Over the last 15 years, the fintech sector has transformed, from early digital extensions of physical bank branches to the rise of neobanks focused on sleek, easy-to-use interfaces.
According to Sifted data, a staggering €13bn flowed into European fintech in 2025 with €4.3bn raised this year already. If investment continues at its current pace, the sector will have raised roughly €11.7bn by the end of this year.
Now, the industry is entering a new phase. A new generation of companies are rethinking banking as an integrated layer embedded into business operations.
Between logging into three different bank accounts and checking fragmented invoicing and cashflow tools, figuring out finances is often a nightmare for startups and small businesses.
“The problem is fragmentation, rather than the actual user experience,” says Deniz Guven, group CEO of finance platform Wamo.
Guven believes fintech is no longer about building a better-looking digital bank but about building a connected operating system that brings tools together and helps to run entire businesses seamlessly.
A new wave of fintech
Before the 2010s, fintech primarily operated as a digital version of physical bank branches, with onboarding requiring paperwork and transactions taking days to clear.
Around 10 years ago, neobanks such as Monzo and Revolut began revolutionising the consumer experience of digital banking by introducing user experience (UX) features that are now industry standard.
These included real-time notifications, spending analytics, the ability to freeze and unfreeze a card instantly within the app and visually aesthetic physical cards.
These types of companies did the “heavy lifting” of the reinvention of the sector, says Guven. They proved that people wanted to manage their money purely through their smartphones.
But while UX transformed personal banking, it’s not enough for the complexities of small to medium-sized businesses (SMBs).
If a founder’s digital bank account doesn’t communicate with a company’s procurement software, payroll provider and invoicing tools, a sleek interface doesn’t save them any time, says Guven.
The most important thing is building the financial operating system designed around how an SME actually spends, not around banking products in silo.
“SMBs are running their finances across three or four banks and ten different disconnected tools,” he says.
Fintech is now focused specifically on fixing how a business runs and building a connected operating layer bringing cash, payables, receivables and credit into one system.
The banking infrastructure and financial software are native to each other. When an invoice gets paid, for example, the system automatically recognises the incoming funds, marks the invoice as paid and updates the balance in real-time.
This is something Wamo has been working on since its beginnings in 2021.
“We are not just a digital bank with some sexy interface,” Guven says. “The most important thing is building the financial operating system designed around how an SME actually spends, not around banking products in silo.
“I’m not a big believer of product-led banking because it’s dying right now. That operating layer will be the differentiating point, and fintech companies will become service-led companies.”
The use of AI in banking
In the fintech industry, AI has previously been seen as a customer service chatbot bolted onto an existing app.
However, AI should essentially be the engine that’s running the platform, says Guven.
It can help to connect various parts of the platform that are often separated such as cash management, accounting and credit as well as the internal banking infrastructure itself such as the data and compliance.
“Automation internally is extremely important, from technology and compliance to risk and product,” he says.
AI can also be used to support underwriting and risk assessment. Traditional banks typically underwrite loans based on historical data such as previous balance sheets.
The goal is to use AI to handle the data so that human agents are freed up to provide customer support.
“By compiling risks and alerts, fine-tuning and reading the market, using AI here will completely change the shape of underwriting,” Guven says.
Legacy banks also often combine all startups and scaleups into one ‘SME’ category, offering them the exact same interfaces and services.
“Say someone has a small flower shop and someone else has a small construction company,” Guven says. “Normally, traditional banks look at these two companies and just say: ‘They’re both SMEs.’ But are they really the same?”
“You have to understand the behavioural clusters with the help of AI. Can I give a fully personalised service for a flower shop and a completely different one to the construction firm?”
SMEs don’t have massive finance departments, but their finances are generally far more complex than a standard consumer’s.
Founders don’t want to talk to a generative AI bot, Guven says. The goal is to use AI to handle the data so that human agents are freed up to provide customer support.
The future of Wamo and SME banking
True embedded finance allows SMEs to access financial services exactly where and when they need them. Guven predicts this integrated service layer will be a major growth area over the next two years.
If we can hear our customers say they run on Wamo instead of having a bank plus six other tools, then that’s the win.
Because traditional banks can’t afford to spend hundreds of millions to replicate new technologies over the next few years, he also sees a surge in partnerships happening between traditional banks and fintechs.
“Honestly speaking, when I look at banks in Europe right now, I don’t believe all of them can spend €100m each and build similar services in two or three years’ time,” Guven adds. “That’s not the best way for the European economy. There will be some leaders and the others will collaborate.”
Wamo is working hard to be a leader within the fintech space over the next five years. By 2027, the platform hopes to reach 100k companies across Europe and hit €50m ARR.
“But the real ambition isn’t really a number,” he says. “If we can hear our customers say they run on Wamo instead of having a bank plus six other tools, then that’s the win.”
