Europe’s Fintech Sector Grows Rapidly as AI and Stablecoins Reshape the Future of Finance
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Despite economic headwinds, Europe’s fintech ecosystem is demonstrating impressive resilience and innovation. According to a new mid-year report by Finch Capital, European fintechs raised €3.6 billion in the first half of 2025 a 23% increase from €2.9 billion in the same period of 2024. This growth underscores the sector’s strength and its continued appeal to both local and international investors.
The report highlights two transformative forces reshaping financial services — artificial intelligence (AI) and stablecoins both emerging as pivotal technologies driving the next phase of fintech evolution.
In 2025, fintech accounted for 23% of all venture and growth funding in Europe, rising from 18% a year earlier. This surge positions fintech as Europe’s leading tech investment sector. US investor interest has also rebounded, with major firms like Sequoia, Balderton, and Atomico driving deals across payments, lending, and wealthtech.
While mega-deals above €500 million remain limited, mid-market mergers and acquisitions continue to thrive. Notably, 22 European fintech firms are now valued above $2 billion including Revolut, Klarna, and Checkout.com together representing a massive $150 billion valuation pool.
AI Takes Center Stage in Financial Services
Finch Capital’s report reveals that AI adoption in finance is growing rapidly. Around 55% of lenders are already piloting or scaling AI, a figure expected to reach 70% by 2026. AI has reduced loan underwriting times from 12 days to as little as 2.5 days when fully automated.
In wealth management, generative AI (genAI) is enhancing client experiences and improving operations. According to EY-Parthenon’s 2025 survey, 95% of asset managers are using genAI in areas such as marketing, compliance, and client onboarding.
Despite its promise, AI fintech remains early-stage contributing 21% of fintech deal volume but only 7% of deal value in H1 2025.
Stablecoins and Agentic AI Redefine Payments
The European payment sector is at a turning point, driven by the combined power of stablecoins and agentic AI. With global stablecoin supply hitting $250 billion in H1 2025 equivalent to 10% of US currency in circulation adoption is particularly high in inflation-hit economies like Argentina and Venezuela.
Meanwhile, payment giants like Visa, Mastercard, and PayPal are developing “agentic payment stacks” AI systems that handle budgeting, bill payments, and dispute resolution autonomously. A 2025 BCG report predicts that 81% of consumers will use agentic AI for shopping, with up to $1 trillion in e-commerce spending becoming AI-assisted.
UK and Germany Lead Europe’s Fintech Race
The UK remains Europe’s undisputed fintech leader, capturing 56% of total funding in H1 2025 roughly €2 billion with London accounting for nearly 80% of this activity. Major funding rounds included Rapyd’s €474 million, Dojo’s €168 million, and FNZ’s €460 million.
Germany follows as a strong contender, attracting about €500 million in fintech investments across wealthtech, digital banking, and blockchain. Notable rounds included Scalable Capital (€155 million), Solaris (€140 million), and Nelly (€50 million).
The Outlook
As Europe’s fintech ecosystem matures, AI and digital currencies are paving the way for more efficient, intelligent, and inclusive financial systems. With innovation accelerating and investor confidence returning, 2025 could mark a defining year in the continent’s fintech transformation.
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