After years of caution, IPOs (initial public offerings) from private financial technology companies are back!

With Chime’s announcement this week and Circle going public last week, the financial services industry is breaking away from a malaise & inactivity that plagued innovation in the last 3-4 years.

These milestone IPOs are more than mere exits — they’re indicators of investor momentum and signs of stakeholders (i.e. banks, regulators, vendors, etc.) validating FinTech as the way forward for the industry.

In the discussion below, we briefly breakdown how these IPOs impact for the financial ecosystem in the US — from restarting early-stage funding, regulatory transparency to more collaborative bank-fintech relationships.

The industry is heating back up for the 2nd half of 2025!

Chime’s IPO: Challenger Banks Can Succeed

Chime’s IPO is one of the most highly anticipated in years.

Built on a mantra of no-fee digital banking, Chime quickly gained millions of users and became the leading neobank in the US. The company matured from a cash burning startup to an established brand within reach of profitability.

Being able to IPO in this market climate shines a light for growing consumer banking brands — there is a path ahead despite narrowing margins and increasing regulatory obligations of sponsor banks. Direct-to-consumer fintech is not dead in 2025. With an emphasis on cost-conscious growth and differentiation, companies can acquire customers and operate with efficient overhead.

A critical move that enabled success was Chime’s ability to gain additional revenue streams beyond interchange from card spend. By offering credit products, overdraft protection, early wage access, and workplace benefit solutions, Chime created a balanced growth strategy that competitors were unable to replicate.

Maintaining positive, stable relationships with bank partners was also important. Some neobanks may be forced to leave a partnership due to high volume growth or risk practices — Chime was able to keep its initial partner and add another (now working with The Bancorp and Stride Bank).

Before compliance-first became the industry-wide mindset, Chime was fully committed to best-in-class risk management. Investments in fraud mitigation, dispute resolution, and client support services paid off in the form of minimizing regulatory findings and building trust with banks and customers.

Circle’s IPO: Catalyst for Mass Adoption of Stablecoins

The IPO from Circle showcases the industry branching out from traditional banking systems to a new environment in which a regulated ecosystem in the US is on the way.

Known for issuing the USDC stablecoin, Circle converted the concept of a digital dollar into a global powerhouse. With more than $30B in payment activity and enterprise relationships locked in (e.g. Coinbase, Visa, Stripe), the company developed into a leader in blockchain-enabled payments.

As the US regulatory environment starts to gain clarity & support (GENIUS Act was passed a few months ago), the time is now for stablecoins (and Circle) to have its moment. Formal guidelines with reserve requirements, audits, and banks able to participate in money movement sets a precedent for more innovation to come — such as Web3 and hybrid banking experiences.

B2B platforms and cross-border payment providers have a legitimate option for instant, cost-effective money movement — a gamechanger for companies of all sizes, in any location.

Fintech Funding and VC Interest Coming Back?

IPOs are a welcomed event in any industry/vertical as they confirm to venture capital investors that liquidity & growth are possible.

For FinTech, the timing of these two IPOs is what stands out the most. Going back 2 years, industry valuations were hit incredibly hard — minimizing the pace and amount of funding events for startups and mid-sized firms. The only option was to take a ‘down round’ (investment at a lower company valuation) or ‘bridge round’ (small extension of funding from a company’s most recent round).

As VCs who invested in Chime or Circle start to cash out their investment + returns, investors can decide to redeploy capital back into the FinTech sector — elevating company valuations with their next round of funding. Key areas that are of particular interest in 2025:

Infrastructure-enabling companies with customer traction and strong monetization;
Vendors assisting banks & fintechs with compliance and risk management;
Stablecoin-powered platforms the deliver new value props in payments, banking, lending;

Despite growing optimism, founders & early stage teams will still be challenged in driving robust operating models that deliver profitability in the short-term — instead of burning through multiple funding rounds to gain vanity metrics. VCs may open up soon, but there will still be caution finding the right opportunities.

A Boost for Bank-Fintech Partnerships

The IPOs also have an interesting implication for the future of bank-fintech partnerships — one as a clear growth partner and the other as an infrastructure enabler.

For Chime, some banks will start to closely consider partnerships in which new types of users, transaction activity, and deposits are not competing with the products already offered to branch clients. This risk of ‘cannibalization’ was an early concern for sponsor banks in 2019. Chime highlights an approach in which bank partners can accommodate multiple segments of customers and realize diversified growth. Additionally, new products & services can be offered to existing bank customers such as earned wage access, credit builder cards, expense management, and budgeting tools.

With Circle, a bank can quickly enhance their treasury management infrastructure — unlocking modern treasury capabilities and liquidity, as well as new payment rails for remittances. This allows community & regional based banks to compete with mega banks (such as JPMorgan Chase, Bank of America) and established fintechs that offer access to stablecoins. There’s also a path to reach international consumers & businesses with an affordable, secure payment method.

In both cases, there’s a clear theme that innovation can be effectively outsourced by banks and utilized to achieve growth beyond the physical footprint of financial institutions.

Industry Maturity Creates Opportunities

The timing of regulatory support/ clarity AND company maturity (especially with compliance & risk management over the last few years) is remarkable.

Chime made significant improvements to claims management and disputes processes (in line with regulatory requirements).

Circle was transparent with global policymakers in addressing critical requirements of security, reserves, and customer protection.

Up & coming fintechs are taking note in how their platform should evolve over time, especially once product-market fit is established. Holding off on robust controls & oversight is not a sustainable path forward — as companies grow in scale, vulnerabilities in risk processes are magnified.

Being proactive is a critical takeaway in manuevering regulatory ambiguity. Failing to do so will lead to negative outcomes and reputational damage (e.g. BlockFi, FTX).

Is this THE “FinTech is Back” Moment?

Numerous signs are pointing to YES.

At least one more IPO is expected in the next months — Klarna. Others are in position to make a move if markets & economic sentiment become a bit more favorable in Q3 & Q4.

On the theme of maturity, investors & founding teams are much more smarter & engaged to deliver new products that are built responsibly.

The era of ‘growth at all costs’ and copycat use cases is over. It’s all about differentiation, sustainable scale, and critical go-to-market partnerships that unlock customer acquisition.

Overall, the industry expectation for the rest of 2025 is:

Mature fintechs strongly considering going public in the next 12 months;
Positive engagement from investors funding infrastructure providers that are compliance-first;
Existing sponsor banks being willing to expand partnerships AND new banks testing the water with their first fintech partner;

A steady flow of new IPOs would place FinTech in a strong position to enter its next phase of growth in the next 5 years.

New Era for Financial Services: How Chime and Circle IPOs Validate FinTech in 2025