Digital Banking Beyond the Milestones: Trends Reshaping the Second Half of 2025

In this edition, we unpack the most strategic shifts shaping digital banking across Europe, LATAM, and beyond. Drawing from the latest market signals (July–August 2025), we highlight:

• How profitability, licensing, and capital market plays are redefining FinTech credibility.

• Why distribution-first strategies — from telco integrations to SME workflows — are becoming the new battleground.

• The real impact of AI as it moves from hype to execution.

• How consolidation and acquisitions are shaping ecosystems across BNPL, SME, and merchant services.

• The global expansion strategies anchored in local licenses, acquisitions, and regulatory footholds.

C-Innovation’s perspective: The next phase of digital banking isn’t about chasing scale for its own sake. It’s about control — of capital, customer touchpoints, ecosystems, and regulatory anchors. The players aligning these levers with disciplined execution will define the winners of the next decade.

Profitability and Licensing Become Strategic Tools

In recent weeks we’ve seen profitability and licensing rise to the top of the strategic agenda. Qonto doubled profits and applied for a full banking license, showing how SME-focused FinTechs are preparing to compete directly with traditional banks. Wise secured approval to move its listing to New York, making capital-market positioning part of its global strategy. Revolut hit the headlines with a $75B valuation in a secondary share sale — no longer just a challenger, but standing alongside Santander and BNP Paribas in scale.

These moves are about more than numbers. They tell us that digital banks are building long-term trust with regulators and investors. Profitability proves resilience, licensing opens access to deposits and lending, and listings unlock deeper capital pools. Together, these levers shift FinTechs from disruptors to credible contenders.

Forward view: Expect more neobanks to tie their growth stories to discipline + visibility: profitability as proof of resilience, licenses as permission to expand, and listings as a gateway to capital.

Distribution as the New Battleground

We’ve also seen distribution strategies evolve rapidly. Nubank launched NuCel, embedding mobile connectivity into its app. Monzo began testing MVNO services in the UK, signalling a play to reduce churn by controlling not just the banking app, but the SIM card in the customer’s phone. Wise partnered with Google to integrate remittances directly into Search and Wallet, meeting users at the exact moment of intent. And Starling acquired Ember, folding accounting, payroll, and tax directly into its SME accounts.

This wave is less about adding features and more about embedding into daily routines. By owning the “front door” — whether through telecoms, search, or business workflows — digital banks lower acquisition costs, drive deeper engagement, and make switching away almost unthinkable.

Forward view: The next battleground will be who controls the on-ramp to financial services: telcos, super-apps, or search engines.

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AI Moving from Hype to Execution

The last weeks have also marked a turning point for AI. Ramp is using it to automate expense management, moving finance teams closer to autonomous workflows. Wells Fargo and Google Cloud are deploying “agentic AI” in compliance and operations. Grasshopper Bank has embedded Claude-powered natural language queries into its SME platform. Even in payments, AI is shaping the future, with Handwave in Latvia testing palm biometrics.

This is AI where it counts: cutting costs, boosting resilience, and enhancing customer trust. The narrative has shifted from marketing to measurable results. For SMEs especially, AI is becoming the new CFO copilot. Looking ahead, those who embed AI into core workflows — fraud detection, forecasting, compliance — will gain a lasting competitive edge.

Forward view: Expect FinTechs to differentiate by execution quality, not just AI adoption. Those who embed AI into back-end workflows (fraud, compliance, forecasting) will build long-term resilience.

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Consolidation as Ecosystem Control

Consolidation has accelerated. Klarna sold $26B of BNPL loans to Nelnet and another portfolio to Santander, de-risking its balance sheet while reinforcing its merchant-finance ecosystem. Zopa acquired Rvvup to bring payment orchestration for SMEs into its platform. Airwallex bought Openpay to expand into subscription billing, directly challenging Stripe. Starling folded Ember into its SME offering, while incumbents like JP Morgan are embedding supply-chain finance into Oracle and FedEx’s ERP workflows.

This isn’t consolidation for scale — it’s consolidation for control. By owning the workflows where money moves — invoices, payroll, subscriptions — these players secure recurring relationships and defensible revenue streams. The winners won’t be those with the most features, but those who become indispensable to businesses and merchants.

Forward view: Expect FinTechs to behave more like platforms, less like apps. The winners will own ecosystems, not just products.

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Global Expansion Anchored Locally

We’ve also seen global moves shift from “digital first” to “local anchor” strategies. Revolut entered Argentina through the acquisition of Cetelem, gaining immediate credit operations. Starling opened in Canada and bought a local lender to speed its North American ambitions. Wise deepened its LATAM presence with a Brazilian Payment Institution license and launched Wise Business on Pix rails. Mercado Pago applied for a Mexican banking license, aiming to evolve from wallet to full bank. TransferMate secured a Singapore license to bolster cross-border payments.

Global ambition without local depth no longer works. These moves show that the path forward is acquisition- and license-led, signalling permanence to regulators and embedding products in local ecosystems. The global neobank of the future will look less like a single app and more like a federation of locally licensed entities.

Forward view: The “global neobank” of the future will be a federation of locally licensed units, not a monolithic app.

From Growth to Control — and Now to Intelligent Scale

The July–August signals show that the era of growth at all costs is firmly behind us. Profitability, licensing, distribution, AI, consolidation, and local anchoring are no longer optional — they are the foundations of credibility. What we are witnessing is the consolidation of digital banking as a mainstream, institutional force.

What to expect going forward:

• Profitability will harden into expectation, not aspiration. Investors and regulators will treat losses not as the price of disruption, but as a sign of weakness. Digital banks will need to sustain profits while continuing to innovate.

• Distribution models will fragment. Some players will embed via telecoms, others via search, and others via SME workflows. The winners will be those who control the customer’s default entry point into financial services.

• AI will evolve from execution to prediction. In the next 24 months, expect digital banks to move from automating workflows to offering predictive, personalised insights — becoming financial copilots rather than passive apps.

• Consolidation will intensify. Owning adjacent workflows (accounting, payroll, billing) will decide who becomes indispensable to SMEs and merchants. The lines between banks, SaaS, and payment platforms will blur further.

• Global expansion will look more like multinational banking. The global FinTech of the future will be a federation of locally licensed, locally adapted entities, tied together by common technology, compliance, and brand.

The next chapter of digital banking

We believe the next stage will be defined by intelligent scale: profitable, AI-augmented, ecosystem-embedded, and locally anchored institutions that can operate globally with credibility. They won’t look like the lean disruptors of 2015, nor like the slow incumbents of the past. Instead, they will merge discipline with innovation — reshaping the competitive landscape of banking for the decade ahead.

C-Innovation’s perspective: Control has become the foundation; intelligent scale will be the differentiator. The banks that master both will not only survive the next cycle — they will redefine what it means to be a global financial institution.

At C-Innovation, we don’t just track the news — we deliver the context, benchmarks, and forward-looking insights that empower our clients to lead, not follow.

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