Q2 2025 Fintech Industry Recap: Banking Licenses, M&A Momentum, and Product Expansion
PART 1 of 2
As the fintech ecosystem continues to mature, Q2 2025 delivered a critical chapter in its ongoing development.
From high-profile charter applications and strategic acquisitions to bold product expansions, leading fintechs and financial institutions are repositioning themselves to own infrastructure, enter new markets, and capitalize on an increasingly digital economy.
This industry recap (Part 1) covers three dominant trends shaping the future of fintech:
The race for banking licenses and charters;
A surge in fintech acquisitions and strategic buyouts;
A wave of product and market expansion across the ecosystem;
Whether you're a founder, banker, investor, or fintech enthusiast, this breakdown offers actionable insights into the state of play—and where these trends are headed.
Here’s a comprehensive 2nd Quarter 2025 Industry Recap section, diving deep into the accelerating wave of fintech and crypto firms applying for banking charters—why now, what it means, and its broader impact on financial services.
Aimed at founders, bankers, investors, and fintech enthusiasts, this narrative explores how Stripe, Wise, Circle, Ripple, Plaid, Xero, and others are redefining the boundaries between banking and fintech.
#1 - A Growing Wave of Charter Applications
Five years ago, many established fintechs were seeking formal bank charters.
The application process is costly and lengthy (up to 2 years in some cases). Due to ambiguity from regulators, most of the applicants ended up opting out. One success story came through with Varo — the first neobank in the US to become licensed and independent.
Fast forward to 2025, multiple companies are exploring licensing in a limited nature — mostly as trust banks (with the exception of Ripple).
Let’s discuss each player making the move and the rationale behind it, followed by why this is taking place now and what it means for the industry overall.
Stripe: Merchant Acquirer Limited‑Purpose Bank (MALPB)
In early Q2, Stripe took its first formal step toward chartered banking by applying & receiving approval from the Georgia Department of Banking and Finance for a Merchant Acquirer Limited-Purpose Bank (MALPB) charter.
This specialized charter allows Stripe to process Visa and Mastercard transactions directly (no need for a sponsor bank), which unlocks streamlined settlement, fee reduction, and faster payouts;
The focus is on merchant acquiring — holding deposits or lending is not allowed with this charter;
Strategic rationale: as Stripe’s ecosystem (and volume) evolves, the constraints from third-party intermediaries become restrictive to growth. This charter enhances control over its payment stack, improves margins, and positions Stripe to pioneer next-gen payment infrastructure offerings.
Wise: National Trust Bank Application
In early July, Wise followed suit, submitting an application to the Office of the Comptroller of the Currency (OCC) to establish a non‑depository national trust bank.
This would grant Wise direct access to U.S. Federal Reserve payment systems—cutting out intermediary banks;
Such a charter positions Wise for improved settlement times, reduced costs, and tighter control over its U.S. dollar money movement;
Strategic rationale: as cross-border and remittance volumes grows (and competition heats up), Wise needs more control and cost efficiency in USD flows. A charter not only enhances operations but signals commitment to U.S. expansion — possibly toward a potential U.S. listing.
Circle: Building a National Trust Bank
Hot on the heels of a successful IPO, Circle applied to create the First National Digital Currency Bank, N.A., a national trust bank under the OCC.
This charter would allow Circle to hold custody over its USDC reserves—currently managed by BlackRock and held at BNY Mellon—and to offer institutional custody services;
While trust banks cannot offer deposits or lending, they can hold assets and provide settlement services—critical for stablecoin infrastructure.
Strategic rationale: following its IPO in June, Circle is moving to cement trust and compliance. With stablecoin legislation (STABLE/Genius Acts) advancing in Congress, a federal charter would place Circle ahead of new regulation.
Ripple: A Dual Charter Ambition
Ripple announced in July that it has applied for a national bank charter and has also submitted for a Federal Reserve master account via its subsidiary Standard Custody & Trust Company.
The charter would shift oversight of Ripple’s RLUSD stablecoin from New York state to federal authorities—and most likely enable 24/7 settlement via Fed rails;
Strategic rationale: Ripple is pushing deeper into regulated banking, enabling on‑chain payments in a more compliant framework. Access to federal rails could reduce cost and friction in cross-border flows.
