Citi analysts foresee fintech entering a “dynamic new phase” in 2025, building on Q4 2024 improvements after a year of stabilization. Despite fluctuations in the five years since the pandemic began, the sector’s core drivers—digitization, modernization, and enablement—remain robust. Here are the 10 key developments Citi analysts, led by Andrew Schmidt, predict:

1. Strong Fintech Performance:
   Following the U.S. election, approximately 66% of Citi-covered fintech stocks outperformed the market, compared to just 31% earlier in the year. Broader investor interest across market caps is a promising indicator for 2025 growth.
2. Bank and Credit Union Consolidation:
   M&A activity is expected to accelerate, surpassing historical averages. Beneficiaries include Fidelity National Information (NYSE:FIS) and Q2 Holdings (NYSE:QTWO), as merged entities adopt their technologies. Alkami Technology (NASDAQ:ALKT) is well-positioned, while Jack Henry & Associates (NASDAQ:JKHY) could see gains depending on specific pairings.
3. Fintech M&A Activity Increases:
   Analysts anticipate smaller, manageable transactions, with a few larger deals possible. Rising stock valuations may encourage sales, particularly among function-based companies. Sponsors holding assets could act on opportunities, while a stable or declining interest rate environment might drive acquisitions, benefiting profitable firms with low debt.
4. Capital Markets Rebound:
   Increased activity in capital markets could unlock new fintech opportunities. While sustainable, profitable growth remains a focus, private and public companies may pivot to growth investments later in 2025 and beyond.
5. Transformation Success in Focus:
   Companies like PayPal Holdings (NASDAQ:PYPL) and Block (NYSE:SQ) are progressing in their strategic transformations. Fidelity National Information (NYSE:FIS) is advancing, though with a longer timeline, and Global Payments (NYSE:GPN) is in the early stages of repositioning.
6. Generative AI Expands:
   Revenue opportunities tied to generative AI and data management are expected to grow gradually. Companies poised to benefit include Clearwater Analytics (NYSE:CWAN), Alkami (NASDAQ:ALKT), Q2 Holdings (NYSE:QTWO), Jack Henry (NASDAQ:JKHY), Mastercard (NYSE:MA), and Visa (NYSE:V).
7. Subdued U.S. Migration:
   Restrictive border policies and anti-immigrant rhetoric are likely to limit migration. Stocks tied to remittance services, such as Western Union (NYSE:WU), Euronet (NASDAQ:EEFT), and Remitly (NASDAQ:RELY), are expected to be impacted.
8. U.S. Policy Uncertainty:
   Analysts remain watchful of consumer health and potential adverse policy effects on spending and cross-border trade. These factors remain unpredictable but could influence the fintech landscape in 2025.
9. Deregulation Opportunities:
   Companies with significant exposure to deregulation themes include Marqeta (NASDAQ:MQ), Visa (NYSE:V), Mastercard (NYSE:MA), Alkami (NASDAQ:ALKT), Q2 Holdings (NYSE:QTWO), Jack Henry (NASDAQ:JKHY), Fiserv (NYSE:FI), Fidelity National Information (NYSE:FIS), PayPal (NASDAQ:PYPL), and Block (NYSE:SQ).
10. Another Digital Asset Cycle:
    Enhanced regulatory clarity may boost digital asset use cases, especially Stablecoins in cross-border and wholesale trade. Analysts are closely monitoring these developments for broader applications.

Citi’s comprehensive analysis highlights opportunities and challenges shaping the fintech sector in 2025, underscoring its resilience and potential for innovation.