As artificial intelligence transforms the business landscape, fintechs are set to initiate a new wave of disruption as the industry emerges from a prolonged downturn.
According to a recent report from Boston Consulting Group (BCG) and fintech investor QED titled Fintech’s Next Chapter: Scaled Winners and Emerging Disruptors, the sector has come out of a challenging funding environment stronger and more disciplined, boasting improved growth prospects.
In 2024, fintech revenues increased by 21%, up from 13% in 2023, significantly outpacing traditional banks. Additionally, the average EBITDA margin for public fintechs rose to 16%, with 69% of them now operating profitably. This impressive performance is largely driven by a new category of scaled players generating over $500 million in annual revenue, accounting for about 60% of total fintech revenues.
“A class of scaled fintechs is maturing. Investors are seeking greater accountability, and regulators are pushing for more oversight,” states Deepak Goyal, managing director and senior partner at BCG. “At the same time, emerging disruptors are leveraging advanced technologies like agentic AI and developing innovative business models, prompting established firms to continuously adapt.”
The report highlights agentic AI as a key catalyst for future disruptions in commerce, vertical SaaS, and personal financial management.
Challenger banks are also experiencing rapid growth: 24 institutions with annual revenues exceeding $500 million are increasing deposits at an annual rate of 37%, substantially outpacing traditional banks.
Moreover, the funding landscape is evolving, with private credit emerging as a significant support for fintech lending.
“Fintechs are succeeding in areas where traditional banks have retreated, such as catering to lower-income households and offering buy now, pay later services,” says Nigel Morris, managing partner at QED Investors. “With growth rates three times faster than incumbents and a strong foundation in unit economics and customer satisfaction, it’s clear why there’s a growing interest in IPO-ready companies focused on profitable growth. Fintech is ushering in a new era in financial services.”