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 Surges
Last 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 rebounds
After 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.
I predicted in 2024 that the financing market would remain tight and this was proven right with 1H 2024 fintech venture financing trailing the same period in 2023. While activity recovered somewhat in the second half of the year, it remained an incredibly
challenging year for the market.
As with the M&A market, the financing market will recover in 2025 as euphoria spurred on by likely deregulation and tax cuts in the US buoy investor appetites. The venture funds, like private equity, have significant dry powder sitting on the side lines
waiting to be deployed. The improved conditions leading into this year will whet there appetites to do more deals.
Given the recent history of post-pandemic easy money and over investment, more disciplined investing can be expected in this go-round with companies able to demonstrate operational discipline and clear value propositions able to attract the most funding,
with the exception of certain hot pockets of the market such as AI. Expect a more measured, thoughtful approach to investment as the industry moves forward in 2025.
3. Another boom and bust for crypto
In April of 2024, Bitcoin had its latest halving event (simply explained as a reduction in Bitcoin’s issuance rate for the same amount of computing power used to mine it) and, predictably, since that time the overall crypto market has boomed – Bitcoin has
since soared to new highs over $100k and the rest of the crypto market has followed this ascent. Most market observers view this latest bull run as having quite some room to go.
This follows a similar pattern to every halving since Bitcoin’s inception. First Bitcoin and then the broader crypto market booms, and then, following the market euphoria, the bull momentum breaks, usually spurred on by a disruptive event (e.g. the collapse
of Terra Luna or FTX bankruptcy) and the momentum shifts the other way.
Despite being a huge proponent of the sector and of Bitcoin, I don’t think we are done with this cyclical behaviour. Some commentators may argue that this time is different, especially given that for the first time we have Bitcoin and Ether ETFs and more
widespread institutional adoption. My prediction is that we will again have a cyclical swoon some time towards the end of Q3 or Q4 of 2025. Until then, the good times will indeed be rolling and Bitcoin and the rest of the cryptocurrency market could very well
hit many new milestones on the way.
4. The rise of AI-powered financial services
Last year, I predicted that AI would have a transformative impact on fintech. I would chalk up my prediction last year as not having been met as although AI has started to be incorporated into fintech solutions this is still nascent and we have only scratched
the surface.
AI technology is so transformative that it warrants inclusion as a key prediction again this year. I believe in 2025 we will start to see more powerful utilisation of AI to drive smarter decision-making, enhance customer experiences, and create operational
efficiencies in the fintech sector. Its applications are wide-ranging, from detecting fraud and streamlining compliance to reshaping credit underwriting processes, to streamlining and improving the customer experience.
The utilisation of AI in fintech can be seen in aspects such as:
- Fraud detection – AI systems are now capable of identifying suspicious patterns far more effectively than traditional rule-based models or manually intensive compliance teams allowing financial services business to streamline and reduce costs.
- Customer interactions – tools like conversational AI and generative AI models enable companies to offer hyper-personalised financial advice, creating deeper engagement; robo-advisors are becoming more sophisticated, delivering individually tailored investment
strategies that adapt to changing market conditions.
- Credit scoring – by analysing unconventional data points—such as rent and utility payments—machine learning models are enabling lenders to assess creditworthiness more effectively, potentially helping underserved populations get access to credit and allowing
for the application of buy now pay later’ solution models to novel transactions such as flights and hotel bookings.
5. Sensible crypto regulation in the US is coming
Regulatory uncertainty has long been a thorn in the side of the cryptocurrency industry, particularly in the United States. This has hindered innovation and the maturation of the industry and led some market actors to put projects on hold or consider moving
out of the US altogether to escape what was perceived as regulatory overreach and a hostile environment.
With an ostensibly crypto friendly administration in place and crypto friendly individuals on track to be appointed to helm key regulatory agencies, it is almost a certainty that the US will be a much more hospitable place for the crypto industry in 2025
than over the last four years. While I would expect effective regulation to be rolled out during the course of the second Trump term, this will take time to formulate and implement.
I predict incremental advances in the regulatory framework this year. 2025 will bring with it a cessation of rampant and unfair enforcement action by US regulators and a reestablishment of the US as a preeminent hub for innovation and advancement of the
industry.