Following the end of the zero interest-rate policy (ZIRP) phase, the US fintech industry has entered a “leaner era” characterized by investor focus on profitability and efficiency.
In this era, growth is being increasingly driven by financial infrastructure, particularly embedded finance and digital assets, according to a new report by Silicon Valley Bank (SVB).
The October 2025 edition of the Future of Fintech edition looks at the state of the fintech industry in the US, delving into funding and development trends.
During the ZIRP era, which ran from 2020 to mid-2022, cheap capital financed capital-heavy lending models. This period has ended, giving way to a more disciplined phase centered on sustainable growth. This change is evident in funding data. In 2022, at the peak of fintech, the sector represented over 20% of US venture capital (VC) investment. The space now accounts for less than 10% of VC dollars.
The trend is also reflected in a global shift from early-stage funding toward larger rounds for established venture with strong financial performance. According to CB Insights, mid- and late-stage fintech deals reached a four-year high in 2025, accounting for 22% of all fintech transactions in the first three quarters of the year. In contrast, early-stage deals have declined to 66% of total activity, marking a five-year low.
Embedded finance takes center stage
In this era, embedded payments and digital assets have become the key drivers of fintech growth, with finance being now directly embedded into software-as-a-service (SaaS).
Embedded payments, in particular, is now widespread, with more than half of relevant independent software vendors offering embedded payments in North America in 2025, according to Boston Consulting Group (BCG).
In parallel, many small and medium-sized enterprises (SMEs) are now accustomed to using payments integrated directly into their SaaS platforms. SME adoption of vertical software reached 59% in the US in 2024, compared with 50% just two years earlier.
BCG estimates that in North America and Europe, the total addressable market (TAM) for embedded finance is about US$185 billion across four core products, namely payments, capital solutions, accounts, and card issuing. However, current penetration stands at around US$32 billion, leaving significant room for growth.
Digital assets reach mainstream adoption
Digital assets are another key vertical in the current fintech era, with crypto-focused companies dominating key VC metrics. The median early-stage pre-money valuation for crypto firms now stands at US$45 million, surpassing financial business process software (US$32 million), banking and capital markets (US$31 million), and payments (US$27 million). Crypto’s median valuations are now roughly three times higher than those in alternative lending.
In parallel, crypto-focused funds are dominating fintech investing. Funds with a crypto mandate account for two-thirds of all fintech funds. The top quartile internal rate of return (IRR) of these funds stands at 30%, compared with 22% across all VC funds.
The crypto market has reached mainstream maturity, establishing itself as a global store of value on par with conventional global assets. The total cryptocurrency market capitalization has surpassed US$4 trillion, rivaling the world’s most valuable company, NVIDIA, and becoming one-sixth the size of the global gold market.
As crypto adoption grows, blockchain’s core utility is driving momentum in stablecoins. These digital assets are pegged to fiat currencies and backed by reserves, bridging the gap between fintech and traditional finance.
Institutional players are now exploring stablecoins at scale. JPMorgan is piloting a blockchain settlement system, while retail giants Walmart and Amazon are evaluating stablecoins as alternatives to legacy payment rails like ACH.
Slower revenue growth but higher investor expectations
Another key trend highlighted by SVB is the widening gap between fintech growth rates and investor expectations.
For fintech companies, growth has become harder to come by, and yet investors are demanding stronger revenue performance than ever before. Between late 2021 and the end of 2023, revenue growth rates have fallen by over half for fintech companies. Currently, only half of companies with over US$25 million in revenue are growing 25% per year. That’s down from 83% at the end of 2021.
While companies are growing slower, investors are expecting more in terms of absolute revenue. Companies raising a Series A round needed just US$1 million in revenue in 2020-2021. Today, that benchmark has quadrupled to roughly US$4 million. Similar trends have also played out at Series B and Series C.
Featured image: Edited by Fintech News Switzerland, based on image by user5604845 via Freepik
