US Fintech 2025: Bank Charters, Funding and Network Effects

A Sector Racing to Redefine Banking

Fintech in the United States is entering a pivotal stretch, with fresh data pointing to strong consumer demand, sustained enterprise investment, and a handful of growth areas pulling in fresh capital and talent through 2025 1. But the more consequential story unfolding beneath the funding headlines is structural: a wave of fintech companies is trying to become banks outright, and the regulatory system is proving to be an uneven gatekeeper.

The Charter Battle

Two contrasting episodes this week illustrate just how high the stakes are for fintechs seeking direct access to the banking system. Flexible Finance formally applied to the FDIC and the Utah Department of Financial Institutions to charter a new industrial bank, Flex Bank, joining a growing line of fintech firms pursuing the industrial-bank route as a way to secure deposit-taking powers without going through a traditional national-bank charter 2. Utah's industrial bank charter has long served as a side door for non-bank companies wanting FDIC-insured status while avoiding some of the stricter holding-company oversight that comes with a national charter.

That side door looks more appealing after Wise Group's experience with the front door. The U.K.-headquartered, U.S.-listed money-transfer fintech saw its shares fall as much as 11% after regulators rejected its application for a national bank charter, a setback that raises questions about the path forward for the company's U.S. ambitions and puts a spotlight on how difficult it remains for even well-capitalized, publicly traded fintechs to win full banking status 3. Taken together, the two stories underscore a widening divergence in strategy: smaller or more nimble players are chasing state-level industrial charters, while larger international fintechs testing the national charter process are running into resistance.

Banking-as-a-Service as the Workaround

While some fintechs pursue charters directly, others are opting to partner with already-chartered banks rather than become one themselves. Coastal Financial has built a banking-as-a-service model with more than 20 fintech partners, a structure credited with driving revenue and earnings-per-share growth above 30% and supporting a bullish price target near $110, positioned in contrast to Dave Inc., whose valuation and payday-loan-adjacent lending model draw more skepticism 5. This BaaS approach effectively lets fintechs rent bank infrastructure instead of building or acquiring it, a middle path that sidesteps the regulatory friction seen in the Wise and Flexible Finance cases.

Network Effects and What Comes Next

Underneath the charter and partnership maneuvering is a simpler dynamic driving valuations and strategy alike: network effects, where payment and financial platforms become more valuable to every user as more people and businesses join them, a force expected to keep shaping competitive advantage in the US financial market into 2026 4. Combined with continued funding momentum and diversified growth areas 1, the data suggest fintech's next phase will be defined less by novelty and more by which companies can secure durable infrastructure — whether through charters, partnerships, or scale — to keep those network effects compounding.