Fintech has evolved from a disruptive force to a foundational layer of modern financial services. Total global funding for fintech reached $116 billion in 2025, up from $95.5 billion the previous year, per KPMG. For marketers in financial services, understanding fintech's revenue models, competitive dynamics, and customer acquisition challenges reveals where the industry is heading and how to position products effectively.

What is fintech?

Fintech, short for financial technology, refers to companies that use technology to deliver financial services more efficiently than traditional institutions. The term encompasses businesses ranging from payment processors and digital banks to lending platforms and wealth management tools.

The sector operates on a technology-first premise: software and automation can reduce costs, improve speed, and expand access to financial services. Fintech companies typically focus on specific customer needs rather than offering full-service banking. A neobank might specialize in fee-free checking accounts for underbanked consumers, while a B2B fintech provides expense management for corporate clients.

What are the main categories of fintech companies?

Fintech spans multiple sub-industries, each addressing distinct financial needs:

• Neobanks. Digital-only banks operating without physical branches. Examples include Chime, Varo, and Revolut. These companies offer mobile-first banking with convenient customer experiences.
• Paytech. Payment processing and transfer services, including digital wallets, peer-to-peer platforms, and buy now, pay later providers. Stripe, PayPal, and Klarna operate in this space.
• Insurtech. Technology-driven insurance companies using AI and data analytics for underwriting, claims processing, and risk assessment.
• Wealthtech. Platforms modernizing investment and wealth management, including robo-advisors like Betterment and digital brokerage services.
• Lendtech. Online lending platforms offering consumer loans, business financing, and alternative credit assessment methods.
• Regtech. Regulatory technology companies that help financial institutions comply with regulations through automation and analytics.
• Embedded finance. Financial services integrated into non-financial platforms.

How do fintech companies generate revenue?

Fintech revenue models vary by segment, but most companies rely on a combination of transaction-based and recurring income streams:

• Interchange fees. Card-issuing fintechs like Chime earn a small percentage of transaction fees charged to merchants when people use the associated debit card.
• Transaction fees. Payment processors charge per-transaction fees. Stripe charges approximately 2.9% plus $0.30 per online transaction.
• Subscription models. Premium tiers offer advanced features for monthly fees. Budgeting apps and robo-advisors commonly use this model.
• Interest income. Lending platforms earn through interest spreads on loans originated.
• Licensing and white-label solutions. B2B fintechs license their technology to banks and enterprises.

Profitability has become the priority. Median revenue requirements for Series A fintech funding rose to $4 million in 2025, up from $1 million four years prior.

Why are traditional banks partnering with fintechs?

Banks increasingly partner with fintechs rather than compete directly. These partnerships allow legacy institutions to modernize customer experiences without building technology from scratch.

Embedded finance illustrates the trend. In March 2025, JPMorgan Chase and Walmart launched an embedded finance solution for marketplace sellers, integrating payments, lending, and cash management. Amazon's embedded lending ecosystem includes partnerships with JPMorgan, Affirm, Synchrony, and other lenders to serve third-party sellers, who now represent 64.3% of US platform sales.

Banks gain distribution reach and technology capabilities. Fintechs gain regulatory infrastructure, deposit insurance, and credibility. The partnership model reduces risk for both parties compared to direct competition or costly acquisitions.

How is AI transforming the fintech industry?

AI adoption in financial services accelerated through 2025, with applications spanning fraud detection, customer service, lending decisions, and operational automation.

According to an EY survey cited by EMARKETER, 47% of medium and large banks have rolled out generative AI initiatives, with 20% using generative AI-powered solutions in production and 8% deploying agentic AI. Revenue gains vary: 38% of banks reported less than 5% revenue increase from AI, while 39% saw 6-10% gains. Expectations are higher going forward, with 43% anticipating 11-20% revenue growth from AI within two years.

However, implementation challenges persist. The same survey found that 40% of generative AI use cases in production failed to reach desired results.

What are the largest fintech companies in 2025?

The largest public fintechs by market capitalization include legacy payment networks alongside newer entrants. According to Analytics Insight, the top public fintechs by market cap as of May 2025 are:

• Visa. $694.04 billion
• Tencent. $606.77 billion
• Mastercard. $528.68 billion
• Intuit. $177.82 billion
• Ant Group. $150.00 billion
• Block. $86.96 billion
• Nasdaq. $81.96 billion
• FIS. $80.98 billion
• PayPal. $64.55 billion
• Adyen. $50.00 billion

What challenges do fintechs face in 2026?

Despite growth, fintechs confront structural pressures heading into 2026.

• Profitability demands. Investors require sustainable unit economics, not just user growth. Revenue thresholds for funding rounds have risen dramatically.
• Regulatory scrutiny. Increased oversight around data governance, AI decision-making and outsourcing arrangements extend deal timelines and raise compliance costs.
• Customer acquisition costs. Fintech leads most industries with an average CAC of over $900 per customer.
• Partner bank risk. Fintechs relying on banking-as-a-service partnerships face exposure when partner banks encounter regulatory issues or failures.

We prepared this article with the assistance of generative AI tools and stand behind its accuracy, quality, and originality.

EMARKETER forecast data was current at publication and may have changed. EMARKETER clients have access to up-to-date forecast data. To explore EMARKETER solutions, click here.