Fintech Challenges 2026

Fintech challenges at a glance in 2025–2026

Global fintech revenues crossed the $300 billion mark in 2023, with projections pointing toward a $1 trillion industry by 2032. Yet beneath these impressive growth numbers, the fintech industry faces mounting pressures that threaten to derail unprepared players. Regulatory scrutiny has intensified, funding has tightened, and cyberattacks have grown more sophisticated.

The global fintech market sits at approximately $305–340 billion as of 2023, with over 26,000 fintech startups operating worldwide. At the same time, record regulatory fines have reshaped the landscape. N26 faced multi-million-euro penalties for AML shortcomings in 2021. Binance settled with US authorities for $4.3 billion in 2023. Wells Fargo continues dealing with fallout from compliance failures stretching back years. These aren’t isolated incidents—they signal a fundamental shift in how regulators approach financial technology.

This article focuses on practical fintech challenges for startups, incumbents, and executives navigating 2025–2026. We’ll cover real-world examples including ransomware attacks on banking-as-a-service providers, interest rate shocks that killed growth-at-all-costs business models, and regulatory crackdowns across payments, crypto, and lending.

Here are the main challenge groups shaping the fintech sector today:

• Funding constraints: Venture capital volumes have dropped to levels not seen since 2017, forcing startups to demonstrate clear paths to profitability
• Cybersecurity threats: Ransomware gangs, synthetic identity fraud, and API exploitation continue to escalate
• Regulatory compliance: A fragmented patchwork of GDPR, MiCA, PSD2/PSD3, and evolving AML requirements creates operational complexity
• Tech talent shortages: Cloud-native engineers, ML specialists, and compliance experts remain scarce and expensive
• User experience expectations: Consumers now expect instant, frictionless experiences that many legacy systems cannot deliver
• Competition from big tech and banks: Apple Pay, Google Pay, and well-funded incumbent transformations squeeze market space

3 core fintech challenges for startups

By late 2025, over 25,000 active fintech startups compete globally for customers, capital, and regulatory approval. Despite this activity, failure rates remain stubbornly high—most startups don’t survive beyond 3–5 years. The post-COVID era of cheap money has definitively ended, exposing business models built on the assumption that growth would eventually solve everything.

This section examines three recurring pain points that fintech companies face in their earliest and most vulnerable stages: valuation uncertainty, fundraising in a tighter market, and differentiation against dominant players. Understanding these challenges prepares founders for the strategic decisions that will determine whether they survive or join the startup graveyard.

Is fintech a “balloon” or a “bubble” in 2026?

The “balloon versus bubble” metaphor captures the central debate about fintech’s future trajectory. A balloon represents slower but sustainable growth—expanding steadily with fundamentals intact. A bubble, by contrast, implies an imminent pop reminiscent of the dot-com crash in 2000.

The data suggests a more nuanced reality:

• European fintech deals climbed from approximately 1,800 in 2015 to over 8,000 by 2022, showing genuine expansion in financial services innovation
• 2023–2024 saw fewer mega-rounds but more early-stage deals, indicating a market correction rather than collapse
• Sectors still attracting significant capital include embedded finance, Banking-as-a-Service (BaaS), regulatory technology, InsurTech, and B2B payments
• New technologies support the “balloon” thesis: AI copilots for customer service, LLMs for underwriting automation, on-chain settlement for cross-border payments, and open banking APIs mandated by PSD2/PSD3 in the EU

Markets like the UK, EU, US, and Singapore continue to attract investment, though with greater scrutiny on unit economics. The global economy still needs faster, cheaper, more accessible financial services. That fundamental demand hasn’t disappeared—it’s simply being channeled toward companies that can demonstrate sustainable business models.

Raising venture capital in a tighter market

Fintech VC funding peaked around 2021 before falling sharply through 2022–2023. According to CB Insights and PitchBook data, funding nearly halved from 2021 records. This isn’t a temporary dip—it represents a structural reset in how investors evaluate fintech startups.

