Europe’s Fintech sector has momentum for growth

After several years of volatile funding conditions and slowing investment, the global fintech industry is entering a new phase of expansion. According to McKinsey & Company, fintech revenues reached approximately $650 billion in 2025, representing annual growth of around 21 per cent, highlighting the sector’s continued ability to outpace much of the wider financial services industry.

Europe’s Fintech sector has momentum for growth

Investor confidence also appears to be returning. CB Insights estimates that global fintech deal value reached $12.1 billion during the first quarter of 2026, an increase of 3.7 per cent compared with a year earlier.

While the United States accounted for 47 per cent of all fintech investment, Europe captured only 21 per cent, underlining the region’s comparatively subdued funding environment.

Consumer Demand Is Outpacing Market Development

Despite attracting increasing levels of consumer trust, Europe’s fintech market remains significantly underpenetrated.

McKinsey’s latest consumer research found that, for the first time, consumers across Europe place greater trust in fintech companies and digital banks than traditional banking institutions, citing stronger innovation, greater fee transparency and better overall value.

Yet fintech providers account for only 2.6 per cent of Europe’s financial services market, compared with 3 per cent in Asia and 8 per cent in Latin America. According to industry investors, fragmented national markets, uneven access to capital and complex regulatory requirements continue to constrain growth despite rising customer demand.

Daiva Rakauskaitė, Managing Partner at venture capital firm Aneli Capital, believes fintech companies that embrace regulation from the outset will be better positioned to compete.

“Fintechs that invest in regulatory capabilities early can turn compliance into a competitive advantage, strengthening customer trust and increasing their attractiveness to investors,” she says.

Central and Eastern Europe Offers a Platform for Growth

Rather than focusing exclusively on Europe’s established financial centres, investors increasingly see Central and Eastern Europe as one of the region’s most promising fintech growth opportunities.

Markets including Poland and Romania offer sufficient scale to validate products while enabling companies to develop regulatory expertise before expanding internationally. Lithuania has also established itself as a leading fintech hub, combining strong technical talent with considerable experience supervising internationally active digital financial institutions.

Artificial intelligence is expected to play an equally important role in shaping the sector’s next phase. According to PitchBook, investment is increasingly flowing towards AI-native fintech companies capable of reaching commercial milestones with smaller teams by automating software development, operations and customer support.

Europe possesses many of the ingredients needed to produce the next generation of global fintech leaders. However, the continent’s long-term success will depend on its ability to translate strong consumer demand into scalable businesses that can navigate regulatory complexity, attract investment and harness artificial intelligence to compete with both incumbent financial institutions and better-funded international rivals.