Monday Brief: DeFi Migration, SMB Credit Card Trends, and AI’s Fintech Premium

1. Fintech Firms Eye DeFi Lending Shift Within 3 Years

Source: Cointelegraph via Binance / CoinGlass

Summary

Fintech firms are increasingly exploring decentralized finance (DeFi) protocols—like Aave, Compound, and Morpho, as a more efficient, inclusive alternative to traditional lending. Morpho co‑founder Merline Egalite told attendees at EthCC 2025 that many fintechs could shift to DeFi in the next three years, thanks to growing total value locked (TVL), now around $67 billion, and its permissionless infrastructure.

Key Points

• DeFi allows lending and borrowing without intermediaries, improving access for underbanked users.

• Aave leads with ~$31 billion in TVL, while Morpho holds $5.5 billion.

• Fintechs risk losing API access or bank support, making DeFi a strategic hedge.

• Institutions are warming to regulated, yield-bearing DeFi products.

Strategic Takeaways

Fintech platforms should experiment sooner rather than later. Embedding DeFi lending as a pilot, supporting crypto‑native or cross-border SME use cases, will build institutional knowledge and infrastructure ahead of a broader shift. Consider teaming up with compliance-savvy DeFi protocols to manage regulatory complexity and liquidity risk.

2. Why Small Businesses Shy Away from Business Credit Cards

Source: PYMNTS

Summary

A recent PYMNTS Intelligence report reveals that over half of SMBs use both personal and business credit cards. Younger firms frequently carry balances, signaling cash flow pressure. While high limits attract larger SMBs, smaller ones want credit-building tools and relevant perks.

Key Points

• 50–54% of SMBs use hybrid card strategies, mixing business and personal credit cards.

• Younger firms lean heavily on credit, with many carrying balances.

• Key card features vary: large SMBs value high limits; smaller ones seek credit scores and perks.

• Many rewards fall short of expectations, opening opportunities for more tailored offerings.

Strategic Takeaways

Card programs should provide tiered incentives: simple tools for startups to build credit, and scalable limit services for larger firms. Reward structures must be vertical‑specific, like travel perks for storefronts or software credits for digital businesses. Highlighting flexible limit growth tied to positive repayment behavior could set your platform apart.

3. AI-Fueled Fintechs Drag Higher Valuations

Source: Crowdfund Insider

Summary

PitchBook reports that fintech startups integrating AI are attracting a valuation premium of 242% over non-AI counterparts. While only one-third of U.S. fintechs are AI-enabled, they capture over half of all venture capital flowing into the sector.

Key Points

• Median valuation of AI fintech startups: $134 million.

• Heavy investment in AI across “CFO stack” analytics, payment infrastructure, fraud detection, and compliance tools.

• Though fueled by hype, actual exits and IPOs are still catching up.

• The “cost of intelligence” is pushed higher by both investor expectations and sophisticated technology development.

Strategic Takeaways

Lenders and fintech providers should embed AI into every part of operations: underwriting, cash-flow forecasting, risk scoring, document review, and fraud detection. Even basic machine learning features, such as anomaly detection and customer segmentation, can unlock significant value. Start small but think big; integrating AI now is a market differentiator that builds credibility and investor attention.