Navigating the uncertain North American fintech landscape

A guest editorial by Nicky Senyard, founder and chief executive officer of Fintel Connect

Last year was a whirlwind for North American fintech. Regulatory changes, technological leaps, shifts in U.S. government leadership, and a drop in investment marked 2024.

According to KPMG’s Pulse of Fintech, global fintech investment fell from $62.3bn in the second half of 2023 to $51.9bn in the first half of 2024, the lowest level since 2020. North America mirrored this trend, with fintech investment dropping from $38.4bn in the second half of 2023 to $27.3bn in the first half of this year.

Some major deals stood out, like Worldpay’s $12.5bn acquisition in the U.S. and Nuvei’s $6.3bn deal in Canada. These moves are more selective, prioritising strategic, mature acquisitions over early-stage fintechs looking for rapid expansion.

The real surprise was Regtech. Technology focused on regulatory compliance was the only subsector to see a boost, hitting $5.3bn in the first semester, proving how crucial compliance is becoming, especially with stricter data privacy laws and tighter regulatory oversight.  

As we move into the new year, fintechs are learning to adapt and prepare for an unpredictable 2025. Here is what we can expect for the next year:

Regulatory shifts

The coming year will likely bring more twists and turns for fintech, especially with the impact of changing administrations on fintech regulation and its ripple effects.  

A change in government often means a shift in how fintech is regulated. Republican administrations have favored lighter regulation and free-market policies, while Democrats tend to emphasise stricter oversight. What does this mean for 2025? Fintech companies are bracing for possible changes, particularly around the Consumer Financial Protection Bureau (CFPB).  

Will there be less emphasis on enforcement? Or could we see a restructuring of the bureau itself? These questions are top of mind for fintech leaders. Whether the changes ease reporting requirements for community banks or alter oversight for platforms, the landscape could shift significantly.  

The outcome of fintech regulation next year is still unclear, but It’s important to remember that effective regulation isn’t about having more rules; it’s about having the right rules. Aligning regulatory frameworks with fast-paced technological advancements will be crucial.  

Market sentiment: the driver of fintech investment

Market sentiment has always been a powerful driver of fintech investment. Over the last couple of years, cautious investors sat on the sidelines, waiting for a better economic landscape, but with AI advancements and hints of economic recovery, optimism is returning. We may see renewed interest in areas like embedded finance, regtech, and financial inclusion technologies, but  Fintechs will need to tread carefully, balancing ambition with sustainable growth.  

AI and the future of fintech

AI is not just a buzzword anymore; it is becoming the backbone of innovation in fintech. From automating customer service to assessing credit risk, AI is everywhere. Still, fintechs must ensure AI-driven decisions are transparent, free from bias, and compliant with emerging regulations. As governments ramp up scrutiny on algorithms, staying ahead of these rules will be a top priority.  

In 2025, AI will likely become less of a stand-alone feature and more of a standard tool across the industry. Think of it as the engine quietly driving efficiency, better customer experiences, and entirely new solutions.  

Embedded finance is taking over

Embedded finance has been steadily gaining traction. Whether it’s e-commerce platforms offering buy-now-pay-later options or retail apps adding credit features, this trend is making financial services more accessible and convenient.  

In North America, this space holds massive potential, especially for reaching underserved markets.  However challenges like data privacy and security remain hurdles fintechs must clear to fully capitalise on this opportunity.  

The macro perspective: inflation, growth, and economic stability

Macroeconomic factors, including inflation and interest rates, will significantly influence the fintech landscape. A shift toward looser regulations might boost economic activity in the short term, but it could also increase inflation.  

Inflation affects consumer purchasing power, which, in turn, impacts the demand for fintech services. For instance, higher living costs may reduce the adoption of financial tools, while essential services like payment platforms or budgeting apps could see sustained demand.  

To thrive, fintechs must adopt a sustainable growth model. This includes managing resources efficiently, investing in talent, and leveraging partnerships to expand their capabilities.  

Embracing uncertainty with resilience

If there’s one thing 2024 has taught us, it’s the importance of resilience. Going forward, successful fintechs will be the ones that adapt quickly, invest in scalable technology, and build strong compliance frameworks. It’s not just about surviving; it’s about earning trust. Customers value transparency and reliability, especially in uncertain times. Fintechs that prioritise these will come out ahead. 

The North American fintech sector is at a turning point. Yes, the road ahead is uncertain, with regulatory shifts, market dynamics, and technological evolution creating a complex set of challenges, but it’s also an exciting time, filled with opportunities for those ready to innovate and adapt.

By staying flexible, focusing on sustainable growth, and keeping customers at the heart of their strategies, fintechs can turn today’s uncertainty into tomorrow’s success. One thing’s for sure: the next wave of financial innovation is just getting started.

Related: we interviewed Alana Levine, Fintel Connect’s chief revenue officer, on financial trends in the US and Canada.

Image: Fintel Connect

Guest Editorial This article was produced specially for Fintech Intel by an expert guest contributor.