Venture capitalists cautiously funded fintechs in 2025 as they continued their investment spree into AI-driven fintech companies and are expected to spend more in 2026. 

“AI-driven fintech funding in 2025 has been disciplined, not enthusiastic,” Katie Quilligan, principal at venture capital firm BankTech Ventures, told FinAi News. “We’ve seen selective capital deployment, not a funding boom.”

Hear more from Quilligan at the FinAi Banking Summit. 

Investors are writing checks for AI fintechs that can show revenue impact and unit economics that work, not companies with impressive demos and ambitious roadmaps, Quilligan said. 

During the first three quarters of 2025, global fintech funding fell to $64.9 billion, a 6% drop from the $69.3 billion raised a year earlier during the corresponding period, according to data analytics company Fintech Global’s Dec. 4 release. 

The drop in fintech funding is a healthy caution rather than a retreat, Quilligan explained.  

“Investors are done funding AI-powered as a pitch. They’re now asking: What specific financial workflow does this actually fix?” she said. 

While fintech funding remained subdued this year, AI-driven fintechs are still gaining a big slice of total funding, Quilligan said. “By early 2025, it was clear AI would continue to outperform other fintech segments, but valuations would stay grounded, and fundamentals would continue to be emphasized.” 

The companies raising capital right now solve concrete problems: underwriting that takes days instead of weeks, KYC processes that don’t require three compliance officers manually reviewing documents and fraud detection that catches sophisticated attacks that legacy systems miss, Quilligan said. 

“Meanwhile, startups offering generic AI layers without defensible data advantages or clear ROI are struggling to close rounds, even though overall AI appetite remains strong,” she said. 

2026 outlook 

Heading into 2026, private markets are expected to absorb a majority of the financing needs for fintechs, Quilligan said. “Both public and private options are on the table, but only a small number of AI fintechs have the scale, governance and revenue durability to successfully navigate a public listing.” 

Growth equity firms, PE shops and strategic investors continue to show an appetite for companies with predictable cash flows and margin expansion driven by automation, she said. “While exit conditions are normalizing, for most AI-driven fintechs, the private route makes more sense in 2026.” 

For 2026, investors want to invest, but only in companies that can prove their AI works, she said.  

“The bar is higher than it was 18 months ago,” Quilligan said. “You need defensible technology, proprietary data sets and customers who are paying real money because your product delivers measurable value.” 

BankTech in November invested an undisclosed amount in Abacus, a software development agency that provides AI, machine learning and advanced analytics services, according to Crunchbase. 

Major deals 2025 

2025 turned out to be one of the best years for AI companies raising funds with these mega deals announced: 

• OpenAI, xAI, Anthropic and Scale AI collectively raised over $75 billion; 

• Spend management company Ramp raised $800 million over two rounds in April and July to be valued at $32 billion; 

• AI agents platform provider AppZen raised $180 million in September; and 

• AI-based commercial insurance provider Nirvana Insurance raised $100 million in December. 

Register here for early-bird pricing for the inaugural FinAi Banking Summit, taking place March 2-3 in Denver. View the full event agenda here.