Investor priorities in 2025–2026 have fundamentally shifted:

• Path to profitability: Clear timelines for reaching breakeven, not just user growth projections
• Unit economics: Customer acquisition costs, lifetime value, and margin analysis must withstand scrutiny
• Regulatory strategy: Detailed compliance roadmaps showing which licenses are needed and when
• Defensible technology: Proprietary systems or data advantages that competitors cannot easily replicate

Validation tactics that resonate with investors include:

• Pilot projects with established banks or financial institutions demonstrating real-world traction
• Regulatory sandbox approvals from bodies like the UK FCA Sandbox or MAS Sandbox Express in Singapore
• Paying customers rather than free sign-ups or waitlist numbers
• Cohort retention data showing actual user engagement over time

Founders must tailor pitch decks to anticipate compliance and security questions. Include detailed sections on your KYC/AML approach, security architecture, and actual retention metrics rather than vanity metrics.

Notable raises since 2023 prove capital remains available for the right opportunities. Stripe’s 2023 round demonstrated continued confidence in proven infrastructure plays. Revolut maintained its growth trajectory despite market headwinds. Klarna’s down-round recovery showed that even challenged companies can rebuild when fundamentals improve.

Finding the right investor–partner

Not all capital is created equal. The difference between “any capital” and “smart capital” can determine whether a fintech startup navigates regulatory hurdles successfully or burns through runway before reaching market.

Sector-experienced investors—dedicated fintech funds in London, New York, Berlin, and Singapore—bring more than money:

• Deep understanding of banking regulation across jurisdictions
• Established networks with regulators who can smooth licensing processes
• Existing partnerships with banks that might become customers or distribution partners
• Patience for long enterprise sales cycles that can stretch 12–18 months

Founders should build pitch decks anticipating questions on:

• KYC/AML compliance approaches and vendor relationships
• PCI DSS certification status and timeline
• SOC 2 audit completion or planning
• Cloud security posture across AWS, Azure, or GCP environments

Due diligence works both ways. Before accepting investment, check potential investors’ previous portfolio exits in payments, lending, and wealthtech from 2015–2024. Talk to other founders in their portfolio about the support they received during difficult periods. The best investors help navigate regulatory challenges—the worst disappear when problems arise.

Competing with dominant banks and tech giants

Fintech startups don’t compete in a vacuum. They face pressure from multiple directions simultaneously.

Key competitors include:

• Global banks: JPMorgan, HSBC, Barclays, and other institutions with massive balance sheets and regulatory licenses
• Payment networks: PayPal, Visa, Mastercard with established merchant relationships and brand trust
• Big tech: Apple Pay, Google Pay, Amazon financial services, and Alibaba’s Ant Group with billions of existing users

B2C fintech firms succeed by focusing on underserved segments:

• Gig workers needing flexible income management and instant access to earnings
• Migrants requiring low-cost remittances and multi-currency accounts
• Gen Z in emerging markets seeking mobile-first banking experiences
• Niche products like fractional investing, teen banking (GoHenry), or climate-focused banking

B2B fintech companies win by tackling specific pain points:

• High cross-border payment fees that eat into margins for international businesses
• Slow corporate onboarding where KYC processes stretch weeks
• Costly compliance requirements for SMEs that cannot afford dedicated teams

Real differentiation examples prove these strategies work. Revolut built its initial user base on multicurrency travel cards starting in 2015. Wise (formerly TransferWire) focused relentlessly on low-cost international transfers. M-Pesa in Kenya demonstrated that mobile money could reach populations entirely ignored by traditional banking.

5 structural fintech challenges for incumbents

Banks, insurers, and brokers face existential pressure from digital-only challengers while simultaneously managing regulatory requirements that grow more complex each year. Many institutions still run COBOL-based core systems dating to the 1980s–1990s, making digital transformation slow, expensive, and risky.

