Fintechs shift from challengers to banking powerhouses

Klarna has filed for a US banking license and has begun offering deposit accounts and debit-card services as it expands beyond payments and buy-now-pay-later products. The application to operate as a bank in the United States was part of a broader trend of fintech firms moving into regulated banking activities.

Revolut and Wise have also broadened their offerings and regulatory footprints, and 11 leading UK fintechs reported a combined £2.4 billion in pre-tax profits in 2024. The UK attracted about $3.6 billion of fintech investment in 2025.

Fintech companies now supply more than 68% of small and medium-sized enterprise lending in the UK. Lenders cite faster application processes, digital underwriting, automated decisions and the use of alternative data beyond traditional credit histories as reasons for higher approval rates and quicker funding.

Open banking and automated connections between accounts and accounting systems are central to many fintech products. By March 2025, one in five UK consumers and small businesses were active users of open banking, and open banking payments rose about 70% year on year. These payment rails enable faster transfers, automated reconciliation and in-platform short-term funding.

Some fintechs are seeking full banking licenses to take deposits and access core payment infrastructure. Others provide regulated services through partnerships with established banks. Traditional banks have adjusted product terms, distribution and pricing in response to the changing market.

Fintech platforms combine payments, accounts, lending and business tools in a single interface. Integrated services provide consolidated views of receivables and payables, automate reconciliation and link lending decisions to real-time cash-flow data used by customers.

The origins of the current phase trace back to early fintech products that targeted specific customer needs such as faster payments or simpler lending approvals. Several firms then reinvested revenue into broader product lines and regulatory compliance, allowing them to offer a wider set of services.

For small firms, the changes mean more options for managing cash flow and applying for credit through the same digital platform. Product launches, regulatory filings and investment data show a shift from single-product offerings toward multi-service platforms across the UK and in international markets.