The Public Ledger: Where Did the Fintech Magic Go?

Hello, Fintech Friends!

Fintech stocks are having a terrible year, and the rest of the market isn't. The TWIF index, which tracks the performance of the 15 largest public fintechs, is down 24% so far in 2026. The Nasdaq Composite is up 14% over the same stretch. That's a 38-point gap, and only one name in the index is green. Block.

I track 85 public fintechs, and every single one trades below its 52-week high. Only 10 have beaten the Nasdaq this year. Only about one in five is up at all.

This isn't second-tier names dragging down an average. Mastercard, one of the best businesses in the world, trades at a P/E it last saw in the COVID crash. Visa isn't doing much better. When the market prices the card networks like a recession is here, something specific is happening to fintech.

The obvious explanations don't hold up.

Start with the economy. Earlier this year there were real worries about stress in the system, and they didn't materialize. There were expectations the Fed would cut. Now the Fed is expected to hike to fight inflation. Through all of it, fintech kept grinding lower. If this were a macro story, the selloff would track the macro news. It doesn't.

Then there are stablecoins, the threat everyone points to. It's a real shift, but look at who is supposedly most exposed. Visa and Mastercard have handled stablecoins about as well as anyone could. Stablecoin-linked cards are growing fast, and most run on Visa and Mastercard. Stablecoins could also help the two win B2B flows they hardly serve today. Both make them beneficiaries, not victims.

If it isn't the economy and it isn't stablecoins, then what is it? Perhaps the magic is simply gone. For a decade, the industry sold the idea that fintech companies would take over banking, payments, and lending. The upside looked unlimited. Now the ceiling is in view. The growth rates are known, the business models are understood, and the market is repricing fintech as a mature industry.

So the capital that once chased fintech now goes to AI. Every dollar of risk appetite and every bit of investor attention is going there. A fintech that's just a fintech, growing 20% with clean margins, is competing for capital against companies the market believes are reinventing whole workflows. Against that, a profitable and predictable fintech is a hard sell.

Block is the best evidence for this. It's the most aggressive on AI among the large fintechs, and the only name in the index that's green this year. Ramp, the spend-management startup, is the private-market version of the same story. While public fintechs sank, Ramp's valuation climbed from $13 billion to $44 billion in about 18 months. Investors there weren't paying for expense software. They were paying for an AI story. Public markets are dumping the fintechs that don't have one.

I don't think there's an objective reason for fintech to trail the indices this badly. The businesses are fine. The earnings are fine. What changed is the story the market wants to buy, and right now that story has AI in it.

I might have the cause wrong. Maybe the selloff reverses. But if I'm right, the lesson for every fintech founder is uncomfortable. It may no longer be enough to build a great financial company. You may have to build an AI company that happens to do finance.

Jev Kazanins

p.s. Have feedback? Reach out on X

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