Where fintech founders should build in 2025
Where fintech founders should build in 2025
Words Founders Factory
January 6th 2025 / 8 min read
It’s hard to believe that 2025 marks a decade since two of Europe’s biggest fintechs—Monzo and Revolut—were founded.
The progress made in financial services over the last decade has been phenomenal. Monzo and Revolut may have been one of the catalysts for Europe’s fintech golden age, and they still only represent a small slice of the way technology has transformed the way we earn, spend, save, and invest.
And yet, the problems to be solved still loom large. Over 1.5 billion people remain without traditional banking access, creating huge demand for products and technologies that can create security and opportunity for many. Zooming out even further, fintech sits at the forefront of some of the world’s biggest challenges—whether that’s political instability, climate change, or growing cybersecurity threats.
So we asked our team—where should founders be building in 2025?
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10 years into the journeys of Revolut and Monzo, and nearly 20 years in for Klarna, we’re seeing these European fintech giants building customer bases in their millions, and valuations in their billions. Much of this is down to the ingenuity of their technology, particularly how they’re using, or planning on using, AI to build better experiences for their customers.
It begs a valuable question though—if you were rebuilding these companies now, with rapidly advancing AI at your fingertips, how would you do it?
For instance, consider efficiency gains from day 1. Monzo and Starling have demonstrated that building and owning your core banking platform enables you to provide better customer experience at lower cost. Cost savings have been enabled through better use of data and much more efficient processes than financial incumbents. Similarly, Klarna earlier this year rolled out AI in customer services, handling two-thirds of customer services inquiries and driving an estimated $40M a year saving.
Now, if they’d had access to a near infinite workforce, at close to zero cost, from the very beginning—imagine the processes and products they could be offering by now?
Crypto 2.0: Stablecoins
Those involved in web3’s last bullrun—and subsequent market crash—will be wary of anything involving crypto or any new hype cycle (particularly given Bitcoin’s price, at time of writing, at an all-time high). But are we starting to see evidence of some of the longer term use cases that we were promised years ago?
In October, Stripe announced its $1 billion acquisition of stablecoin infrastructure startup Bridge, a move which clearly signals their desire to own their own payment infrastructure and cut out middle men—founder Patrick Collison describes stablecoins as “room temperature semiconductors for financial services”.
PayPal is already paying with their stablecoin; Revolut have announced plans for the same. For the wider market, these moves are a big vote of confidence in stablecoins and their wider benefits.
This creates huge market opportunities for entrepreneurs to build the infrastructure around stablecoins and the second coming of crypto—whether that’s cross-border payment solutions, microtransaction solutions, or embedded wallets. Moreover, a return of a risky market sees a return of the regulation and compliance debate. We’re interested in solutions that address these changing dynamics, such as platforms to help stablecoin issuers comply with global regulations, or for on-chain auditing, reporting, or even proof-of-reserves verification to drive trust in stablecoins.
Enhancing embedded lending
Embedded lending—meaning a financial service offering loans or credit at the point of payment—has undergone various iterations over the years, most recently in the rise of buy now pay later (BNPL) platforms that embed short term credit directly into online checkout processes.
There are a number of interesting changes that could drive a resurgent demand for embedded lending. Principally, we’re seeing interest rates (which reached dizzying heights over the last few years) coming back down, meaning we’re likely to see an increase in borrowing. Platforms that can do this seamlessly and conveniently will no doubt meet huge demand.
Generative AI also presents a new frontier for lending. It allows for potentially powerful new ways to embed lending even further; it can also, as with other financial products, enable even further personalisation and additional value add services—such as enhanced financing options, embedded insurance, and so on.
AI co-pilots for financial services
Just as generative AI has come to disrupt most industries, financial services is next in line. AI is certainly not new to financial services, but there are still several compelling use cases that could enhance the way that organisations deliver financial support—from the way they market products (more more personalised, targeted) to the way they calculate credit risk.
Going deeper, we’d like to see how AI can enhance FS functions like compliance, treasury management, or even operations like customer service.
