriting information efficiently. Additionally, a modular system architecture is essential, enabling rapid integration of third-party APIs to access and analyze diverse financial data sources for effective risk assessment and underwriting.

As more platforms integrate BNPL payment gateways, fintech companies must ensure their loan origination systems can easily integrate into e-commerce and retail platforms, delivering smooth, intuitive lending experiences.

Upgrading lending infrastructure to be compatible with multiple platforms and enabling plug-and-play integration with various data sources and technologies is crucial for fintechs to fully capitalize on emerging opportunities in the lending sector.

Trend 4: Real time cross border payments steadily moving to the center stage

Back in 2020, the G20 made improving cross-border payments a top priority, tasking the Financial Stability Board (FSB), Committee on Payments and Market Infrastructures (CPMI), and other regulatory bodies with building a roadmap for faster, more efficient global transactions.

By the end of 2024, those efforts paid off. According to an ACI Worldwide report, only 8 out of 81 countries reviewed still lacked a real-time payment system. While some countries—especially in Africa—are still in the early stages, most of the world is now moving toward real-time payment (RTP) as the new standard.

By the end of 2024, real-time payments accounted for 24% of all electronic transactions worldwide. Projections indicate that by 2028, this figure will rise to 27.1% of all electronic payments, translating to  575.1 billion transactions expected to happen that year.

2025 outlook: The growth of RTP increases the demand for stronger fraud prevention and better payment infrastructure.

The rapid growth of RTP has led to rising fraud concerns, with APP (Authorized Push Payment) fraud alone expected to reach $7 billion by 2026 across major markets.

Fraudsters exploit RTP’s speed and irrevocability through identity theft, phishing, and account takeovers, contributing to projected global fraud losses of $40 billion annually by 2027. To counter these threats, fintechs must deploy real-time, AI-driven fraud detection systems, transaction monitoring solutions, collaborate on fraud data sharing, and implement machine learning models to identify and block fraudulent transactions before settlement.

Interoperability remains a significant challenge in the evolving RTP landscape. In Europe, payment systems have primarily been developed with domestic users in mind, leading to fragmentation across countries. Each nation operates multiple RTP providers that were built independently, without cross-border compatibility. For example, Poland alone has three separate RTP systems—Express Elixir, BlueCash, and Blik. RTP solutions might function seamlessly for domestic transactions but can take days to process cross-border payments.

As RTP adoption grows, enhancing interoperability between international payment networks will be crucial. The ability to seamlessly integrate RTP systems across borders and embed them into digital platforms will be a key driver of global financial efficiency, ensuring faster, more seamless transactions for businesses and consumers alike.

Trend 5: The Digital Wallet Race Heats Up: Competing for Checkout Dominance

Digital wallets have rapidly become a dominant payment method, with consumers drawn to their convenience, security, and seamless integration with mobile ecosystems. The global value of digital wallet transactions is expected to grow 77% from $9 trillion in 2023 to $16 trillion in 2028, fueled by rising adoption in both online and in-store commerce.

In the UK, digital wallet usage in e-commerce is projected to increase from 38% in 2023 to 50% by 2027, while in-store transactions using wallets will nearly double from 14% to 29% in the same period.

Several factors are driving this surge:

• Frictionless checkout experiences: wallets eliminate the need for manual card entry, enabling one-click payments.
• Enhanced security features: tokenization and biometric authentication provide consumers with confidence in digital payments.
• Value-added services: loyalty programs and cryptocurrency integrations, are making wallets more than just a payment method—they're becoming all-in-one financial hubs.

2025 Outlook: Fintechs Must Enhance Wallet Capabilities to Stay Competitive

As wallets become more and more common, consumers expect more from new solutions to migrate from the traditional wallets like Apple Pay or Google Pay. Embedded wallet experiences that work effortlessly across online platforms, in-store transactions, and subscription services are the new direction for digital wallets.

Businesses integrating wallets into their checkouts must ensure compatibility across devices while optimizing transaction speed and user experience.

A new frontier in the wallet race is guest checkout, with players like Bolt, Skipify, Stripe Link, and Shop Pay competing to become merchants’ preferred guest payment solutions. The main differentiator of these solutions from traditional wallets is that they don’t require users to create accounts.

However, competition is fierce, as merchants usually integrate only one digital wallet. That’s why cloud wallet providers will actively pursue partnerships with PSPs and e-commerce platforms in 2025, similar to PayPal securing Adyen, Global Payments, and BigCommerce as distribution partners for Fastlane.

Regulatory developments will also shape the digital wallet ecosystem. For example, in the UK The Payment Systems Regulator (PSR) and Financial Conduct Authority (FCA) focus on fostering competition, ensuring innovation, and defining liability in payment disputes.

Wallet providers must balance compliance with maintaining frictionless transactions. Additionally, account-to-account (A2A) payments are gaining attention, but widespread adoption depends on improving consumer protections and expanding real-world use cases. Looking ahead, wallets that integrate A2A transactions, crypto payments, loyalty programs and partner with BNPL solutions will lead the next wave of financial innovation, providing users with greater flexibility and merchants with a competitive edge in the evolving payment landscape.

Stay Ahead of Fintech Trends with Vodworks

The rapid evolution of digital payments, real-time transactions, and AI-driven financial solutions presents both opportunities and challenges for fintechs. As digital wallets redefine the checkout experience, real-time payments transform cross-border transactions, and fintech funding shifts toward sustainable models, companies must embrace innovation while strengthening security and compliance.

To stay competitive in 2025, businesses must rethink their payment infrastructure and adopt a platform-first mindset. The ability to quickly integrate APIs and connect with other platforms will be a key differentiator for vendors. As competition intensifies, digital wallets will race to secure partnerships with payment gateways, while businesses will need robust fraud prevention strategies to navigate emerging risks.

At Vodworks, we closely track fintech trends to provide actionable insights and cutting-edge solutions for our readers and partners. Whether you're looking to build a fintech application, enhance fraud detection, or upgrade your payment infrastructure, our team can help. Get in touch to discuss your use case and explore how we can support your growth in 2025 and beyond.