“The global fintech industry is turning the page to a new chapter—one characterized by the coming of age of a class of scaled fintechs, the emergence and application of new technologies and business models, including AI, and investors’ unrelenting focus on profitable growth”, as per a new report from Boston Consulting Group (BCG) and QED Investors, Fintech’s Next Chapter: Scaled Winners and Emerging Disruptors.

The BCG and QED report reveals that 2024 was a pivotal year for fintechs, with funding and valuations stabilizing and fundamentals showing significant improvement.

The report notes that fintech revenues grew by 21% last year—up from 13% in 2023—representing a threefold acceleration over the financial services industry at large. It also highlights that the average EBITDA margin of public fintechs rose to 16%, with 69% of public fintechs now profitable. Notably, much of this strong performance is being driven by a new class of scaled players—also known as scaled fintechs —that generate US$500 million or more in annual revenue (fewer than 100 fintechs meet this threshold). These firms now account for nearly 60% of the global fintech industry’s total revenues.

To unlock the next phase of growth, the report outlines actionable steps for fintech founders, investors, regulators, and banks. Here are the key takeaways:

Scaled fintechs primarily operate across five key verticals

Out of around 37,000 fintechs globally, just under 100 are scaled fintechs. Based on the BCG and QED report, their success so far has primarily been concentrated in key segments such as payments, challenger banks, retail crypto trading and brokerage, as well as buy now pay later (BNPL) and point of sale (POS) lending.

“Payments are the indisputable winner to date, accounting for roughly 55% (or $126 billion) of all scaled fintech revenues in 2024. Within payments specifically, fintechs have had most success scaling in digital wallets (for example, PayPal, WeChat, and Apple Pay) and acquiring and vertical SaaS (Stripe, Adyen, Toast, Shopify, Square)”, the report noted.

Challenger banks are a distant third, representing about 15%—or $27 billion—of scaled fintech revenues. Prominent players in this vertical include Revolut, Monzo, KakaoBank, Nubank, and Toss. In comparison, retail crypto trading and brokerage contribute around $16 billion (nearly 7% of scaled fintech revenues).

Finally, while contributing “Only 4% ($8 billion) of scaled fintech revenues today, BNPL/POS lenders are growing at a roughly 42% CAGR”, marking them as the fifth successful vertical, the report further stated.

US and China generate two-thirds of scaled fintech revenues

The BCG and QED report explains that the US commands close to 50% ($118 billion) of scaled fintech revenues, supported by its expansive market and ready access to capital. It goes on to state that payments lead the charge, with digital wallets and acquirers thriving in a consumer-led, card-first economy that prioritizes frictionless acceptance. Additionally, vertical SaaS providers like Toast and Shopify have capitalized on opportunities among small and medium size businesses (SMBs) looking to integrate payments into broader software solutions.

Accounting for another 16% ($38 billion) of scaled fintech revenues, China’s success is propelled by its extensive addressable market and the emergence of “super apps” like WeChat and AliPay, developed by technology behemoths Tencent and Alibaba, the report underscores.

Asia Pacific (excluding China) generates around 10% of scaled fintech revenues, totalling $22 billion. Like China, the greatest fintech traction in Asia Pacific is taking place through regional super apps such as Grab, Toss, PayTM, PhonePe, and GCash.

According to the BCG and QED report, despite the challenges of scaling across a fragmented region—comparable to Europe—Asia Pacific is home to major emerging markets like India, which offer immense growth potential.

Similar to Asia Pacific, Latin America holds a 10% ($22 billion) share of global scaled fintechs revenues, with players like Nubank succeeding by serving un- and underbanked segments, while Mercado Pago and PagSeguro ride the momentum of the fast-growing retail sector.

B2B payments (2X), financial infrastructure, and lending are set to drive the next phase of fintech growth

As mentioned in the report, fintech growth in the coming years is likely to be powered by three core segments: B2B payments (2X), financial infrastructure, and lending.

B2B payments (2X) accounts for 39% of fintech revenues in the $50 million to $500 million range, as detailed in the BCG and QED report. “In B2B (2X), including acquiring and vertical SaaS, embedded finance also still has plenty of room for growth, as established in last year’s report.” The report also emphasises that approximately $32 billion in equity capital has been invested in B2B payments (2X) fintechs across Series A–D rounds over the past three years.

The findings in the report indicate that the financial infrastructure segment makes up 18% of fintech revenues in the $50 million to $500 million category.  “The financial infrastructure vertical is more broadly representative of a growing trend of incumbents partnering with fintechs, as opposed to directly competing with them”, the report pointed out.

Financial infrastructure fintechs encompass regulatory technology firms, core banking platforms, and trading technology enterprises. As per the report, nearly $30 billion in equity funding has been invested in these fintechs during Series A to D rounds in the last three years..

Lending represents 14% of fintech revenues within the $50 million to $500 million bracket. The BGG and QED report anticipates strong tailwinds for fintech lenders in the near future, fueled by declining interest rates, which are expected to boost credit demand from all segments. Over the past three years, an estimated $22 billion in equity capital has been invested in lending fintechs during Series A–D rounds, rounding out the trio of core segments expected to shape the next wave of fintech growth.

Conclusion

So far, scaled fintechs have thrived in spaces where traditional banks have pulled back from competition. As these companies evolve, they will face the dual test of meeting investor and regulatory expectations while staying ahead of new challengers through innovation.

Just as the internet and mobile advancements shaped the early era of fintech, technologies such as AI and blockchain-based onchain finance are poised to define its next chapter and drive a new wave of progress, the report suggests. “Investors, regulators, and fintechs themselves all have a role to play in realizing these opportunities and sustaining the industry’s renewed momentum. Ultimately, this moment represents not an end but the beginning of fintech’s” and scaled winners’ next compelling chapter, the BCG and QED report advises.