From challengers to giants: fintechs are the new disruptors

A decade ago the fintech challengers competed on a single product: a faster payment, a cleaner app, a cheaper card abroad. The contributed piece below argues that the ambition has changed. Klarna's application for a US banking licence is its marker of a wider shift, in which the companies that began on the fringes of financial services now want ownership of the customer relationship and a central role in how money is routed.

The argument is made from the payments side of the industry, and its interest for readers outside banking is what it says about expectations. Small businesses, the author writes, now assume finance will work in the background: instant payments, cash-flow management, funding and cross-border growth from one provider. Whether traditional institutions can meet that assumption is the question the piece leaves open.

Mark Andreev is chief operating officer of Exactly.com, a payments company. The article that follows is a contributed piece and presents his opinion.

Not long ago, companies like Klarna and Revolut were viewed as upstart challengers operating on the fringes of financial services.

By offering faster payments, smoother user experiences and innovative alternatives to traditional banking products, they built loyal customer bases by addressing frustrations that established institutions had left unresolved. What started as a consumer-focused revolution has since evolved into something much bigger.

Klarna's application for a US banking licence is a prime example of a wider shift taking place. Instead of simply partnering with banks or specialising in individual financial products, many fintechs are seeking greater ownership of the customer relationship and a more central role in how money is routed and managed.

Expectations have changed across the board. SMEs increasingly expect financial services to work seamlessly in the background: enabling instant payments, simplifying cash flow management, unlocking access to funding, and supporting international growth.

The result? The boundaries between banking, payments and commerce are becoming increasingly blurred. As fintechs continue to expand their offerings, the conversation is shifting from whether challengers can disrupt the industry to how traditional institutions will compete, and what this means for the businesses that rely on them.

How fintech challengers are evolving into major industry players

The first wave of fintech innovation centred on targeted solutions, with firms differentiating themselves by tackling particular customer pain points, whether this was faster payments, more accessible lending or a better digital experience. Their success came from delivering convenience, transparency and speed in areas where traditional providers often struggled to keep pace. In many cases, 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 start-up roots. The UK continues to rank as Europe's leading fintech market, attracting $3.6 billion in investment in 2025, while many of the sector's biggest names are now delivering consistent profits. At the same time, 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.

Alongside this development is growing customer expectation. Businesses increasingly want financial services that operate seamlessly in the background, allowing them to manage payments, cash flow and growth through a single provider. Customers now expect financial providers to deliver the same frictionless digital experiences they receive from the best services and brands they interact with daily.

This has created an opportunity for fintechs to expand their role in the financial ecosystem and build deeper, longer-lasting customer relationships.

Klarna's recent push into broader banking services highlights this trend. Having built its reputation through buy-now-pay-later offerings, the company is now expanding into everyday financial management products, including accounts and debit card services. It is a sign that fintechs are no longer content with disrupting individual parts of the market. They are beginning to compete for ownership of the entire customer relationship.

This transition is blurring the lines between banks, payment providers and fintechs. The organisations that will thrive in the years ahead will likely be defined by their ability to deliver connected, customer-centric financial experiences.

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 services. It is 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.

As fintechs continue to expand their capabilities, SMEs are gaining access to more integrated solutions that combine payments, banking, lending and financial management within a single platform. This reduces administrative burdens while giving businesses greater visibility over their finances.

The impact of this shift is increasingly evident. Fintechs now deliver more than 68 per cent of SME lending across the UK, underlining the increasingly important role digital-first financial providers are playing in helping businesses access capital and manage their finances.

By leveraging technologies like open banking and alternative credit assessments, fintechs are creating new pathways to finance for businesses that may previously have been underserved. 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 implications for payments are equally significant. As fintechs expand beyond individual products, payments are becoming more embedded in wider financial ecosystems, enabling businesses to access banking, lending and cash flow management through a single provider.

This shift is already changing how businesses interact with financial services. By March 2025, one in five UK consumers and small businesses were active users of open banking, with open banking payments growing by around 70 per cent year on year, highlighting the growing demand for faster, more connected payment experiences.

As expectations continue to rise, the future of payments will be shaped by providers that can reduce friction, simplify management and deliver seamless customer experiences across the entire financial journey.

In the coming years, businesses are unlikely to distinguish between banks, fintechs and payment providers. Instead, they will gravitate towards the platforms that make managing money easiest.