Several high-profile incidents since 2020 demonstrate the cost of inaction. The Capital One 2019 breach aftermath stretched for years with regulatory and legal consequences. The Evolve Bank & Trust ransomware incident in 2024 exposed customer data across multiple neobank partners, revealing systemic vulnerabilities in the BaaS ecosystem.

These five themes define the structural challenges facing incumbents:

1. Data security and ransomware threats
2. Regulatory compliance across multiple jurisdictions
3. Legacy technology and lack of modern expertise
4. User retention and digital experience gaps
5. Service personalization at scale

Data security and ransomware

The current threat landscape features coordinated ransomware gangs, API exploitation, and supply-chain attacks targeting vendors that banks and neobanks depend upon.

Specific incidents illustrate the severity:

• The 2024 ransomware attack on Evolve Bank & Trust exposed customer data affecting partner neobanks, demonstrating how BaaS concentration risk can cascade across the ecosystem
• Average data breach costs in the financial industry now exceed $4.8 million per incident, not including long-term reputational damage
• Attack vectors have expanded beyond phishing to include credential stuffing, API abuse, cloud misconfigurations, and compromised third-party integrations

Regulatory expectations have hardened in response:

• Multi-factor authentication requirements across customer-facing and internal systems
• Encryption at rest and in transit for all sensitive financial data
• Annual penetration testing at minimum, with additional testing after major releases
• Documented incident-response runbooks that can be activated within hours

Security standards and frameworks guiding compliance include PCI DSS for card data, ISO/IEC 27001 for information security management, NIST CSF for cybersecurity frameworks, and zero-trust architectures for cloud environments on AWS, Azure, and GCP.

Regulatory compliance across jurisdictions

Financial institutions face an alphabet soup of regulations that differ by geography, product type, and customer segment.

Key regulatory frameworks include:

• GDPR in the EU: Maximum penalties of €20 million or 4% of global turnover, with strict data protection and consent requirements
• GLBA and CFPB rules in the US: Consumer financial protection with evolving interpretations
• PSD2/PSD3: Open banking mandates requiring data sharing with authorized third parties
• MiCA for crypto assets: EU-wide framework with licensing requirements taking full effect by mid-2026
• AML directives: Evolving requirements for transaction monitoring, suspicious activity reporting, and sanctions screening

Real fine amounts underscore the stakes:

• N26 received multi-million-euro penalties for AML shortcomings in 2021
• Binance settled with US authorities for $4.3 billion in 2023
• GDPR fines across the finance industry have reached hundreds of millions of euros

Fintech firms operating in both the US and EU must simultaneously comply with KYC/AML requirements, sanctions screening (OFAC lists), and consumer-protection rules that change annually. Most successful firms blend in-house compliance officers with specialized RegTech vendors offering automated transaction monitoring, sanction screening, and regulatory reporting.

Legacy technology and lack of modern expertise

Many banks rely on monolithic core systems written in COBOL or running on mainframe architectures. These systems make real-time APIs, 24/7 availability, and mobile UX difficult or impossible to deliver without fundamental rewrites.

Common constraints include:

• Batch processing that runs overnight rather than real-time transaction updates
• Inflexible data structures that cannot accommodate new product types
• Limited integration capabilities requiring manual file transfers or screen scraping
• Shortage of engineers who understand both legacy systems and modern cloud-native development

Digital transformation projects frequently stall because in-house teams lack cloud, Kubernetes, or microservices experience. Staff trained on legacy systems may resist or struggle with new approaches.

Typical solutions involve:

• Partnering with experienced fintech development teams that can bridge legacy and modern systems
• Hiring product teams with mobile and cloud-native skills from outside traditional banking
• Using BaaS platforms to launch new product offerings faster than internal development allows
• Gradual core modernization with API layers that abstract legacy complexity

UK bank outages from core migration projects between 2018–2023 demonstrate the risks when legacy technology updates go wrong—customers locked out of accounts, payments failing, and regulatory investigations following.