Why Now? Confluence of Forces
Not a coincidence why these companies are aiming to formalize their core offering in 2025.
There are regulatory shifts & openness and competitve benefits at play for these fintechs and other stakeholders (such as financial institutions, tech providers, and investors).
1. Regulatory Catalysts: The GENIUS & STABLE Acts
In Q2, the U.S. Senate passed the GENIUS Act (alongside the STABLE Act in the House), setting forth national standards for stablecoins—reserve-backed, audited, and legally contained.
The Acts require issuers to hold reserves in insured institutions and undergo third-party audits—driving stablecoin firms to seek trust charters (as referenced above);
Chartering gives firms direct control over reserve custody—boosting compliance & reducing dependency on legacy banks;
2. OCC’s Crypto‑Friendly Shift
Post-2024, under Comptroller Rodney Hood, the OCC rolled back crypto restrictions, signaling openness to special-purpose fintech charters.
With a near-zero denial rate since 2009, the path is clear for fintechs to secure charters;
3. Strategic Competitive Advantage
Operational control: Charters allow firms to directly access payment networks, settle with the Fed, and custody assets—eliminating friction and costs;
Brand trust: Federal oversight instills market confidence—vital for onboarding institutional clients and enterprise partners;
Regulatory alignment: Chartering positions firms ahead of future laws requiring issuers of stablecoins, custodians, or payment providers to fall under banking regs;
Industry Implications
1. Banking Disruption & Disintermediation
Stripe and Wise demonstrate how tech firms are eating into core banking functions—payment settlement and treasury services—without building full-scale banks.
Trust charters allow embedded-finance platforms to become their own payment processors / custodians, bypassing traditional banks. It can also open the door to full banking charters (enabling custody of customer deposits & lending).
2. The Rise of Platforms-Centric Banking Models
Ecosystem plays are emerging: Circle’s trust bank could become a reserve custodian and token-services provider; Ripple’s charter may catalyze cryptofied treasury services.
These models redefine “banking” as an API- and platform-based utility—layered onto fintech rails.
3. Regulatory Standardization & Inclusion
Charters incentivize standard compliance across reserve custody, audit, and risk management—elevating industry-wide governance norms.
They could level the playing field, encouraging smaller stablecoin and fintech firms to pursue regulated infrastructure.
4. Bank-Fintech Collaboration Opportunities
While banks may lose certain intermediated functions, they could gain from partnering with chartered fintech leaders to offer white-label or BaaS products.
Institutions with weak payment infrastructure may instead integrate fintechs with their own charters into their stacks.
5. Competitive Shakeout and Barrier Creation
Moving from BaaS dependencies to charters raises regulatory, capital, and compliance thresholds—effectively building a moat for deep-pocketed players.
Startups may pivot out of regulated infrastructure, retreating to non-custodial or niche B2B verticals.
What to Watch in Q3 & Beyond
A few key factors lay ahead with application & legislation approvals — the right combination can have a profound impact on the entry of new players and partnerships:
Charters Granted – OCC is expected to finalize decisions this quarter. Approvals will validate the movement.
Congressional Legislation Passage – U.S. stablecoin law finalization will anchor future compliance paths.
New Fintech-Bank Compacts – Expect innovative partnerships—formerly non-banking platforms bringing institutional-grade solutions.
Ecosystem Expansion – Charter-holders could pioneer treasury-as-a-service, embedded B2B settlement, or stablecoin APIs for enterprises.
Final Take
Q2 2025 marks a pivotal shift—from experimentation to regulation-aligned operating models.
Stripe, Wise, Circle, and Ripple are all staking claims as infrastructure-first financial institutions, owned and operated by nimble tech-native firms.
With OCC charters, Fed access, and emerging stablecoin law, the traditional wall between fintech and banking is dissolving.
The high-level questions many execs & boards are asking themselves are:
Could your business thrive with its own payments or custody rails?
Is your institution ready to collaborate—or compete—with these chartered innovators?
