📝 FinTech's 1st Quarter 2025 in Review
Recap to the start of the year for the financial services industry -- 'FinTech Spring', market turbulence, expansion from established fintechs, funding's slow comeback, and regulatory movements.
👋 Hey everyone,
It’s been a while since our last edition (~ 2 months), but we’re back with a Q1 recap!
📅 From Mid-March thru April we were slammed with new project exploration from founders and product leaders looking to expand their platform with FinTech.
Despite market & economic turbulence, there was a common theme of industry optimism surrounding embedded finance, B2B use cases, stablecoin adoption, and artificial intelligence (AI) improving product. 📚 Excited to share more in playbooks & frameworks coming this summer!
Back to our weekly focus — > the 1st Qtr. 2025 was anything but calm in FinTech.
💰 From major funding rounds and shaky markets to regulatory movements and tech advances, the start of 2025 highlighted both resilience & rapid innovation across the industry.
For financial services leaders, startup teams, product owners, and investors — the developments over the past months are shaping what’s to come in the rest of the year.
Let’s jump into our review below ⬇️,
William M. (Founder, Dir. @FinTechtris)
Top Industry Themes: Jan. – Mar. 2025
Q1 2025 brought a wave of dynamic news, reflecting growing complexity in the fintech landscape.
Artificial intelligence (AI) is penetrating nearly every aspect of financial services — from underwriting and customer support to risk management and investment tools. JPMorgan Chase revealed a new generative AI product designed for wealth advisors (Coach AI), while a handful of startups like KlarityAI and CredoAI gained traction with enterprise-grade AI governance solutions.
Embedded finance continues to evolve, but not without its growing pains. Multiple vertical SaaS providers began exploring embedded financial products (especially in lending & banking) as a way to expand revenue. However, some companies have started pulling back due to increased operational complexity and regulatory ambiguity.
Established fintech giants continue to see growth & expansion: Plaid’s $300M+ in revenue and renewed product roadmap (briefly) revitalized speculation of an IPO in 2025. Other major players, like Stripe and Brex, made headlines with international expansion efforts. As market volatility increased in late Q1, more strategic shifts are expected in Q2 — some firms already decided to hold off on going public.
Lastly, macroeconomic factors such as inflation, interest rates, and tariff uncertainty in U.S. trade relations has had a vital impact on fintechs with international supply chain and/or customers.
The AI Momentum in Financial Services
Artificial Intelligence continues to redefine what’s possible across financial services. No longer a buzzword in the industry — AI is gaining traction with new launches, compliance announcements, and funding.
During Q1 2025, various banks and a growing group of fintechs made announcements of new AI capabilities. Citigroup launched a proprietary large language model for transaction monitoring. Revolut released an AI chatbot to improve user experience and reduce support costs.
AI in compliance continues to be on the rise as RegTech firms beef up product performance. Companies like Alloy and Hummingbird expanded their platforms with automation of fraud detection and user onboarding.
For regulators, concerns surrounding ethical AI and data privacy created new guidance in the EU (and proposed legislation in the U.S) that will impact how financial institutions leverage machine learning.
Venture capital (VC) interest in AI fintechs remains constant with firms (such as a16z & Sequoia) placing numerous bets in startups improving credit scoring, document verification, and custom financial advice.
As 2025 rolls on, the AI in FinTech discussion will shift to foundational layers, oversight, and controls needed to achieve scale & address regulatory concerns.
Regulatory Pulse: What’s Coming Next
Coming out of 2024, regulators around the world have had FinTech squarely in view.
In the U.S., the OCC and FDIC issued joint guidance (July 2024) on the responsibilities of sponsor banks when partnering with fintechs — a response to issues with Synapse (and middleware providers shutting down).
The European Union advanced its Digital Operational Resilience Act (DORA), which is expected to directly impact neobanks and API-first fintechs operating across EU member states. Firms with insufficient incident response protocols or inadequate cloud oversight could face heavy penalties.
Meanwhile, the U.K.'s Financial Conduct Authority (FCA) opened a consultation on embedded finance disclosures, suggesting the sector is reaching a new stage of maturity.
Another major regulatory storyline was the increased tension between centralized finance (CeFi) and decentralized finance (DeFi). As crypto markets rebounded in early 2025, questions around stablecoin reserves, consumer protections, and tokenized assets re-entered the spotlight.
In response, fintechs are investing more in legal, compliance, and risk talent — with some even restructuring operations to fit within evolving frameworks. Greater clarity (and greater enforcement) anticipated in the remainder of 2025.
Funding Rounds, IPO Watch, and M&A Moves
Despite market volatility in 2023 and early 2024, fintech funding showed surprising resilience during Q1 2025.
Plaid's impressive revenue figures and product diversification brought back IPO speculation (briefly). Similarly, Chime was revisiting public market ambitions after improving profitability & renewing bank partnerships.
Gusto’s recent fundraise doubles down on embedded finance offerings for payroll. The company’s new embedded lending partnership is gaining attention as it competes against legacy B2B lenders.
On the M&A front, Stripe acquired Bridge to expand its platform into stablecoin infrastructure.
Private valuations for late-stage companies appear to be stabilizing, especially for those in core infrastructure, compliance, and AI-powered services.
However, early-stage fintech startups continue to face pressure to show monetization and a path to profitability.
What’s Next?
With the first four months of the year behind us, the fintech industry appears poised for more consolidation, accelerated AI adoption, and deeper regulatory engagement.
While uncertainty still looms—from global trade tensions to macroeconomic unknowns—the first months of 2025 make one thing clear: fintech continues to evolve at a rapid rate.
For product leaders, founders, and operators, this means rethinking how you build, scale, and partner.
For banks and investors, it’s a reminder that tech-driven financial services are no longer a niche—they are a core necessity.
‘FinTech Feed’ Recommended Reads
Stay sharp with curated reads that our team found insightful this quarter:
“Learnings from a FinTech Platform Shutdown” — FinTechTris
“Fintech Firm Plaid Raises $575M at …..” — Bloomberg
“Vertical SaaS vs. Horizontal Saas in Embedded Finance” — FinTechTris
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