User retention and digital experience

Many banks’ apps lag significantly behind fintech UX benchmarks set by Revolut, Cash App, and Nubank. This gap translates directly into lower engagement, higher churn, and reduced cross-sell opportunities.

Common UX issues affecting incumbent apps:

• Slow login processes requiring multiple authentication steps without smart device recognition
• Confusing navigation structures that bury common actions under multiple menu levels
• Delayed transaction updates that leave customers uncertain about their actual balance
• Lack of instant card controls (freeze, unfreeze, spending limits)
• No in-app support chat, forcing customers to call centers

Poor UX has measurable business impact:

• Higher call-center volumes as customers seek help with tasks the app should handle
• Lower cross-sell conversion for credit, investment, and insurance products
• Reduced Net Promoter Scores affecting acquisition through word-of-mouth
• Declining active-user ratios as customers maintain accounts but disengage

Improvement practices proven by leading fintechs include comprehensive app analytics, A/B testing for feature changes, and adoption of UX patterns that work: instant notifications, spending insights, savings goals with visual progress indicators, and contextual offers based on actual behavior. Mobile and web experiences should be considered separately for retail consumers versus SME business customers.

Service personalization at scale

Customer expectations have risen dramatically. Users now expect tailored offers, dynamic credit limits, personalized investment portfolios, and context-aware alerts based on their actual behavior—not generic promotions.

AI and machine learning enable these capabilities:

• Recommendation engines suggesting relevant products based on transaction patterns
• Behavioral scoring models that predict churn or identify cross-sell opportunities
• Dynamic pricing and limit adjustments based on real-time risk assessment
• Contextual notifications triggered by specific behaviors or life events

Large incumbents have piloted personalization platforms since 2022, often starting with simple use cases like category-based spending insights before advancing to more sophisticated applications.

Risks require careful management:

• Over-personalization fatigue when customers feel surveilled rather than served
• Privacy concerns under GDPR, CCPA, and similar regulations requiring explicit consent and data minimization
• Model governance requirements to avoid bias in credit decisioning or targeting
• The need for human oversight on consequential decisions affecting customer access to financial products

Cross-cutting challenges: cybersecurity, compliance, and tech integration

Some challenges transcend the startup versus incumbent divide. Cyberattacks, regulatory changes, and integration complexity hit everyone in the fintech ecosystem. A single major incident in any of these areas can wipe out years of trust-building and growth.

This section bridges perspectives, examining risks that fintech startups, established financial institutions, and their technology partners must all address.

Preventing high-impact cybersecurity incidents

Cyber risk consistently ranks as the number one concern in bank and fintech CISO surveys from 2023–2025. The threats are real, sophisticated, and evolving.

Common attack vectors include:

• Credential stuffing: Automated testing of stolen username/password combinations across multiple services
• Phishing: Increasingly sophisticated social engineering targeting employees with access to sensitive systems
• API abuse: Exploiting poorly secured endpoints to extract data or execute unauthorized transactions
• Cloud misconfigurations: S3 buckets, database instances, or containers left exposed due to configuration errors
• Supply-chain attacks: Compromising KYC providers, core banking SaaS platforms, or payment gateways to reach multiple targets

The numbers are sobering:

• Average breach cost in financial services: approximately $5 million
• Time to detect and contain without proper monitoring: often over 200 days
• A single successful attack can trigger regulatory investigations, customer lawsuits, and permanent brand damage

Best-practice themes for cybersecurity vulnerabilities mitigation:

• Encryption in transit and at rest for all sensitive data
• Strong authentication including passwordless options where possible
• Bug bounty programs inviting security researchers to find vulnerabilities before attackers do
• Regular red-team exercises simulating real attack scenarios
• Secure software development lifecycle (SDLC) with code review and vulnerability scanning

Keeping up with evolving legal and regulatory requirements

The regulatory landscape shifts faster than many organizations can adapt. Regulatory changes announced in 2024 will reshape operations through 2026 and beyond.

