After a few choppy years, 2025 has the makings of a year of progress, bringing with it increased deal activity, regulatory clarity and technological innovation.Having survived the pandemic and interest rate shocks many investors who had been sitting on the sidelines are chomping at the bit to get back in action. Crypto is back in another bull market, which appears to still be in its early innings. The market feels
happier, perhaps due to a combination of lower interest rates and post-Trump euphoria. The air feels lighter, deal-making is nigh. There is a palpable feeling that good times are about to roll.On the regulatory front, MiCA has been fully implemented in Europe after a long transitional period. In the US, all expectations are for increased regulatory certainty for the cryptocurrency industry, with a much friendlier SEC and other regulatory bodies,
chivvied on by a welcoming Trump administration.On the technological front advances in AI and greater embedding and utilisation of blockchain technologies bring the potential for increased efficiencies and novel use cases in the world of fintech.Dear reader, here are my five key predictions for the fintech sector in 2025. From markets to surges in funding and M&A activity, to continued boom and bust cycles for crypto and the rise of AI and embedded finance, these trends will shape the future of
financial services. Let’s dive in.1. Fintech M&A SurgesLast year I predicted that we would see an uptick in fintech mergers and acquisitions (M&A) particularly towards the second half of the year. I was right, but this was coming off a depressed baseline in 2023 and overall the year was still a relatively muted
one for deal making. I predict that 2025 will see a significant wave of M&A activity. This will be driven in part by the continued cleanout of pandemic related overfunding. Many companies that experienced rapid growth during the digital finance boom are now struggling to sustain
their momentum, creating opportunities for distressed acquisitions. Strategic acquisitions, particularly in payments, cybersecurity, and lending, will also dominate headlines.Private equity sponsors will also play a major role. Many sponsors have been sitting on the sidelines waiting for a rebalancing of seller pricing expectations and more favourable financing conditions. Both appear to be materialising in 2025 and we can expect
savvy sponsors to leverage their capital reserves to acquire and consolidate undervalued fintech assets. While M&A activity will reshape the competitive landscape, it will also foster innovation and pave the way for more integrated, user-friendly solutions.2. Financing for fintech reboundsAfter weathering a challenging period of reduced venture capital activity, 2025 promises a rebound for fintech funding. However, while purse strings might be looser, the focus has shifted to sustainable, profitable business models.
