Boston Fintech Week returned this week for its seventh installment, drawing industry experts and executives to a two-day conference at the Federal Reserve Bank of Boston. The event focused on the current state of banking and fintech in the U.S. and explored future trends.
Reetika Grewal, head of digital at Wells Fargo’s commercial and corporate investment bank, and Sarah Lamont, an investor at F-Prime Capital, joined Nikhil Lele from EY’s banking and capital markets division to discuss the adoption of AI, advancements in back office operations, the significance of partnerships and user-centered design, and the resurgence of fintech valuations following 2022.
2025 Prediction: Community banks will remain the lifeblood of the economy
Lele initiated the discussion by noting that traditional banks are at a crucial juncture, highlighting the resilience of community banks. He emphasized that while these banks may not have widespread recognition, they play a vital role in local economies. Lele pointed out that, despite being a mission-critical industry, U.S. traditional banks have been slow to innovate as their primary focus has been on security. However, he believes that the foundational work being done will gradually yield benefits as banks expand their technology capabilities over time.
To move past current stagnation, there is a need to optimize both aspects of the market, fostering growth amid significant pressure on fees and net interest margins. Lele remarked that traditional banks often lack the capital required for large-scale growth initiatives and innovative projects, necessitating a shift in strategy. He advocated for collaboration between banks and fintech firms to integrate innovation into their operations, noting that many small banks are already leveraging fintech solutions in ways that are often underestimated.
2025 Prediction: Fintech investment is on a rebound, not an anomaly like 2021
Lamont provided insights into the overall fintech landscape from a macro, public markets perspective, outlining a three-year narrative. She explained that while fintech experienced explosive growth in 2021—reaching a valuation of $1.3 trillion—2022 saw a significant reappraisal that brought that down to $400 billion. However, 2023 has marked a recovery in public markets.
Using SoFi as an example, Lamont illustrated how the company’s revenue multiples, which peaked at 13x in 2021, fell sharply in 2022 but rebounded to 4.4x in 2023. This reflects a trend of rapid revaluation for banking disruptors in comparison to traditional banking, which has seen more modest growth in multiples.
She also noted that in the U.S., the same seven banks dominate deposits, totaling around $7 trillion. While some banks with deposits between $10 billion and $1 trillion are flourishing, fintech firms hold significant power, particularly impacting smaller banks with deposits under $10 billion, which are experiencing slower growth and need to adopt creative strategies to thrive.
2025 Prediction: It’s important to be excited about generative AI, but measured too
Grewal shared insights on Wells Fargo’s exploration of generative AI across various use cases, emphasizing its potential applications in customer success and overall customer experience. She mentioned efforts to develop AI-driven experiences and establish a center of excellence to navigate the associated risks prudently.
Lamont concurred, stating that true generative AI would be most beneficial in situations where summarization or text generation is valuable. She highlighted that while AI has long been utilized across many banking and fintech domains, the application of generative AI is not universally relevant.