Recent and upcoming regulatory developments:

• EU MiCA: Comprehensive crypto-asset regulation with licensing requirements taking full effect by mid-2026
• Buy-now-pay-later scrutiny: UK FCA and US CFPB increasing oversight of BNPL providers
• Open banking expansion: Movement toward “open finance” covering investment accounts, pensions, and insurance
• EU AI Act: High-risk AI obligations hitting in August 2026, requiring explainability and governance for credit scoring and fraud detection systems

Operating across multiple markets multiplies the burden. A fintech serving the US, EU, and UK must manage different KYC thresholds, data-retention rules, and consumer-protection laws simultaneously. Cross border compliance requires dedicated resources and often specialized legal counsel in each jurisdiction.

Strategic compliance approaches that work:

• Horizon scanning: Systematically monitoring regulatory proposals before they become requirements
• Industry body participation: Joining associations that can provide early insight and collective advocacy
• Continuous training: Keeping staff current on evolving rules rather than one-time onboarding
• RegTech solutions: Automated reporting, transaction monitoring, and regulatory change management

Record AML fines between 2018–2023 and high-profile settlements fundamentally changed market behavior, pushing compliance from a cost center to a strategic priority.

Ensuring interoperability and third-party integrations

Open banking and APIs have transformed how financial services connect and operate.

Major frameworks include:

• PSD2 in the EU since 2018, requiring banks to share account data with authorized third parties
• UK Open Banking creating standardized APIs and governance
• India’s UPI and Account Aggregator framework enabling seamless payments and data sharing
• Brazil’s Pix and open-finance initiatives expanding real-time payments and data portability

Typical fintech integrations span dozens of services:

Integration challenges persist:

• Versioning: Managing API updates across multiple vendor relationships
• Vendor outages: Single points of failure when critical services go down
• Rate limits: Throttling that can affect transaction throughput during peak periods
• Inconsistent SLAs: Different uptime guarantees and support responsiveness
• Legacy systems: Sometimes accessible only via robotic process automation or file transfers

Architectural guidance for resilience:

• Modular services that can swap vendors without major rewrites
• Clear API governance defining standards, documentation, and version management
• Contingency plans for critical vendors (e.g., secondary payment gateway for failover)

Payment network downtime incidents in 2022–2024 demonstrated that even major infrastructure providers can fail, making backup strategies essential.

Top fintech technology opportunities that also create challenges

Certain technologies—blockchain technology, artificial intelligence, machine learning, big data, and Web3—offer transformative potential while introducing their own risks and learning curves. The fintech firms that succeed will be those that can harness these emerging technologies while managing the compliance, security, and operational challenges they bring.

Blockchain and digital assets

Market forecasts project the global blockchain market reaching tens of billions of dollars by mid-decade, with double-digit compound annual growth rates.

Core benefits driving adoption:

• Tamper-evident ledgers providing auditable transaction histories
• Programmable money through smart contracts enabling complex financial logic
• Faster settlement compared to ACH and SWIFT, reducing counterparty risk

Challenges remain substantial:

• Regulatory uncertainty: Ongoing debates about whether tokens are securities or commodities
• Custody risk: Securing private keys and protecting against theft
• Protocol vulnerabilities: DeFi protocol hacks have resulted in billions in losses since 2020
• Energy consumption: Though improving post-Ethereum merge, sustainability concerns persist

Real use cases demonstrate blockchain moving beyond speculation:

• Cross-border payment pilots reducing settlement from days to minutes
• Tokenized deposits enabling 24/7 instant transfers between institutions
• CBDC experiments including China’s e-CNY and ECB digital euro tests exploring digital currencies
• Tokenized real-world assets bringing traditional securities onto blockchain rails

Artificial intelligence in fintech

AI applications now span virtually every aspect of financial services.

