After years of hype, high valuations, and rapid customer acquisition, the neobank sector is heading into a wave of consolidation. As 2025 unfolds, pressure is mounting on digital-only banks and fintechs to prove profitability, retain users, and withstand competition from incumbents who have finally caught up in digital capabilities. The question facing the industry is stark: which players will endure this shakeout, and which will disappear?
In 2024, global fintech funding dropped to $33.7 billion—the lowest level in seven years—according to CB Insights. Yet, banking technology remained a relative bright spot, with the sector’s median deal size surging 70% year-over-year (yoy) to $8.5 million, signaling investor appetite for more mature and scalable digital banking models.
Monzo and Starling in the UK, and Nubank in Brazil, have shown signs of maturity with increasing revenues and improved unit economics. But many others are still burning cash without a clear path to profitability or regulatory stability.
The market narrative is shifting. In its 2024 Global Banking Annual Review, McKinsey notes that the industry is transitioning “from growth to resilience.” Traditional banks have recovered profitability, while most neobanks remain in a fragile financial position, struggling to monetize users or scale their offerings beyond core products. This divide is sharpening investor scrutiny, which is now more focused on fundamentals than top-line growth.
Silver line
At the same time, M&A activity is rising. Fintech M&A exits rose by 6% year-over-year to 664 deals globally in 2024, with a 24% quarter-over-quarter spike at the end of the year, data from CB’s study show. Stripe’s $1.1 billion acquisition of stablecoin platform Bridge was one of the most high-profile transactions, reflecting a growing trend among digital finance platforms to consolidate capabilities in payments, cybersecurity, and digital identity. This consolidation wave is not only a response to funding scarcity, but also a strategic move.
Profitability remains elusive for most. S&P Global reports that average deal sizes are rising while overall volumes decline—a sign that investors are backing fewer, more mature players. Starling Bank is an exception, posting a £223.4 million yearly pre-tax profit in its latest results, driven by strong lending and SME banking segments. Meanwhile, several high-profile neobanks, including Revolut, continue to delay the publication of audited financial statements, raising governance concerns.
Policies and conclusions
Regulatory tightening is another filter. With the UK’s Financial Conduct Authority (FCA) and the US SEC applying more rigorous scrutiny to neobanks’ compliance frameworks, some players may find continued independent operation unsustainable. In Brazil, the central bank has also begun issuing stricter capital requirements on digital-only banks following the explosive growth of Nubank and C6 Bank (now a JP Morgan company). In the US, recent turmoil in the banking-as-a-service segment—such as Synapse’s collapse—has also drawn regulators’ attention to operational risk and customer fund protection mechanisms.
The likely survivors of 2025 will be those with clear revenue models, some degree of proximity and influence with regulators, and a scalable business model. While pioneers like Nubank and Revolut look well-positioned due to diversified income streams and strong user engagement, the middle of the market remains at risk—especially second-tier neobanks that lack differentiation. Investors will look less to the promise and more to the bottom line.
