Driven by pent-up merger and investment demand, Citi analysts forecast a notable wave of consolidation among U.S. banks and credit unions in 2025. This activity is projected to surpass historical norms and provide chances for fintech businesses to assist in technology integration as combined organizations simplify processes.

Two fintech companies ready to profit on this trend are Fidelity National Information (FIS, Financials) and Q2 Holdings (QTWO, Financials). Alkami Technology (ALKT, Financials) also expects to gain, especially given its focus on allowing smaller financial institutions to modernize. Jack Henry & Associates (JKHY, Financials) has more situational possibilities, albeit as its fortunes rely on certain merger combinations.

Apart from the banking industry, Citi expects a more general increase in fintech M&A; smaller, digestible deals will probably rule the scene. Although some big transactions still exist, the emphasis will be on successful businesses with low debt levels, especially in light of a stable-to- lower interest rate environment would improve deal-making.

This momentum caused by consolidation emphasizes a key development path for fintech in 2025 as businesses providing creative ideas are essential in changing the way financial institutions run. As M&A activity picks up speed, fintech remains a major industry of interest for investors.