Current deployment areas:

• Fraud detection: Real-time transaction scoring identifying suspicious patterns
• Document processing: eKYC using OCR and natural language processing
• Customer service: Chatbots handling routine inquiries and reducing support load
• Robo-advisory: Automated investment management based on risk profiles
• Credit scoring: Alternative data analysis expanding access beyond traditional bureau scores
• Process automation: Internal workflows streamlined through intelligent automation

The acceleration of generative AI since late 2022 (ChatGPT and similar systems) has expanded possibilities for customer interaction, document generation, and analysis.

Challenges require careful navigation:

• Model risk management: Documenting, testing, and monitoring AI systems throughout their lifecycle
• Explainability: Ability to explain individual decisions, especially for credit
• Data privacy: Ensuring training data complies with GDPR, CCPA, and sector-specific rules
• Bias: Preventing discriminatory outcomes when models learn from historical data

Regulators increasingly focus on AI governance. The EU AI Act classifies many financial AI applications as “high-risk,” requiring transparency, auditability, and human oversight with obligations taking effect in August 2026. US guidance on AI in credit underwriting continues evolving.

Machine learning and predictive analytics

Machine learning serves as the engine behind pattern detection in transaction data, enabling capabilities from anomaly detection to personalized offers.

Key application domains:

• ML-based fraud scores at card networks identifying suspicious transactions in milliseconds
• Credit-risk models in online lending assessing borrower probability of default
• Churn-prediction models for neobanks identifying at-risk customers before they leave
• Dynamic pricing adjusting terms based on real-time risk assessment

Implementation challenges:

• Data requirements: Need for large, clean datasets that may not exist or may be siloed
• Overfitting risk: Models that perform well on training data but fail in production
• Continuous monitoring: Model drift as underlying patterns change over time
• Talent scarcity: Experienced ML engineers command premium compensation

Regulators require documentation of model performance, fairness testing, and human oversight on key decisions. Models affecting credit access must demonstrate they don’t discriminate against protected classes—a requirement that demands ongoing validation and data accuracy monitoring.

Big data and real-time analytics

Big data sources available to fintech firms have expanded dramatically:

Business benefits from comprehensive data analysis:

• More accurate customer segmentation for targeted products
• Behavior-based credit scoring expanding access to thin-file customers
• Data-driven product design based on actual usage patterns
• Real-time risk monitoring identifying problems before they escalate

Infrastructure challenges:

• Architectural decisions between data lakes and warehouses
• Streaming pipelines for real-time processing requirements
• High cloud costs as data volumes grow
• Strict access-control requirements under regulatory frameworks

Regulations affecting data use include GDPR data-minimization and consent requirements, CCPA rights in California, and data-localization laws in markets like India that require data to remain within national borders.

Web3 and the future of decentralized finance

Web3 represents a decentralized, blockchain-based evolution of the internet incorporating crypto wallets, DeFi protocols, NFTs, and decentralized identity systems.

Potential impact on fintech:

• Non-custodial wallets giving users direct control of assets
• Peer-to-peer lending without traditional intermediaries
• On-chain exchanges operating 24/7 without centralized operators
• Tokenized real-world assets (RWA) bringing traditional securities onto blockchain infrastructure

Experiments between 2020–2024 have tested these concepts:

• “DeFi summer” 2020 demonstrated demand for decentralized financial services
• Institutional pilots of tokenized bonds explored on-chain issuance and settlement
• Regulatory sandboxes in multiple jurisdictions explored how DeFi might integrate with existing frameworks

Challenges limit current adoption:

• Unclear regulation: SEC enforcement actions against crypto firms in the US create uncertainty
• Smart-contract vulnerabilities: Code exploits have resulted in billions in losses
• UX friction: Managing private keys, gas fees, and transaction signing remains complex
• AML concerns: Regulators worry about pseudonymous transactions enabling illicit finance

Web3 remains promising but early and unevenly regulated. Only a subset of fintech firms are experimenting seriously, while most maintain focus on traditional rails while watching how regulatory frameworks evolve.

