Fintech Revenues Hit $650B Globally But Europe Is Still Leaving Money on the Table, Investor Says

According to Daiva Rakauskaitė, Managing Partner at a VC firm Aneli Capital, despite global growth, the European fintech market remains underutilized.

A McKinsey consumer survey across European countries shows that consumers trust fintech companies and digital banks more than traditional banks for the first time, and see fintechs as more innovative, more transparent on fees, and better value overall.

However, fintech financial services still represent only a fraction of the broader financial market. In Europe, the fintech sector has remained smaller, with 2.6% market penetration, compared to 3% in Asia and 8% in Latin America.

Rakauskaitė notes that European fintechs often lag behind due to fragmented national markets, stronger incumbent banks, lower access to capital, and regulation.

“In Europe, regulation often sets the pace of fintech expansion. For early-stage companies, compliance and licensing requirements can increase the cost and complexity of market entry, often favoring larger, better-capitalized players. At the same time, fintechs that invest in regulatory capabilities early can turn compliance into a competitive advantage, strengthening customer trust and increasing their attractiveness to investors,” Rakauskaitė says.

According to Rakauskaitė, the main driving force behind the new wave of European fintech winners will be those that can grow in a regulated environment and deploy AI to scale. Q1 investment data by PitchBook already shows that investors are backing AI-native startups at the earliest stages, where smaller teams are hitting growth benchmarks faster than ever before.

“Scaling a financial product used to require massive engineering, operations, and compliance teams from day one,” Rakauskaitė says. “Today, AI-native startups can automate significant parts of product development, operations and customer support, allowing them to reach product-market fit and validate distribution channels with substantially less capital and smaller teams. While regulated financial activities still require robust compliance and governance functions, AI is reducing the cost and time needed to build and scale fintech products”.