Fintech · Industry brief

Bank-fintech partnerships surged 67% in 2024 while completed bank acquisitions fell 34%, according to American Banker's January 2025 analysis, driven by higher borrowing costs, compressed valuations, and regulatory complexity that make traditional M&A less attractive. Federal Reserve Governor Michelle Bowman's December 2024 remarks at the ABA Risk Management Conference emphasized that institutions must ensure third-party fintech relationships meet the same risk management standards as critical business functions. The OCC's revised third-party risk management guidelines, effective January 2025, establish enhanced due diligence requirements for partnerships involving consumer-facing financial services, including ongoing monitoring of partner financial health, cybersecurity assessments, and business continuity plans. A Midwest community bank with $2.1 billion in assets partnered with a healthcare fintech platform and grew its commercial healthcare loan portfolio by 23% within 18 months while increasing payment processing fee income by 156%, demonstrating the partnership model's effectiveness in vertical markets. A $750 million asset credit union launched embedded payment services through three fintech partnerships within 120 days, generated $180,000 in new fee income in the first quarter, and maintained perfect regulatory compliance scores during a fintech partnership examination.

On August 20, 2026, the Federal Reserve Board issued an enforcement action with SouthPoint Bancshares, Inc. and announced termination of an enforcement action with Deutsche Bank AG, DB USA Corporation, and Deutsche Bank AG New York Branch (Federal Reserve press release). The same date, the Federal Reserve Board approved an application by National Westminster Bank Plc (Federal Reserve press release). Additionally, enforcement actions were issued against former employees of Regions Bank and United Community Bank (Federal Reserve press release). On August 13, 2026, an enforcement action was issued against a former employee of Regions Bank (Federal Reserve press release).

Global fintech investment reached $103.1 billion in H1'26, up from $72.2 billion in H2'25, driven by major M&A transactions including the $24.3 billion acquisition of Worldpay by Global Payments, the $13.5 billion acquisition of Total System Services, and the $8.4 billion buyout of Clearwater Analytics, according to KPMG's Pulse of Fintech report. Deal volume declined to 2,100 globally in H1'26 from 2,501 in H2'25 as investors concentrated capital on large deals in mature fintechs with proven business models. The payments sector led investment at $44.2 billion, while AI-focused fintechs attracted $21.4 billion across venture capital, private equity, and M&A, with strategic acquirers emphasizing consolidation and operational efficiencies.

Canadian fintech investment reached US$996.7 million across 47 deals in H1 2026, according to KPMG International's Pulse of Fintech report. M&A activity totalled US$37 million across 12 deals, with the largest transaction being Robinhood Markets' US$168.4 million acquisition of Toronto-based WonderFi Technologies, marking Robinhood's entry into Canada through WonderFi's regulated cryptoasset platforms Bitbuy and Coinsquare. Venture capital funding hit US$492.9 million across 33 deals, with AI and machine learning fintechs attracting the most investment at 19 deals. Regulatory changes are emerging as a key investment catalyst. Canada's Consumer-Driven Banking Act and Real-Time Rail implementation are expected to materially alter fintech economics by enabling secure data-sharing, modernizing payment infrastructure, and reducing fintech dependence on incumbent institutions. According to KPMG Deal Advisory partner Andrew Mathias, these reforms could accelerate competition and consolidation across Canadian financial services over the next 18 months, with investors now targeting fintechs that have scale, specialized AI capabilities, and competitive positioning to leverage upcoming infrastructure reforms.