Fintech infrastructure companies raised $18.6 billion in venture capital in 2024, representing 35% of all fintech investment, according to CB Insights. The category — which includes core banking platforms, payment processing systems, compliance automation tools, and Banking-as-a-Service providers — has attracted the highest share of fintech VC for three consecutive years. Investors are prioritising infrastructure because it captures value from every fintech company and every financial transaction built on top of it, creating durable businesses with compounding network effects.
The Infrastructure Investment Thesis
Infrastructure companies in any technology sector share attractive characteristics: high switching costs, recurring revenue, and leverage from every customer and transaction that runs on the platform. In fintech, these characteristics are amplified by the regulated nature of financial services, which adds compliance requirements that increase the value of infrastructure providers and raise barriers to entry for competitors.
According to McKinsey, fintech infrastructure companies retain customers at rates exceeding 95% annually, compared to 85% for fintech application companies. The retention advantage reflects the difficulty and risk of migrating core financial systems — a bank that has integrated its operations with a core banking platform or payment processor faces months of migration work and significant operational risk to switch providers.
The revenue model is equally attractive. Infrastructure companies generate transaction-based revenue that scales with customer growth. When a fintech startup built on a BaaS platform acquires more customers, the infrastructure provider’s revenue grows automatically without additional sales effort. According to Forrester Research, the median fintech infrastructure company generates 120% net dollar retention — meaning existing customers generate 20% more revenue each year as their usage grows.
Infrastructure Categories Attracting Capital
Core banking platforms (Thought Machine, Mambu, 10x Banking) raised $4.2 billion as banks and neobanks replace mainframe-era systems with cloud-native alternatives. Payment infrastructure (Stripe, Adyen, Checkout.com, Marqeta) raised $5.8 billion as digital commerce volumes grow. Compliance and risk infrastructure (Alloy, Sardine, Chainalysis) raised $3.1 billion as regulatory requirements increase globally. BaaS platforms (Unit, Treasury Prime, Synctera) raised $2.4 billion as embedded finance adoption accelerates.
According to industry projections, the fintech infrastructure market will reach $120 billion in annual revenue by 2028, growing at 22% annually. The growth is driven by three factors: more digital banking platforms launching on modern infrastructure, more non-financial companies embedding financial services through BaaS, and more traditional banks migrating legacy systems to cloud-native platforms.
Why Infrastructure Produces Outsized Returns
Fintech infrastructure investments have produced some of the largest venture returns in the sector. Stripe, valued at $65 billion, is a payment infrastructure company. Plaid, valued at $13.4 billion, is a data connectivity infrastructure company. Marqeta, which went public at a $16 billion valuation, is a card issuing infrastructure company. Each built a platform that other companies rely on to deliver financial services.
The outsized returns reflect the leverage inherent in infrastructure businesses. A fintech application company captures value from its own customers. A fintech infrastructure company captures value from every application built on its platform and every customer those applications serve. According to Goldman Sachs, fintech infrastructure companies trade at an average of 15x forward revenue, compared to 8x for fintech application companies, reflecting the durability and compounding nature of their revenue streams.
For venture investors, the infrastructure thesis is straightforward: as fintech grows, infrastructure grows faster because every fintech company and every financial transaction requires infrastructure. The companies that build the most reliable, comprehensive, and scalable financial infrastructure will capture a permanent share of the multi-trillion-dollar financial services economy.
