By Mark Andreev, CEO at Exactly.com
For much of the past decade, fintechs were defined by their ability to address barriers in the financial sector by doing what traditional financial institutions could not.
Whether it was making payments faster, simplifying lending or improving the customer experience, challenger firms built their reputations by removing long-standing friction from financial services.
Today, many fintechs are moving beyond the specialist services that helped them grow in the first place. Rather than focusing solely on payments, lending or international payments, they’re broadening their offerings to include a wider range of banking and financial management tools. This shift is already having a measurable impact. Fintechs now account for more than 68% of SME lending in the UK, highlighting the increasingly important role they play in how businesses access and manage finance.
This evolution reflects changing customer expectations. SMEs increasingly expect financial services to operate seamlessly in the background, supporting everything from payments and cash flow management to access to funding and international expansion. In response, fintechs are seeking a greater role in how businesses manage and move money.
How fintech challengers are evolving into major industry players
When fintech was on the rise, it focused on targeted solutions. Industry players set themselves apart by tackling specific customer pain points, particularly around speed and transparency, where traditional providers often struggled to keep up with rising customer expectations and needs. Ultimately, a better customer experience became the differentiator that allowed challengers to compete with far larger institutions.
Today, the industry’s ambitions extend far beyond individual products. Fintechs are transforming into comprehensive financial platforms that combine payments, banking, lending and business management tools within a single ecosystem. Rather than competing in isolated areas of financial services, they are increasingly positioning themselves as a customer’s primary financial partner. As a result, the competitive battleground has shifted from individual products towards the overall customer experience.
The sector’s growing maturity is reflected in the numbers, showing how fintech has massively evolved from its startup roots. The UK continues to rank as Europe’s leading fintech market, attracting $3.6 billion in investment in 2025, with many of the sector’s biggest names now achieving sustained profitability. In fact, many fintech firms have evolved from high growth challengers into financially robust businesses, with 11 of the UK’s leading fintechs, including Revolut and Wise, generating a combined £2.4 billion in pre-tax profits during 2024, highlighting just how far the industry has come.
An important driver of this shift is the rise of embedded finance. Businesses increasingly expect financial services to be built directly into the platforms they already use, rather than accessed through separate providers. As payments, lending and banking capabilities become more deeply integrated into software and digital ecosystems, fintechs are better positioned to deliver financial services at the point of need.
Klarna’s move into broader banking services illustrates how the ambitions of many fintechs are changing. After establishing itself through buy-now-pay-later solutions, the company has expanded its focus to include everyday banking products such as accounts and debit cards. This reflects fintechs’ growing ambition to look beyond individual services and become a businesses’ primary financial partner rather than a provider of a standalone service.
What fintech expansion means for SMEs and their access to financial services
For SMEs, the expansion of fintechs represents far more than increased competition within financial service. It’s helping to address many of the long-standing challenges that have historically limited business growth, from accessing funding and managing cash flow to navigating complex banking processes.
Traditional financial services have not always been designed with smaller businesses in mind. Lengthy application processes, rigid lending criteria and fragmented financial tools can create unnecessary barriers at a time when agility is critical. Fintechs have challenged this model by using data, automation, and digital-first experiences to make financial services more accessible, efficient, and responsive.
Beyond access to finance, SMEs are increasingly looking for greater simplicity in how they manage their financial operations. The growth of all-in-one financial platforms in helping businesses reduce complexity by bringing together payments, banking, expense management and funding solutions in a single environment. This not only saves time but also provides a clearer, real-time view of business performance.
The rise of data-driven financial services is also changing how SMEs access support. By using real-time transaction data and digital onboarding processes, fintechs can make faster decisions and offer products that are better aligned with the needs of modern businesses.
As competition intensifies, SMEs can expect greater choice, more personalised financial services and improved access to capital to support long term growth.
What this shift means for the future of payments
The evolution of fintech is changing the role payments play within the wider financial ecosystem. Once viewed primarily as a transaction function, payments are increasingly becoming the gateway to a broader range of financial services, from lending and cash flow management to financial planning and forecasting.
For businesses, the real value lies in greater visibility and control. By combining payment capabilities with broader financial tools, fintechs can help organisations gain better oversight of cash flow and reduce administrative complexity.
Payments alone are unlikely to set providers apart for much longer. For businesses, the real challenge is managing the wider financial picture. Those that can make that easier and help customers stay on top of their finances will be best placed to stand out.