How will your company manage compliance and trust as banking becomes programmable and on‑chain?
By stakeholder, there are more granular considerations:
Founders: Building tech-enabled payment or asset custody? Decide—charter, acquire, or lean into non-bank rails.
Banks: Evaluate which functions fintech charters are encroaching on—and partner or innovate accordingly.
Investors: Charter-enabled firms have higher regulatory defensibility and scale upside. Prioritize those with early regulatory-first mindsets.
Fintech Enthusiasts: The evolution shows finance transitioning from product-centric to platform-as-a-bank models—financial logic reframed as infrastructure-first.
The strategic frontier isn’t just tech—it’s who controls the rails.
#2 - Rising Tide of Fintech Consolidation
There were numerous acquisitions taking place in Q2 —many from notable leaders in financial services (and a few with multiple deals).
Let’s take a closer — here’s a recap:
Robinhood Acquires Bitstamp: A $200M Crypto Play
In early June, Robinhood completed its $200M acquisition of Bitstamp, marking a pivotal step beyond its U.S.-only retail brokerage roots.
Bitstamp brings extensive global presence—50+ licenses, European institutional clientele, and deep crypto market infrastructure — enabling Robinhood to:
Expand internationally across Europe, the UK, and Asia,
Build a stronger institutional crypto offering, not just retail trading,
This acquisition is a clear signal that Robinhood aims to evolve into a global fintech powerhouse—not just a U.S. app.
A broader institutional user base means diversified revenues, deeper liquidity access, and better compliance positioning. It aligns with Robinhood’s broader crypto strategy, including upstream regulatory resolution and international expansion.
Xero Acquires Melio: Embedded SMB Payments at Scale
On June 24, New Zealand’s Xero announced its acquisition of Melio for an initial $2.5B (USD), potentially rising to $3B with earn-outs. Melio serves ~80K U.S.-based SMBs, processing over $30B in payments last year.
Why now:
Payment integration is now mission-critical for SMBs.
Xero’s “3×3 strategy” targets rapid scaling in its U.S. market—this deal could triple its North American revenue and double group revenue by 2028.
The deal places Xero the embedded finances space, competing with the likes of Intuit via Mailchimp-like acquisitions.
Implications:
Small business financial tooling continues consolidating—SMBs want unified workflows, not siloed tools.
Xero’s move may trigger further consolidation: finance plus software equals sticky, high-margin platforms.
For competitors, the bar for integration just rose—and “buy vs. build” is shifting decisively toward acquisition.
iCapital Acquires Citi Global Alternatives: Powering Wealth Infrastructure
In May, fintech alternative-investment platform iCapital acquired Citi’s Global Alternatives feeder platform, which manages 180+ funds across private equity, credit, real estate, and hedge funds. Citi will continue distribution, while iCapital assumes operational control.
Why now:
Wealth platforms are rapidly adopting fintech to handle increasingly popular alternatives.
Citi likely saw outsourcing this infrastructure as a strategic choice;
iCapital pursued it to become a “one-stop alternative investment infrastructure” provider .
Implications:
Signals the institutional move from point products to platform infrastructure — consolidation is the next phase in wealthtech.
Opens the door for new bank-fintech partnerships, with fintechs providing tech and banks offering sales & distribution.
Checkr Buys Truework: Infrastructure Consolidation in HR Fintech
On April 17, Checkr (background checks API) acquired Truework (income & employment verification)—marking a strategic push into underwriting verticals.
Truework’s AI-powered, integrated approach cuts friction across lending, HR, real estate, and insurance.
Why now:
Fintech infrastructure is consolidating as startups feel valuation pressure and the path to IPO narrows.
For Checkr, adding Truework offers richer, smoother data services—satisfying customer demand for end-to-end verification.
Implications:
This is emblematic of vertical expansion within regulatory-adjacent fintech—background checks, verifications, underwriting—to deepen platform value.
Look for more combo-deals: endpoints plus adjacent capabilities to stay “platform-relevant.”
Investors should prefer infrastructure platforms that offer composability and expand their depth.
Why the Acquisition Momentum Now?
