Tenity Takes brings you authentic voices and views straight from those building the future of finance. And who better to launch this new series than Andreas Iten, CEO of Tenity, opening the conversation with his personal take on the state of fintech.
Two new reports—BCG’s “Fintech’s Next Chapter” and PitchBook’s May 2025 European fintech update—paint a nuanced picture of where we are really at. Yes, there is a rebound in funding and early-stage energy. But it is also clear: the era of easy money is over. What’s emerging is more tactical, more selective, and—frankly—more interesting. Here is what stood out from both the global and European angles:
- Global fintech equity funding rose +34% YoY in Q1 2025.
- Revenue multiples climbed +10%, the first sign of recovery from the 2023 24 downturn.
- AI-native fintechs captured 49% of total equity funding, far above their “fair share” of 23%.
- Despite 37,000+ fintechs worldwide, only ~100 are scaled (>US$500M revenue).
- Fintech has only penetrated 3% of global banking and insurance revenues leaving 97% still in play.
PitchBook’s May 2025 European fintech update:
- Deal count fell 22% YoY in Q1 2025. While this reflects macro uncertainty, it also masks a more focused trend.
- Mega-rounds are returning. Checkout.com and Trade Republic raised significant rounds, showing that scale-up capital is available for strong players.
- Seed and early-stage deals are healthy. There is consistent deal flow in pre-Series A, indicating long-term ecosystem health.
- Infra and AI fintechs are drawing outsized attention. Investors are backing operational infrastructure, B2B tooling, and AI-native models.
- VC dry powder is being redeployed selectively. Fund managers are doubling down on defensible models with strong unit economics.
So, what does all that tell us?
Fintech is not just bouncing back—it is evolving. The funding rebound, the selective bets, the early-stage activity, they are not signals of a hype cycle returning. They are signs of a sector growing up. But if you have been around fintech long enough, you have probably heard a familiar refrain lately: “No one talks about fintech anymore it is all AI now.” Let us unpack that.
What AI is actually doing to Fintech
Let us talk about AI. Yes, there is hype. But there is also undeniable progress.
We are now building fintech solutions with unprecedented speed and efficiency. Software that took 12 months to build in 2020 can often be built in 6 weeks today. For startups, especially in complex verticals like regtech, compliance, or SME finance, this is a breakthrough.
AI drastically lowers the cost to build and serve. Suddenly, segments like small businesses—previously too expensive to reach—become viable markets. It also enables better user experiences, smarter fraud prevention, and personalisation at scale.
But lower costs and bigger promises also bring something else: FOMO-fueled storytelling.
Not every “AI-powered” startup deserves the buzz.
Case in point: Builder.ai. Backed by Microsoft. Hyped as automated, AI-driven software dev. Except—according to a Bloomberg investigation (May 2025)—much of the “AI” was hundreds of offshore engineers manually doing the work.
It is a reminder: before you get dazzled by the deck, ask the simple question: Is this startup actually AI-native, or just fluent in buzzwords? At Tenity, we do not just look for AI as a feature. We look for it in the business model. Does it unlock something that was not viable before? Does it solve a problem better or faster than existing solutions? Is it defensible through deep vertical expertise and knowhow?
That is where the real opportunity lies.
That 3% everyone is talking about
The BCG report Fintech’s Next Chapter (May 2025) includes a stat that is been making the rounds: fintech has only penetrated 3% of global banking and insurance revenues (p. 4). To some, that sounds like disappointment. To me, it sounds like untapped potential.
That 3% has not been disrupted, it is been transformed. There is a big difference. Disruption is flashy and short-lived. Transformation sticks. It redefines processes, rewrites workflows, and leaves no part of the system untouched.
From the internet and mobile banking era to the blockchain wave, we have seen fintech evolve in stages. Each one chipped away at the old model. But we have only just scratched the surface. The foundations of finance—how we insure, lend, onboard, monitor risk—still look eerily similar to how they operated decades ago.
That is not a failure. It is an opportunity.
Europe: difficult by design
You might have seen that PitchBook reported a 20% drop in fintech deal count in Europe in Q1 2025, even as global equity funding rose by 34% year-over-year (BCG, p. 2). That divergence might spook some investors. It does not spook us.
Europe is complex, fragmented, and often slow to scale. But that is also what makes it defensible. Each market has its own regulatory structures, cultural context, and customer behaviors. If you can build a product that works in this environment, you are building resilience into your company’s DNA.
We do not try to do Europe from a single office. At Tenity, we are embedded in local European ecosystems across cities like Zurich, London, Madrid, Tallinn, and Istanbul. Each of these markets has its own regulatory rhythm, founder mindset, and path to scale. Local presence reveals local nuance and that’s critical in a continent as diverse and complex as Europe.
Asia: the scale offset
Now contrast that with Asia.
In markets like Singapore or Hong Kong, you have mature regulatory environments and global capital access. In India or Southeast Asia, you find massive underbanked populations and infrastructure gaps that smart fintechs can leapfrog with new models.
This mix of mature hubs and fast-growth emerging markets creates what I see as the perfect counterpart to Europe’s slower-moving complexity. It is why Tenity focuses on both regions. They move differently—but together, they offer diversified, high-upside fintech investment exposure.
Where we are placing bets
Here is what excites us right now:
- Verticalised fintechs that go deep, not broad—solving painful, defensible problems in areas like payments, lending, onboarding, and regtech.
- AI-native infrastructure, where AI is not an add-on, but core to the architecture.
- SME-focused products, finally economically viable thanks to low-cost development and delivery.
- Embedded finance in B2B verticals, especially when coupled with rich data layers.
- Cross-border compliance platforms, solving for growing regulatory complexity in Europe and Asia.
- These are not categories that grab headlines. But they do grab revenue and eventually, market share.
So, is Fintech dead?
Not at all. But the easy money, hype-stage of fintech might be. And I think that is a good thing.
Now, we are entering the phase where real scale is built. Where growth is earned, not just funded. Where value comes from solving something complex, not just marketing something simple.
We are also seeing signs of consolidation and maturity. According to PitchBook, mega-rounds are returning in Europe meaning investors are no longer betting on hype but doubling down on proven models.
This is the evolution we have been waiting for.
Final thoughts: the next 97%
So where are we now?
If fintech has only penetrated 3% of global financial services, we are not late—we are early. There is still 97% of the industry waiting to be transformed. And with AI now in the toolkit, we have better levers than ever before.
- To founders: build deeply, not trendily.
- To investors: chase defensibility, not just AI.
- To corporates: do not wait to adapt—partner and co-create.
We have only seen the first act of fintech. The next one? It is going to be quieter, smarter, and a lot more powerful. And we are here for it.
Read the original article here.
