The clouds that hung over the financial-technology industry in 2024 appear to be clearing as interest-rate cuts, recoveries infintechstocks and promises of a looser regulatory environment in the second Trump administrationpaint a more promising outlook for startups.After capturing a windfall of investment during the period that followed the Covid-19 pandemic, the fintech industry’s vast crop of startups across payments, lending, consumer banking and other categories faced a challenging adjustment period. As venture funding dried up, some fintechs cut their spending through layoffs and more-focused product strategies. Others with significant war chests held onto valuations that now appear to have been inflated during the frenzied funding period.These factors all combined to stall deal activity, slow growth and inspire laments of a “fintech winter.” For 2025, however, industry insiders are optimistic that the tide will turn and momentum will build around new technologies like stablecoins and that capital raising, acquisitions and public listings will begin to pick up. Here are three fintech themes to watch in 2025:Relaxed regulationThe bankruptcy of banking-as-a-service startup Synapse Financial Technologies left thousands of fintech customers without access to funds held in accounts that were, in some cases, advertised as protected by the Federal Deposit Insurance Corp. The debacle has put partnerships between banks and fintech startups in the regulatory hot seat and accelerated a wave of enforcement actions against so-called sponsor banks which partner with fintechs to enable them to offer financial products. The current administration has responded with a slate of enforcement actions, proposed rule changes and public guidance.Discover the stories of your interestBlockchain5 StoriesCyber-safety7 StoriesFintech9 StoriesE-comm9 StoriesML8 StoriesEdtech6 StoriesYet even before the Synapse disaster, FDIC Chairman Martin Gruenberg stoked the ire of policy groups like the American Fintech Council, which argues that his agency adopted a “regulation by enforcement” approach, stifling innovation in the banking industry. Similarly, the Consumer Financial Protection Bureau has long been accused of regulatory overreach. Its recent moves have included claiming oversight of digital wallets peddled by large technology companies and probing fintech firms includingPayPalHoldings Inc., Affirm Holdings Inc., Klarna Group Plc and Block Inc.’s Afterpay.That all stands to change under the incoming administration. Donald Trump’s advisers have sought to shrink or eliminate bank regulators, including the FDIC and the CFPB, the Wall Street Journal reported. Elon Musk, co-lead of the initiative dubbed Department of Government Efficiency, or DOGE, issued a call to “Delete CFPB” in an X post. President-elect Trump supports DOGE and has the power he needs to fire CFPB director Rohit Chopra, if nothing else.
Dom. Gen 5th, 2025