From the 30,000 foot view, acquisitions are trending now due to four key factors:
1. Market Valuations & Investor Signals: 2025 has shaken fintech valuations — as IPO prospects fluctuate, investor caution grows. For founders, exits via M&A seem more realistic now. For acquirers, they can leverage price softness for scale.
2. Platform-Led Strategics: True, embedded, alt-wealth, and crypto platforms are all racing to own more of the stack. One-and-done features swapped for full workflows—from payments to KYC to verification—integrated under one roof.
3. Regulatory Clarity & Global Scale: Clearer rules (e.g., stablecoin charters, Fed access) increase interest in cross-border plays. Robinhood’s global licenses via Bitstamp & Citi’s retention in iCapital’s deal reflect hybrid tech-regulatory strategies.
4. Customer Expectations: Customers (e.g. SMBs, wealth managers, HR teams) want seamless, composable tools with unified data and zero friction. Fintechs moving to platforms better answer those needs than point vendors.
Final Take
If we distill these purchases into ‘mini-takes’ of industry trends, it would go like this:
Embedded Everywhere —> Xero-Melio shows embedded finance is table stakes for software companies.
Infrastructure Arms Race —> iCapital-Citi elevates fintech as the plumbing behind traditional institutions.
Global Gateways —> Robinhood-Bitstamp clinches institutional and regional licensing advantages.
Platform Depth —> Checkr-Truework expands peripheral services to deepen engagement.
By stakeholders, the considerations are:
Founders: Become indispensable by expanding your stack — acquire (not just partner) adjacent capabilities.
Investors: Prioritize bets on modular, platform-first fintechs capable of integration or consolidation.
Banks & Institutions: These deals present challenges & opportunities—partner with integrated fintechs to modernize.
Regulators: Expect scrutiny on large platform roll-ups—access to data and services raises systemic implications.
These Q2 deals spotlight a fintech ecosystem in its consolidation phase—less about point solutions, more about owning workflow, compliance, and global scale.
#3 - FinTech Grows Horizontally: Product, Market Expansion
Besides organic growth from core offerings and current market segments, many leaders in the space decided to add new products or tap into new markets.
We cover Plaid, Perplexity, Citi working with Carlyle, and the growing trend of banks lending to nonbank lenders.
Plaid: Instant Pay‑Ins via Multi‑Rail Payments
In June, Plaid enhanced its Transfer platform by enabling not just US instant payouts, but also real-time pay-ins via Request-for-Payment (RfP) over real-time rails like RTP & FedNow.
Why now? Marketplace platforms and digital marketplaces are rapidly prioritizing seamless inflows as much as quick disbursements.
Historically, payout networks dominated — but legacy ACH and wires left pay-ins slow and unpredictable. Markets (like Carvana) now require users to fund purchases instantly, at anytime / any day.
Key Implications:
Plaid transitions from data-layer fintech to full-stack payment infrastructure, fueling mission-critical inbound finance capabilities.
The fintech giant is now in revenue-centric payment flows — enabling new growth from money movement.
As more companies demand both pay-in & pay-out, those not building in-house may now partner with Plaid.
Perplexity: Enabling In-Chat Commerce with PayPal & Venmo
Also in Q2, Perplexity added PayPal and Venmo checkout inside its AI-powered chat interface, rolling out agentic commerce functionality in the U.S.
Why now?
As AI-powered agents develop, the shift from “research bots” to “transactional agents” is accelerating.
Consumers expect to go from query (“book a flight”) to executing a transaction request in one seamless flow. Embedding checkout options is an experience upgrade AND a revenue generator.
Implications:
Perplexity moves from discovery to commerce — transforming into an AI-native commerce channel.
For PayPal, this expands merchant and end-user reach into new interfaces / channels, siphoning e-commerce share from search and social.
The trend signals a broader move: commerce via chat, voice, and AI is coming from AI companies (such as OpenAI, Google, Microsoft).
Citi & Carlyle: Expanding into Fintech Specialty Lending
On June 12, Citi and Carlyle launched a joint lending and investment initiative focused on asset-backed finance for fintech lenders, combining Citi’s capital-markets reach with Carlyle's fintech lending expertise.
