Why Fintech will thrive in a shifting global environment — and why the UK stands to win

Reading Time: 5 mins

7 May 2025

By Tosin Agbabiaka

The first quarter of 2025 has been anything but predictable. Between market volatility, global conflicts and shifting trade regimes, we’re clearly operating in a new macroeconomic paradigm — one where certainty is in short supply. No sector has been immune to these headwinds, and fintech is no exception. At the end of 2024, publicly traded fintechs outperformed broader markets. But by early April, sentiment turned sharply — companies like Affirm, Robinhood and SoFi experienced steeper drawdowns than the S&P 500.

You could argue this reflects fintech’s vulnerability to broader volatility. However, we see it differently. In fact, we believe fintech is poised not just to weather the storm, but to increase its already significant strategic importance because of it. We see three key trends driving this argument and see the UK having a critical role to play in that evolution.

1. Fintech is powering the new global trade paradigm

As global trade patterns shift, fintech is underpinning the infrastructure required to enable, direct and secure this change:

Enabling trade: Cross-border payments are more important than ever. With trade policy — and routes — changing, the demand for faster, cheaper and frictionless movement of money is only accelerating. While stablecoins and tokenised assets are gaining traction, pay close attention to wholesale cross-border payments: money movements between financial institutions, governments and large corporations. This space is particularly important to global trade — real opportunities for disruption may come from here.
Directing trade: Embedded finance in supply chain platforms is no longer a nice-to-have. Transparency and control of these supply chains are essential, but so are the financial levers that drive behavioural change. CarbonChain’s sustainability-linked loans offer a glimpse of what’s possible — tools that not only track supply chain activity but incentivise improvements. As global firms face increasing pressure to decarbonise, expect embedded fintech solutions to proliferate across sectors like energy, shipping and manufacturing.
Securing trade: With uncertainty comes a surge in demand to protect and mitigate against risk. Insurtechs tied to the global trade market are coming into their own, with companies like BondAval playing an even more critical role as geopolitical, supply chain, and global climate risks abound. This and other counter-cyclical fintech sub-sectors will become even more essential as companies look to hedge against the unexpected.

2. GenAI in fintech is evolving from hype to habit

In 2024, the fintech sector cautiously experimented with GenAI. This year, the mood music has changed, and caution is giving way to conviction. Use cases are solidifying, and commercial success is following, allowing for:

Compliance breakthroughs: Know your customer (KYC) and anti-money laundering (AML), AI-native compliance tools are seeing real traction. Larger fintechs like Sardine and Hawk AI, alongside new entrants like Greenlite and Salv, are proving there’s both appetite and willingness to pay across SMEs and enterprises alike.
Insurance adoption: Significant adoption of AI by large insurers wouldn’t have appeared on any fintech bingo card two years ago. However, AI is now being embraced across the value chain. Whether it’s underwriting, broker communication or claims handling, AI is being rapidly integrated to modernise outdated tech stacks. The opportunities are both large in scale and compelling in impact, and insurers are keen to take advantage.
New subsectors, new market potential: GenAI isn’t just improving old systems — it’s unlocking new fintech frontiers. One standout? Agent-to-agent, or agentic, payment solutions, where machines transact with each other independent of humans or businesses. While still early, the emergence of “acommerce” (as cleverly coined by our colleagues at Acrew) offers a glimpse into the next evolution of transactions. We’re excited to see how founders in the UK and abroad tackle this new frontier.
Operational efficiencies: Klarna’s recent AI-powered overhaul shows the scale of what’s possible — and the margin upside on offer. With two-thirds of service requests now handled by AI, Klarna has seen a $40m increase in profits as a result. For scaled fintechs, AI is no longer the exception, it’s the expectation.

3. New entrants are becoming incumbents

2025 has been a real coming-of-age story for many fintechs, but none more so than neobanks.

Revolut, in particular, has pushed far beyond banking: with digital mortgages, buy now pay later (BNPL), offline payments, and even restaurant tech. Its valuation surge to a rumoured $60 billion would make it the second-most valuable bank in the UK, trailing only HSBC and a figure that would have seemed implausible just five years ago. These developments have cemented the UK and Europe’s proven ability to produce global fintech leaders.

However, fintech giants like Klarna and Chime have delayed their much-anticipated IPOs, reflecting a more cautious market and taking some of the wind out of the fintech market’s sails. The potential remains for either or both companies to go public in 2025 — we’ll be watching closely!

Conclusion: The UK is the place to build and scale fintech in 2025

Amid these shifts, the UK’s strategic relevance is only growing. Uncertainty in the US — particularly around regulation affecting fintech — has amplified the appeal of the UK’s consistent, innovation-forward regulatory environment. The Financial Conduct Authority continues to provide a rare mix of clarity and adaptability, giving founders the confidence to scale complex products in a compliant way.

Equally important, the UK and Europe represent increasingly valuable demand markets. As global businesses diversify supply and customer bases, local fintechs are already capturing tailwinds. Take Raylo, for example — an Octopus Ventures portfolio company — which is benefiting from supply gluts and pricing shifts to unlock embedded finance opportunities across leasing and credit.

Meanwhile, public market dynamics are evolving. While global fintech giants delay IPOs, the London Stock Exchange is quietly regaining ground. For ambitious fintechs with real revenue and scale, remaining local could unlock more sustainable long-term value. Many of the British businesses that listed overseas in recent years may, in hindsight, have captured greater returns by staying onshore.

Across trade, technology, and talent, 2025 is proving that fintech is not just resilient — it’s essential. In the face of global volatility, the sector is showing its capacity to power structural shifts in how the world does business. Whether it’s enabling faster and more inclusive cross-border payments, embedding financial services in global supply chains, or providing insurance solutions to manage emerging risks, fintech is playing a foundational role in the next era of global commerce.

At the same time, GenAI is moving from speculative hype to tangible habit. Its impact on compliance, underwriting, claims processing, fraud prevention, and even the architecture of entirely new payment rails is already measurable. Operationally, fintechs are using AI to drive margin expansion and deliver at-scale transformation. And while the headlines may focus on public market hesitation, the bigger story is that many fintechs — once challengers — are now incumbents, shaping sentiment, influencing policy, and leading consolidation across financial services.

As we progress into the second half of 2025, we’re excited to see how the UK and global fintech markets evolve — if the first quarter of this year has been anything to go by, we’re sure fintech will supply significant changes and opportunities. Heraclitus is often quoted as saying “the only constant in life is change” and we can’t think of a better way to describe fintech.

At Octopus Ventures, fintech is a core part of our investment strategy, and we’ve built a team to match. From operational and capital input to dedicated people and talent support, we ensure our fintech portfolio companies have all the resources they need to scale to world-changing heights. If you’re building a solution we should know about, we’d love to hear from you.