Economy January 22, 2026

Fintech Sector Poised for Growth Amid Washington's Affordability Focus, Citi Analysts Suggest

Shifts in U.S. policy highlight opportunities for fintech firms over traditional lenders ahead of 2026 midterms

By Hana Yamamoto
Fintech Sector Poised for Growth Amid Washington's Affordability Focus, Citi Analysts Suggest

Citigroup analysts predict a rising advantage for U.S. fintech companies as the federal government adopts a populist, affordability-oriented agenda in the lead-up to the 2026 midterm elections. President Trump's recent policy initiatives emphasizing consumer affordability are encouraging investors to reconsider dynamics within the financial sector, potentially favoring fintech challengers and firms serving small businesses and consumer credit markets over conventional banks.

Key Points

  • Citigroup identifies fintech firms focused on consumer credit and small business services as key beneficiaries of Washington's shift toward affordability-driven policies ahead of the 2026 midterm elections.
  • President Trump’s proposed policies, such as capping credit card interest rates and limiting institutional competition in housing, support fintech challengers over traditional lenders.
  • Despite some mixed stock performances in 2025, companies like SoFi and Affirm saw significant gains, illustrating investor optimism about fintech’s role amid evolving regulatory priorities.

A recent analysis from Citigroup outlines a potential advantage for U.S.-based fintech companies due to Washington's pivot toward a populist and affordability-driven policy framework ahead of the November 2026 midterm elections. This policy shift, propelled by President Donald Trump's ongoing emphasis on making financial products more accessible and affordable, is influencing investor sentiment across financial services.

The brokerage firm forecasts that fintech companies offering consumer-oriented credit solutions and services for small businesses stand to gain in this environment. Notably, buy-now, pay-later providers such as Affirm and Klarna, alongside fintech players like SoFi and Block, are highlighted as well-positioned beneficiaries. Additionally, Citigroup's assessment extends to include tech-driven companies serving the restaurant and e-commerce sectors, naming Toast and Shopify as possible winners under the evolving policy landscape.

Following Trump's assumption of office in 2025, traditional lenders experienced an uptick fueled by expectations of regulatory easing. However, Citi's note signals that Trump's renewed focus on affordability may realign attention and capital flows toward fintech challengers rather than incumbents.

Market performance in 2025 for these fintech firms was varied: SoFi's shares appreciated approximately 70%, Affirm’s climbed over 22%, while Block's shares declined by more than 23%, underperforming its fintech peers and the Nasdaq Composite index, which rose roughly 20.4% during the same time frame. The underperformance of Block appears linked to investor concerns regarding growth trajectories and competitive pressures within payments.

Citi emphasizes that a rise in populism, as embodied in affordability-centered policies ahead of the midterm elections, bolsters the appeal for companies delivering lower-cost, user-friendly lending tools and small-business services. This trend aligns with President Trump's recent policy actions, including his call to cap credit card interest rates at 10% for one year, a proposal that met resistance from major banking industry figures like Jamie Dimon, CEO of JPMorgan Chase.

Furthermore, the President signed an executive order targeting reduced competition from large institutional investors in the housing market to benefit individual homebuyers, reinforcing the affordability agenda. Citi suggests this regulatory environment potentially advantages smaller fintech firms competing in consumer credit and housing finance sectors.

Risks

  • Resistance from established banking institutions, exemplified by opposition to interest rate caps, introduces regulatory and lobbying risks for fintech.
  • Market competition and concerns over growth may dampen investor enthusiasm for certain fintech names, as evidenced by Block’s underperformance.
  • Policy outcomes related to affordability measures remain uncertain and may shift dynamically, introducing potential volatility for fintech and related sectors.

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