Why now?
Fintechs issuing consumer loans, merchant cash advances, or niche credit products need large-scale funding — many struggle with access in private credit markets (especially when starting out).
Traditional banks face regulatory and capital constraints — private credit can absorb excess balances.
This co-investment model offers fintech founders tailored debt & equity solutions based on their program & traction —established private-stage firms can now scale liquidity without an IPO.
Implications:
Banks re-enter fintech debt markets — not as a competitor, but as an institutional partner.
Strengthens private credit’s role in fintech’s future, signaling fewer firms needing to IPO to access scale.
Opens hybrid capital models: debt + equity + securitization = next-gen fintech capitalization.
Banks Financing Nonbank Lenders: Lending to Lenders
A broader industry trend in the 1st half of 2025: banks originated over $1T in loans to nonbank financial institutions (NBFIs)— including private credit funds, fintech lenders, and asset managers.
Why now?
Direct corporate lending by banks has slowed amid tighter capital buffers and regulatory headwinds.
NBFIs offer collateralized lending with lower regulatory capital weightings, which makes them more capital-efficient.
These lenders often leverage bank debt to fuel higher-yield lending to underserved markets (e.g., SMEs, specialty credit, consumer niches).
Implications:
Banks create a circular system—providing liquidity to nonbank lenders, which extend that credit further in the market.
This satisfies capital needs while limiting regulatory burdens on banks—but introduces systemic risk, as leverage expands through the credit chain.
Observers are concerned with similarities from the pre-2008 credit bubble — drawing attention from regulators.
Why the Trend of Product & Market Expansion Is Heating Up
In terms of themes that these strategic moves are tied, here are the top 3:
Integration-led market demand: Customers expect seamless workflows. Whether AI chats, marketplace pay-ins, or corporate lending, users want complete, end-to-end solutions.
Capital shifts into fintech lending: As direct bank credit stalls, fintechs fill the gap. New bank-fintech capital synergies are emerging.
Competition intensifies in adjacencies: Plaid must expand into payments; Perplexity must transition into commerce; banks must extend into fintech-enabled credit to stay relevant.
Final Take
For the financial services industry, the next year becomes more dynamic for emerging competitors and the new wave of startup builders. Broad industry impacts that all stakeholders should be mindful of:
Plaid becomes a payments powerhouse—occupying dual roles of pay-in/pay-out infrastructure, increasing stickiness and market defensibility.
More platform fintechs go deep: Expect Plaid-like companies to add overlays (e.g., fraud, credit, embedded flows).
Embedded commerce becomes AI-native—Perplexity’s move signals that search/chat experiences now come with buy buttons. Other AI platforms will sign partnerships with payment giants.
Banks pivot to capital providers—creating a symbiotic ecosystem with fintech lenders, yet raising systemic questions.
Growth infrastructure solidifies—capital and tech stack converge, making scaling fintechs less reliant on IPOs and more on hybrid growth strategies. Co-investment models dominated by bank/private equity partnerships could become standard for scaling fintechs.
Regulatory oversight intensifies: As banks fund nonbank lending en masse, expect central banks and regulators to scrutinize "lending-to-lenders" mechanics.
By role, there are specific action items and questions to explore:
Founders: Look beyond your core product—can AI-enabled commerce, payments depth, or financing as a service unlock new monetization and stickiness?
Investors: Track platforms like Plaid expanding into payments, or Perplexity into commerce. Also watch capital partnerships like Citi/Carlyle for signs of scalable funding pipes.
Banks & Regulators: Lending to fintechs offers yield — but monitor concentration, leverage, and contagion risks. Regulators may step in if systemic exposure grows.
Fintech Enthusiasts: The fintech wave is maturing. It's no longer “build and pivot”—it's about platform entrenchedness, real-time atomic flows, and AI-driven commerce.
That’s it for Part 1 …
Thanks for joining us on this deep dive Q2 2025 recap — we’re excited for Part 2 (of 2) coming up in the next week.
We’ll cover only 2 topics in this last installment, but they made a tremendous impact to financial services already (IPOs and stablecoins). Stay tuned ….
