By Simon Wu
In tech circles, we’ve been hearing it a lot: “fintech is back.”
But for early-stage founders, it doesn’t always feel that way. In categories such as consumer and business banking, spend management or payments, the room is already crowded. Companies including Chime 1, Ramp, Mercury and Stripe dominate the news cycle and have become the perceived winners, soaking up capital and customer mindshare. But under the surface, something deeper is happening.
A new wave of fintech companies is emerging, not by competing head-on with these giants, but by going narrow where others go broad.
With consumers using three to four fintech apps on average, the fight for top-of-wallet has never been more intense. It’s no longer enough to build a slick app and hope customers will show up. Today’s successful fintech startups are vertical-first, AI-native and built on owned infrastructure, enabling better data, smarter decisioning and far stronger economics.
They’re no longer adding financial services to the mix — they’re using AI to finally fulfill the promise of fintech, an experience that is truly seamless, intelligent and automated.
What’s next?
We’re seeing areas like cross-border payments, vertical SaaS platforms that combine fintech and AI automation, and wealthtech rise as the sector’s hottest investment areas. But what will really define the next chapter, changing what it means to build and scale a successful fintech company, is the confluence of verticalization, AI and infra-ownership.
In 2025, the most exciting fintech startups won’t look like traditional fintech at all. They’ll feel like vertical operating systems with financial processes embedded inside. They won’t just offer products, they’ll run workflows, automate decisions and monetize through embedded finance. And they’ll win not by being loud, but by being indispensable.
The AI effect on fintech
The integration of AI in fintech is no longer a novelty — it’s becoming the foundation of the most successful players. Here’s what’s changing:
Owning the stack for AI leverage: Controlling infrastructure is more important than ever, not just for gross margins but also for unlocking AI’s full potential. When fintech companies own their stack, they aren’t beholden to third-party providers. This allows them to implement many things, including AI, in ways that meaningfully improve the user experience.
Chime is a great example. By building its own core banking infrastructure, the company has full control over its data, fraud mitigation and personalization capabilities. This has enabled it to offer an industry-leading customer experience, reduce operational costs and fine-tune AI models to optimize user engagement and retention. Companies that control their own infrastructure will be best positioned to deliver AI-powered financial services at scale.
AI as the core driver of customer experience: AI is revolutionizing customer interactions in fintech, improving everything from credit underwriting to customer service. Klarna’s AI-powered chatbot has drastically reduced support costs while improving response times. Nubank has developed AI-driven credit models that allow for better risk assessment and fraud prevention, leading to higher approval rates and lower default risks.
The real unlock? AI lets fintechs do more for customers while also cutting costs. Historically, better margins came from doing less: fewer touchpoints, slower support. Now, AI flips the equation — better experience, better economics. Early data suggests that users actually prefer bots to offshore customer support — something that would have seemed unthinkable just a few years ago.
That said, owning the stack isn’t a blanket requirement. Early-stage founders can still succeed with the right infrastructure partners as long as they retain control over data and user experience.
Parting thoughts
Fintech isn’t just back — it’s being rearchitected. Founders who build with AI at the core, own their data loops, and solve real operational pain will define the next chapter of fintech.
But building smarter products isn’t enough — distribution is the final moat. The next wave of winners will embed into workflows, control key touchpoints and turn product-led growth into defensible market share. Even with modular infrastructure or third-party dependencies, the best companies will find ways to own the customer relationship and the feedback loop that powers it.
In a crowded market, success won’t come from louder marketing or sleeker UI — it’ll come from solving real problems, distributing intelligently and scaling trust through infrastructure.
The next fintech giants won’t just move money — they’ll move industries.
Simon Wu is a partner at Cathay Innovation in San Francisco. Previously, he spent four years at VMware on the strategy and corporate development team, focusing on acquisitions and investments in enterprise software sectors. Prior to that, Wu worked in investment banking at UBS, advising on capital raises and M&A for technology companies. He holds degrees in business administration and operations research, and management science from UC Berkeley.
Illustration: Dom Guzman
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