The adage is that in life, the only certainty is uncertainty, and in business, there’s a simple rule for survival: Evolve or die.
What worked when a fledgling firm came to market may not work once that firm gains scale or the competitive field grows more crowded.
The term “FinTech” has long been a catchall designation, a category of financial services players promising innovation within various corners of the industry that — depending on where you look — are centuries old.
Speed was everything at the beginning of the FinTech era. FinTechs moved fast, collected customers, and jockeyed with banks for the same individuals and households. They promised a digital experience that would surpass anything banks would offer, or in other cases, brought digital services to the banks themselves.
However, external events have forced digital startups to take stock of what they do, what they’ve done and what must come next.
The PYMNTS series “What’s Next in Payments: What Does It Mean to Be a FinTech 2025” explored this evolution. What FinTechs look like today and what they looked like a decade ago are markedly different. Many FinTechs now occupy more specialized niches, emphasizing tangible impacts and measurable outcomes. The eight entries in our series offered points of view on the shifting challenges and opportunities that demand new ways of thinking — spanning everything from financial performance (and what matters now) to the nebulous regulatory environment to the collaborations benefitting all players.
The 2025 FinTech Blueprint
FinTechs need to focus on cost, speed and transparency to differentiate themselves in a crowded market.
Will Artingstall, head of digital asset payments and eCommerce services at Citi Services, discussed the dramatic shift in the competitive landscape, with neobanks and traditional banks offering more digital services.
Artificial intelligence is a transformative force, he said, but he cautioned against viewing it as a silver bullet, stressing the importance of having sound fundamental processes. FinTechs must understand regulatory priorities, particularly concerning financial crime and inclusion. Partnerships between banks and FinTechs will be crucial to innovation.
“The ability to drive differentiation and operate and drive a value proposition that attracts consumers is a unique thing for every single FinTech out there,” he said, adding, “There’s a big drive toward app-based transacting and app-based usage. Most folks are going to tend to be multi-app driven … multi-platform usage is the way consumers view the world.”
The convergence of legacy financial institutions and FinTechs is reshaping market dynamics.
David Durovy, senior vice president of transformation at i2c, said traditional players are increasingly adopting cloud-native capabilities and API interoperability. However, legacy architectural constraints can limit the extent of these enhancements.
Consumers are more focused on financial security than ever before. Because of this, FinTechs must rethink customer engagement and address concerns about cyber threats and financial risks, he said.
“We need to speak with our customers and our clients in different ways,” he said. “We need to think about the customer journey potentially in a different way.”
Scaling — and doing so effectively — requires a nuanced approach and strategic foresight in technology adoption. Regulatory compliance and partnerships help determine FinTechs’ success, he said.
Compliance, Regulatory Shifts and Financial Health
Regulatory compliance has fundamentally reshaped the FinTech landscape. Still, with changes on Capitol Hill and in the White House, as well as the changing compositions of the regulatory agencies themselves, the situation is fluid.
FinTechs must establish robust risk management frameworks and align compliance strategies with evolving regulations, executives told PYMNTS. There are some undeniable truths, however. There’s increased scrutiny around financial crime, with regulators focusing on know your customer (KYC) and anti-money laundering (AML) practices. Navigating the transition from PSD2 to PSD3 and PSR1 in Europe will likely introduce stricter standards, increasing the compliance burden for companies in the space.
Splitit CEO Nandan Sheth said regulatory relaxation may pave the way for new partnerships between financial institutions and FinTechs. Key expectations for FinTechs include simplification, personalization and the ability to manage multiple relationships in one place.
Technology in the new regulatory environment needs a “lean framework,” he said, advocating for a staged approach to changes. AI and machine learning will optimize the value proposition of FinTechs, enabling more powerful personalization.
A measured approach is critical, however.
“Unless you ‘stage’ potential changes, you could be blindsided — and by the time you start doing the work that you needed to do, it’ll be too late” to seize on new opportunities, he said.
Focusing on the financial health of FinTechs, Jon Gaskell, senior vice president of strategic partnerships at Ingo Payments, said FinTechs must strengthen their balance sheets. The emphasis has shifted away from prioritizing growth.
FinTechs need to have their regulatory compliance in order, he said. Banks are now more closely scrutinizing FinTechs seeking partnerships, focusing on their ability to generate revenue while remaining compliant.
“Security has to ‘top’ growth,” he said.
AI, Personalization and Data Quality in the FinTech Sector
AI and machine learning are essential for the FinTech value proposition, enabling enhanced personalization and security. However, it’s crucial to maintain good fundamental processes. Data quality and verification are also paramount.
Maverick Payments Chief Operating Officer Ben Griefer said platforms are expanding beyond their core offerings into financial services, adding there has been a “tremendous amount” of regulatory scrutiny of relationships between sponsor banks and FinTech platforms, with a focus on compliance and KYC.
AI is proving valuable in transaction modeling and onboarding processes, he said. Users expect onboarding to be frictionless across multiple devices.
“AI is going to be crucial as we move into faster payments,” he said.
Plus, partnerships can help FinTechs achieve scale.
“Years ago, you’d see third-party platforms and companies ‘staying in their lane’ to focus on their core offerings,” he said. “Now, we’re seeing them getting into embedded finance and lending — and even banking as a service and monetizing payments.”
As for the capital environment, Chris Corse, principal of Emerging Partnerships at Velera, said FinTechs are re-evaluating their business models amid industry-wide pressures. Equity funding and dealmaking have been muted, with a refocus on profitability.
Traditional financial institutions have trust, and partnerships with FinTechs can deliver innovation and reach younger generations, he said. Transparency is key for compliance, and partnerships are the best route to FinTech profitability. A strong user experience also helps.
The key is to attract the business and the loyalty of younger generations through user-friendly apps and the ability to open accounts seamlessly, he said.
Partnerships, Data and Regulatory Uncertainty
Partnerships between banks and FinTechs are increasingly important for driving innovation and achieving scale. Co-creation models ensure that solutions are market-ready and aligned with client needs. FinTechs must adapt to evolving stakeholder expectations and ensure flexibility in their solutions. Navigating regulatory complexities and offering differentiated value will be key to long-term success.
Markaaz founder and CEO Hany Fam said the era of a generic approach to FinTechs is over, and specialization is now the way forward.
Data quality and verification are critical, and outsourcing data management is a value-added service, he said. Utility fosters trust, which must be earned and re-earned daily. AI plays a role in data collection and synthesis.
“The need for verification services and the need for accurate data about businesses has exploded,” he said.
ValidiFI CEO John Gordon said in an uncertain regulatory climate, FinTechs need to maintain a “business as usual” mindset.
Consumers expect a reasonable and enjoyable process in exchange for their data, he said. Account validation is a driving force behind improving customer experience and preventing fraud.
“Ultimately, what it means to be a FinTech is now we are left to decide how we structure our businesses to best account for what may be … as murky of a compliance framework, regulatory scenario as we’ve ever seen,” he said.
“Regulation is not going away, not by any stretch of the imagination,” he added. “But some of the scenarios that were a little more ‘heavy-handed’ are going away in the near term — and there’s going to be some more time to comply.”
