Steve McLaughlin built FT Partners into a 250-person investment bank by watching financial institutions move slowly while nimble competitors ate their lunch. He sees the same dynamic playing out with AI—and he is not impressed with the incumbents' pace.
"It's about time that the big FIs really fix and automate their back offices. And they won't do it fast enough, unfortunately for them," McLaughlin said at FinTech Nerdcon in Miami, where he recorded a conversation for the Fintech Leaders newsletter.
McLaughlin founded FT Partners in 2001 and has positioned it as the largest fintech-focused investment bank. The firm's deal sheet includes advising on Coinbase's $4.3 billion acquisition of Deribit and guiding Revolut through multiple multi-billion-dollar fundraising rounds. That deal flow gives McLaughlin a view of capital allocation across the fintech stack—where the money is moving and where it is stalling.
His read on the current moment is that 2026 is shaping up as a blowout year for fintech dealmaking. FT Partners is signing more engagement letters than at any prior point in its history, and deal closings are running at a record clip. The contrast with 2023 is sharp: McLaughlin describes that year as the darkest stretch in fintech's 30-year history—worse than the dot-com crash, worse than 2008. The 2021 boom had been so overheated that the correction that followed brought transaction activity to near standstill.
What changed the trajectory, in McLaughlin's view, is not just macro conditions but company quality. The founders he meets today are running lean technical teams, have clear product-market fit, and are using AI to build products at roughly a quarter of the capital requirements that comparable software demanded in 2020 and 2021. Regulatory support for crypto, which returned through 2025, added another leg to the recovery.
Not every company made it through that reset cleanly. McLaughlin calls the stragglers the "zombie zone"—firms that cut costs aggressively enough to survive but never found escape velocity, landing at flat revenue or growth around 5 percent. These companies face a difficult path: equity markets have little appetite for flat businesses with inverted unit economics, debt is expensive, and the pool of strategic acquirers is not interested in upside-down cap tables. McLaughlin predicts meaningful M&A volume at depressed prices and mark-to-market writedowns across venture portfolios holding these names.
The AI back-office thesis sits directly inside that M&A view. Large financial institutions carry enormous operational overhead in compliance, reconciliation, settlement and client servicing—functions that are expensive to run on legacy infrastructure and slow to modernize. McLaughlin's argument is that the window to fix those systems exists now, and the banks that miss it will find fintech competitors have already automated the same workflows at a fraction of the cost.
The on-chain layer is where that thesis intersects with DeFi. McLaughlin flagged tokenization as the space where he now concentrates significant attention. His prediction: within 20 years, every major asset class moves from zero tokenization to roughly 80 percent tokenized. He does not frame this as a sudden shift—his language is "slow but sure, asset class by asset class"—but the directional call is unambiguous. At 80 percent tokenization across equities, credit, real estate and private funds, the clearing, settlement and custody functions that currently employ large portions of bank back offices become largely automated on-chain.
That trajectory has direct implications for protocols competing for institutional flow. Tokenized Treasury products—from issuers like BlackRock's BUIDL and Ondo Finance—are already pulling stablecoin liquidity away from DeFi-native lending desks, as on-chain yields on real-world assets run competitive with money-market rates. If McLaughlin's 80 percent tokenization forecast proves correct even directionally, the settlement and custody rails those assets run on become the contested infrastructure layer.
InsurTech, which McLaughlin said became a "dirty word" during the post-2021 correction, is also back in his view—not because the market narrative has softened but because the underlying business models at surviving companies are now sound. The firms that made it through 2023 did so by cutting promotional spending and the growth-at-any-cost mentality that defined the boom era.
For the high-quality cohort across fintech verticals, McLaughlin's assessment is straightforward: this is a genuine heyday. The founders learned the lessons of 2020 and 2021, capital is moving again, and crypto's regulatory footing in the United States is firmer than at any prior point. The banks that automate their back offices in time will compete. The ones that don't will hand that market to someone who did.
