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Why fintechs are transitioning from partners to principals in banking

Fintech’s core value proposition was that financial services could be delivered without owning a bank charter. That model produced an entire generation of financial companies. But it also created a structural dependency: fintechs could innovate quickly and focus on software, distribution, and user experience, yet the underlying regulatory authority, lending licenses, deposit insurance, and access to the financial system, remained largely with partner banks.

By early 2026, signs of a shift in that architecture have started to emerge. Within the last three months, three prominent fintechs have applied for bank charters. Buy-now-pay-later provider Affirm applied to establish a bank subsidiary, followed by cross-border payments platform Payoneer, which filed for a national trust bank to support stablecoin infrastructure. And this month, AI lending platform Upstart applied to become a national bank.

One quarter, three charters

These charter applications are fueled by different objectives.

Affirm: Owning the lending stack

In January, Affirm applied to establish Affirm Bank, a Nevada-chartered industrial loan company regulated by state authorities and the Federal Deposit Insurance Corporation (FDIC).

Industrial loan companies (ILCs) can be owned by commercial companies while still operating as FDIC-insured banks, allowing non-bank firms to enter banking without becoming traditional bank holding companies.

For Affirm, the charter could change the economics and structure of its lending platform. The firm can reduce reliance on partners and take greater control over the credit lifecycle, better manage funding costs, expand the scope of its products, and align underwriting, funding, and servicing under a single roof.

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Open banking’s paywall era – and what it means for banks, fintechs, and policy in 2026

J.P. Morgan processes nearly 2 billion API requests every month, but only about 13% correspond to direct, customer-initiated actions. The rest are background data calls powering budgeting apps, lending tools, and account connections across the fintech ecosystem.

For years, that access was largely free. But financial innovation seldom arrives in a straight line. Sometimes it swerves unexpectedly, forcing the industry to confront the tension between idealism and economics.

In 2025, the era of free access took a hit. J.P. Morgan started negotiating paid data-access agreements with third-party data aggregators like Plaid, MX, and Yodlee, signaling a broader shift in the economics of open banking.

For more than a decade, open banking ran on an implicit bargain: consumers could share their data freely, fintechs could innovate on top of it, and banks would absorb the infrastructure costs. Now, as data volumes surge and regulatory uncertainty lingers, the industry is confronting a harder question: If access to financial data becomes a commercial service, what does “open” banking really mean – and who ultimately foots the bill?

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Looking back and moving forward: How fintechs will beat back the dark clouds of 2024, capitalize on trends like AI, and build resilient firms in 2025

From ‘BaaS is dead’ to discussing how Gen AI and Open Banking could significantly change how fintechs connect to banks, serve customers, and help push the industry forward, 2024 has been a really happening year for fintechs. 

In this new year we look at how fintechs fared in 2024 and explore what shifts we can expect from these companies in this new year. 

Victoria Zuo, Principal at QED investors, says after a few years of headwinds she expects 2025 to be a year of recovery. 

The turnaround for fintechs was most evident in the uptick in public markets. It restored confidence in fintech companies following successful IPOs, according to Zuo. On the other hand, the private market continued to cherry-pick fintechs that exhibited they had what it takes to reach profitability, she added. 

Most importantly, in this year of many changes, fintechs had to find a way to pivot away from ‘growth at all costs’ and towards efficient scaling and operational discipline. 

“The year showcased the resilience of the sector as it adapted to macroeconomic challenges and recalibrated for long-term success,” Zuo added. 

Looking back: The trials of 2024 

Last year came with challenges that destabilized assumptions about what it takes to build fintechs, run them, drive them to success:

a) The interest rates paradox: At the start of 2024, interest rates remained high and the uncertainty surrounding cuts continued to challenge fintech leaders to think on their feet about how their firms will make money. “Rising rates squeezed margins for lending-focused fintechs, forcing them to diversify revenue streams and focus on underwriting excellence,” said Zuo. 

Source: SVB

Research by SVB backs this up, showing that fintechs have had to focus on acquiring high quality borrowers instead of extending credit to borrowers that may carry revolving balances. But as a result of this strategy, fintechs have had to reap their profits from interchange fees.

Elusive funding: Fintech leaders had a hard time chasing VC dollars in 2024, pushing them to focus on their business models. “Access to venture capital remained limited, prompting startups to extend their runways through cost optimization and prioritizing monetization over growth,” she said.

Source: SVB

The looming regulator: In 2024, regulators started to contract the freedom the industry had available to innovate and pushed its leaders towards building more safeguards and guardrails. This was most evident in how fintech-bank partnerships became strained due to a towering amount of consent orders for bank partners. “The regulatory landscape, especially in areas like BNPL and crypto, grew more stringent, pushing fintechs to invest in compliance and risk management,” Zuo added. 

Capitol Hill in flux: 2024 was an election year and the fintech industry was no stranger to this. FIntech leaders were caught in between red and blue, as questions about the Biden administration taking a more pro-regulation stance through government bodies like the CFPB clashed with ideas how a Trump administration could shift this focus. 

“A new administration could bring a more business-friendly approach, particularly in areas like crypto, financial inclusion, and open banking,” said Zuo. 

The regulatory push didn’t just impact how fintechs chose partners and structured products but also impacted their bottom lines. 

“Compliance costs have risen due to rising regulatory pressure, especially regarding BaaS partnerships. Fintechs are now responsible for more compliance requirements, leading to higher operational costs and a greater focus on regulatory diligence,” said SVB’s Head of National Fintech and Specialty Finance, Nick Christian.

But Zuo feels that moving ahead, this focus on building a strong compliance-forward foundation could be beneficial for the sector, saying that the stricter regulatory environment served as a “forcing function for fintechs to strengthen compliance” and will help in building consumer trust and robustness in the system in the long term. 

The making of a hero: The fintechs that rose up from these challenges were focused on improving cash flows, lengthening their runways, and had an eye on customer pain points, as well as regulation shifts.

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