Fast-growing fintech startups turning challenges into opportunities

Real companies demonstrate that challenges can become competitive advantages. Each example below illustrates how technology and clever positioning help fintech startups overcome the obstacles discussed throughout this article.

GoHenry: financial literacy for kids and teens

GoHenry offers prepaid cards and an accompanying app targeting 6–18-year-olds. Launched in the UK and later expanded to the US, the company addresses a segment traditional banks largely ignored: early financial education with parental oversight.

Key elements of their approach:

• Focused segment: Rather than competing with general banking apps, GoHenry owns the youth financial literacy niche
• Adoption metrics: Over 1 million members with solid app ratings (~4.3/5) on both major app stores
• Compliance navigation: Partnerships with licensed banks and payment processors handle regulatory requirements while GoHenry focuses on the customer experience
• Parental tools: Clear oversight features address adult concerns while giving children age-appropriate financial autonomy

The success demonstrates how narrow segment focus can beat broad, generic competitors.

M1 Finance: automated investing for the mass market

M1 Finance provides commission-free automated investing through customizable “pies” (portfolio allocations), plus borrowing and spending features. Launched in the US in the mid-2010s, the platform brings sophisticated portfolio management to retail investors with low minimums.

Their approach leverages technology to democratize investing:

• AI and automation: Intelligent rebalancing and fractional shares make complex strategies accessible
• User metrics: Hundreds of thousands of app downloads with ratings around 4.5/5
• Regulatory discipline: Compliance with SEC/FINRA rules for investment advisers and broker-dealers
• Security focus: Robust cybersecurity as assets under management grow into the billions

M1 Finance shows how technology can improve customer experience while operating within tight securities regulation.

Figure: blockchain-powered lending and payments

Figure uses blockchain rails (built on Provenance) to power home equity lines of credit (HELOCs), personal loans, and payment solutions. The company serves both retail customers and institutions, demonstrating a hybrid B2C/B2B fintech model.

Blockchain enables specific advantages:

• Reduced settlement times compared to traditional paperwork-heavy lending
• Lower back-office costs through automated verification and recording
• Transparent audit trails that can satisfy regulatory requirements
• Potential for secondary market trading of loan assets

Challenges include convincing regulators and investors that on-chain records can meet audit, transparency, and consumer-protection standards—a process that requires ongoing education and demonstration.

Treasuryspring: modernizing institutional cash management

Treasuryspring operates as a web-based platform offering “Fixed-Term Funds” helping firms invest excess cash more efficiently and securely. Unlike consumer-focused fintechs, Treasuryspring targets institutional treasury operations.

The problem solved:

• Low yields on traditional money market products, especially post-2008 and during the 2010s–early 2020s low-rate environment
• Operational complexity in managing multiple bank relationships
• Counterparty risk concentrated in individual bank deposits

Currently operating as a browser-based service without a mobile app, the platform emphasizes institutional needs over consumer convenience. Compliance and integration challenges center on meeting strict risk and liquidity requirements that institutional clients must satisfy.

Not all successful fintech innovations target retail consumers with slick apps—some address deep institutional pain points.

Revolut: building a global financial “super app”

Revolut, founded in London in 2015, began with FX travel cards and expanded into a comprehensive multi-product fintech app spanning banking, crypto trading, stock investing, insurance, and more.

Scale and metrics:

• Over 30 million customers globally by mid-2020s
• High app ratings (~4.6/5) and tens of millions of downloads
• Presence across dozens of markets

Challenges navigated:

• Obtaining banking licenses in multiple jurisdictions (EU banking license obtained, ongoing efforts in UK and US)
• Managing compliance at scale across different regulatory regimes
• Fending off increased regulatory scrutiny as size and complexity grew

Personalization and UX drive engagement:

• Spending analytics helping users understand their financial behavior
• Vaults for goal-based saving with visual progress indicators
• Disposable virtual cards for secure online payments
• Instant notifications providing real-time transaction awareness

Revolut demonstrates how scaling while balancing regulation, cyber risk, and product expansion is possible—but requires constant investment in compliance and security infrastructure.

