Investor insights on fintech’s future: Confidence holds amid valuation concerns
Fintech investors are cautiously optimistic about the sector’s future, despite mounting concerns over valuations. A new survey by Fintech Connect reveals that while 69% of investors are uneasy about fintech valuations – with a quarter being “extremely concerned” – the majority (70%) still foresee steady growth over the next three to five years, demonstrating their faith in the sector’s potential to deliver.
Commenting on the findings, Laurence Coldicott, senior content director at FinTech Connect, said: “It’s clear that investors still see fintech as a transformative force, which is driving ongoing interest in the space. But the findings also highlight a shift in how investments are being approached: criteria are tighter, and fintechs need to show resilience and scalability to attract funding in this selective market. The positive sentiment among 67% of investors is a good sign, but they also indicated that this is a long-term game. With most targeting returns within three to five years, patience is key, as is the focus on identifying solutions with staying power.”
The survey also identifies several key trends that investors believe will shape fintech over the next five years. The rise of AI was cited by 71% of respondents as the most transformative trend. Investors see AI reshaping everything from customer experiences to operational efficiency, showing interest in solutions that leverage this technology.
Greater regulatory oversight and compliance with stringent frameworks such as AML/KYC requirements, DORA, and APP fraud prevention measures are viewed as critical challenges by 52%, adding complexity to the investment landscape. Furthermore, half of respondents expect increased consolidation, reflecting a maturing sector where scale and synergy are becoming vital for survival.
Investors are channelling their focus into specific areas of innovation, with payments and transfers (83%), wealthtech (70%), and AI applications (64%) dominating interest. By contrast, blockchain and cryptocurrency investments continue to lag, with only 15% of respondents expressing interest in these areas.
Laurence added: “Startups are under pressure to deliver on multiple fronts. Investors want to see innovative technology, proven market traction, and compliance with regulations. At the same time, ESG and sustainability goals can’t take a backseat, with 80% of investors citing them as a medium or top priority. The challenge for fintech companies is to show they can balance these priorities whilst demonstrating how their products address real-world needs. A strong growth story, supported by credible metrics and clear scalability will capture attention in this competitive environment.”
Private equity was identified as the most promising source of fintech investment by 48% of respondents, ahead of venture capital (32%). Investors also revealed strong geographical preferences, with the UK (94%), USA (85%), and Ireland (68%) leading as the most attractive regions for fintech opportunities.
Interestingly, investors are evenly split between prioritising profitability (51%) and innovation (49%), reflecting the need for fintechs to deliver both cutting-edge solutions and tangible returns. As the sector adapts to changing market conditions, the report highlights an optimism among investors. With careful navigation of challenges and a focus on delivering sustainable growth, fintech companies and their investors can continue to thrive.
More findings from the research will be revealed as we get closer to this year’s FinTech Connect event on 4-5 of December, at ExCeL, London.
For more details, visit https://www.alphaevents.com/events-fintech-connect-london.