Could this also be the year of the first consumer co-pilot—a financial assistant that sits in your pocket? This is particularly important for a new generation of tech-native, AI-literate consumers joining the financial system, who will look to apply the same sort of efficiencies and hyperpersonalisation to their finances as they do to other aspects of their lives. Everything from paying your bills to optimising your subscriptions, finding you the best deals to investing your spare change—all managed by AI.
Wealth creation for new financial units
Typical financial products, particularly those around wealth creation, have been focused largely around the individual. But as lifestyles have changed, financial services have failed to keep up.
In one respect, we’re seeing growing shifts towards collectives over individuals. In the face of mounting global challenges, from climate change to political instability, we’re seeing a rise in new social movements that connect people across classes and geographies.
Where savings and investments might have once been for individual gain, we’re expecting that wealth creation, and more broadly money as a resource, will be viewed more collectively. And as such, we’re interested in platforms that can cater towards these new wealth creation groups.
The changing family unit is one of these. Ammonite is one startup that uses algorithms to understand relationships between different people and their financial products, and how those might interact (for instance, a pension, and how that takes into account the needs of the whole family). Similarly, Serene is a startup helping financial institutions understand when customers might become vulnerable, e.g. if someone is older, or has an older parent, being able to predict how these life events will affect the family as a whole.
Then of course there’s recognition for changing preferences of certain individuals opting out of having a family. Investing switches then from the family unit and towards other forms of social group. We’ve already seen a rise in investment clubs (both formal and informal), and we’re interested in tools that can decentralise this even further to create tools that can encourage financial interactions between friend circles.
Women in general are a huge beneficiary of these types of products. It places great financial independence and decision making in the hands of women, which will in turn have a big knock-on effect (we expect) in how that money is invested.
Insurance for permanent life changes
Insurance has improved considerably at protecting us against a number of rising threats—everything from climate risk to cybersecurity attacks. But what about the threat of certain permanent life changes that are unavoidable and yet pose considerable risk?
While immediate damage from climate change has a number of protections, what’s harder to protect against are the longer term effects and changes that extreme weather will cause. Extreme heat, for instance, has a number of implications—from impacts on respiratory and cardiovascular health, to our literal ability to live in certain conditions once they become less habitable, and precautions we have to take as a result. We’re interested to see insurance products that take this into consideration.
The other permanent life changes are around individual health. Women’s fertility has become a prominent conversation in recent years, with more women making the decision to freeze their eggs or pursue IVF. Male fertility is starting to come under the spotlight (see Jack Fertility), given the rising prevalence of infertility among men. Are there new services available that can serve these permanent health changes?
Fintech for unusual pain-points
As banking becomes more and more personalised through deployment of AI, there’s huge potential for businesses that cater to some of the more niche, unusual pain-points of certain customer segments.
For one, there’s the higher risk customer segments that aren’t catered for by typical lending risk profiles. This has already been attended to for self-employed content creators: see Karat, who raised $70M last year.
For instance, restricted merchant category codes (MCCs), businesses that operate in industries with a higher level of financial or regulatory risk: ranging from adult entertainment to gambling, and even cryptocurrencies. These businesses or customers face a number of pain-points that other businesses avoid, from payment processing to compliance and fraud prevention checks. We’d be interested in seeing financial products that can cater to these unusual pain-points and competently address them.
Managing the great wealth transition
We’re currently witnessing the start of the so-called ‘great wealth transfer’, where we’re seeing an estimated $84 trillion shifting from baby boomers to millennials and GenZ over the next two decades. This presents an extraordinary fintech opportunity for a number of reasons.
For one, we’re expecting to see a new generation of high net worth individuals. These individuals have a vastly different set of expectations and experiences when it comes to managing their finances. They’re far more attuned to digital solutions over traditional banking relationships, lacking the same financial loyalty that their parents might have. Where they source advice from, meanwhile, is changing—with many likely to ditch existing family financial advisors.
Their behaviour and values, meanwhile, will have a profound impact on the way their money is managed, particularly when it comes to investment. Younger generations are much more impact and mission oriented, creating a huge opportunity for investment platforms that cater to these preferences. They’re also more interested in digital, alternative assets than older generations.
The sheer volume of money changing hands makes this a particularly tantalising opportunity for any ambitious entrepreneur.
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