The Next Evolution: Why Fintech Will Embrace AI

Over the past two decades, I've seen fintech revolutionise how people across the world interact with their money. Once the scrappy startups began disrupting legacy banks, fintech businesses became the “next big thing,” promising smarter, faster, and more accessible financial services.

Challenger banks, mobile money wallets, payment platforms, robo-advisors, and lending startups have since exploded onto the scene, particularly in the last 10 years, with bold ideas and slick interfaces. But after a wave of innovation, investment, and in some cases, wrong turns, the sector has begun to mature.

Now, artificial intelligence is knocking at the door, offering fintech a new lifeline - or a serious threat, depending on how the industry chooses to respond. 

A Maturing Industry at a Crossroads

The fintech boom of the 2010s was driven largely by user-friendly design, mobile-first experiences, and automation of traditional financial processes.

Companies like Monzo, Revolut, Klarna, and Stripe built empires by doing what banks couldn’t, or wouldn’t. But user expectations have since shifted. Convenience is no longer a novelty; it's an expectation.

Meanwhile, customer acquisition costs have risen, funding has tightened, and regulatory scrutiny has increased. Fintech firms that once prided themselves on rapid growth are now under pressure to demonstrate profitability and long-term sustainability. And that’s where AI comes in - not just as a tool for efficiency, but as the catalyst for a second wave of innovation.

The AI Opportunity for Fintech

Personally, I think AI is here to help the sector. Used right, it will be a transformative force that has the potential to reshape every layer of a fintech business from front-end user experience to back-end risk management. For companies willing to act, the potential upside is massive.

Based on my experience, here are a few things I'd recommend companies explore:

1. Hyper-personalisation at scale 

AI enables fintechs to move beyond static user journeys and offer truly personalised financial experiences. By analysing customer data in real-time, AI can suggest spending habits, investment options, or credit products tailored to individual users. Think of it as the evolution from one-size-fits-all to one-size-fits-one.

2. Smarter fraud detection and risk management 

Fintechs are often misrepresented as more vulnerable to fraud, especially as they scale and become more visible. AI can help provide best-in-class compliance at low cost. Whether used to spot subtle patterns in transactions that traditional rule-based systems miss, allowing for faster, more accurate fraud prevention or simply processing KYC documents faster. It can also refine credit scoring and risk models, opening up lending opportunities to customers who might otherwise have been excluded.

3. Operational efficiency and cost savings 

From automating customer support with AI-powered chatbots to streamlining compliance checks and document processing, AI can drastically reduce costs, which is particularly important in a tighter funding environment and will support more services delivered to a wider client base.

4. New product innovation 

AI opens the door to products and services that didn’t previously exist. For example, real-time financial coaching, predictive financial planning, or even AI-managed portfolios that adapt dynamically based on market movements and personal goals.

The Risk of Standing Still

Fintechs that ignore AI risk being overtaken not just by other startups, but by the very legacy institutions they once disrupted.

Big banks and tech giants are investing heavily in AI and they have the scale, customer base, and data to move at scale. In contrast, fintechs have the advantage of agility, fewer legacy systems, and a culture of innovation. But those advantages only matter if they’re acted on.

To evolve in the right direction, fintechs need to embrace AI fully as a core business strategy. That means investing in talent, building ethical and explainable AI systems, and focusing relentlessly on delivering value to customers.

The first wave of fintech changed how people interact with money. The next wave - powered by AI - will change how people think about money. Those who lead this shift will define the future of finance. Those who don’t may find themselves left behind.