How specialist partners help solve fintech challenges

Many fintech firms and banks rely on experienced technology and consulting partners to tackle security, UX, and compliance problems that exceed internal capabilities or bandwidth.

Typical partner contributions:

• End-to-end product design from concept through launch and iteration
• Secure architecture meeting PCI DSS, SOC 2, and ISO 27001 requirements
• Cloud migration from on-premises legacy systems
• Regulatory alignment ensuring products meet compliance requirements before launch
• Ongoing support and optimization post-deployment

The value lies in concrete outcomes: crash-free launches, successful security certifications, improved NPS scores, and faster time-to-market than internal development alone could achieve.

Modernizing retirement and long-term savings

Consider a scenario: a Swiss or EU regional bank partnering with a tech provider around 2019–2022 to launch a digital pension app for mobile-first users.

Challenges solved:

• Complex pension regulation requiring specialized domain expertise
• Legacy pension administration systems not designed for customer-facing digital access
• Need for intuitive UX that non-expert users can navigate confidently

Results achieved:

• Onboarding time reduced from days to minutes
• Improved visibility into pension investments and projected retirement income
• Higher engagement among younger cohorts previously disengaged from retirement planning

Domain expertise combined with modern UX design can unlock slow-moving verticals like pensions that incumbents struggle to modernize alone.

Designing carbon-neutral, digital-only payment wallets

Environmental concerns increasingly influence financial product design. Consider a wallet designed to eliminate plastic cards entirely, supporting virtual cards with dynamic customizable images.

Technical and regulatory hurdles:

• PCI DSS certification for card data handling
• Tokenization for secure card-not-present transactions
• Integration with card networks for global acceptance
• Measurable green credentials that can withstand scrutiny

Outcomes:

• Reduced reliance on physical card production and distribution
• User-customizable virtual card experiences
• Alignment with ESG investment trends attracting environmentally conscious customers

Environmental goals intersect with payment security and UX requirements, creating complex but achievable product design challenges.

Transforming branch banking into omnichannel experiences

A large global bank might collaborate with a technology partner to build unified mobile and in-branch experiences over several years.

Integration challenges:

• Legacy CRM systems with incomplete customer views
• Core banking platforms with batch processing limitations
• Separate teller systems not connected to digital channels
• Multiple regional apps with inconsistent features and data

Benefits achieved:

• Context-aware offers based on complete customer relationship view
• Improved cross-sell conversion when staff and digital channels work together
• Real-time customer insights available in branch and mobile
• Higher satisfaction metrics as customers experience consistent service

Incumbents can use fintech-style product thinking to reinvent existing touchpoints rather than just launching separate new apps that compete with their own branches.

Summing up: navigating fintech challenges in the next decade

The fintech sector in 2026 operates under fundamentally different conditions than the growth-at-all-costs era of 2015–2021. Understanding and addressing challenges has become the price of entry, not an optional concern for mature companies.

Key challenges covered in this article:

While risk and regulation intensify, opportunities expand equally through artificial intelligence, blockchain, open banking, and Web3 experimentation. The technologies creating challenges also create competitive advantages for those who implement them thoughtfully.

Success through 2025–2030 requires three elements working together:

1. Strong compliance culture treating regulatory requirements as strategic enablers rather than obstacles
2. In-house technical capability in cloud, security, and modern development practices
3. Carefully chosen external partners bringing specialized expertise for areas outside core competencies

For founders, product leaders, and bank executives reading this: the path forward demands treating compliance and security as competitive advantages. Organizations that view fintech risk through a proactive approach rather than defensive posture will outperform those playing catch-up after incidents occur.

Financial inclusion, reduced friction, and a more resilient global financial system remain achievable goals. The fintech sector’s challenges are real, but so are the opportunities for those willing to build responsibly. The next decade will reward organizations that combine innovative technologies with the discipline to deploy them safely and compliantly.