Technology Banking And Fintech Partnerships Will Redefine Lending

Key Takeaways

• Expanding tech-driven banking products and fintech partnerships are set to boost loan growth, fee income, and overall profitability over the next several years.
  
• Investment in proprietary technology and regulatory support is improving efficiency, lowering costs, and enhancing the company's competitive position for long-term earnings stability.
  
• Heavy reliance on wholesale funding, fintech partners, and specialty lending exposes FinWise to rising costs, credit risks, and margin pressure amid competitive and regulatory challenges.

Catalysts

Operates as the bank holding company for FinWise Bank that provides various banking products and services to individual and corporate customers in Utah.

• The company is set to benefit from growing demand for technology-enabled banking and payments solutions, particularly as its new BIN and payment products mature and drive a shift toward lower-cost, noninterest-bearing deposits, which should reduce funding costs and improve both net interest margin and overall earnings in late 2026 and beyond.
  
• Strategic expansion into high-yield, specialty, and credit-enhanced lending products-with several programs just launched or about to scale-positions FinWise to capture outsized loan growth and fee income, supporting further increases in total revenue and non-interest income as these programs ramp up through 2025–2026.
  
• Strong momentum and continued origination volume growth, evidenced by a 27% YoY increase and multiple new fintech partnerships in the pipeline, suggest returns from new and maturing B2B relationships will drive sustained revenue and profit expansion into 2027.
  
• Significant investments in proprietary technology and operational infrastructure over the past two years are beginning to yield improved efficiency, enabling operating leverage gains and supporting the long-term target of lowering the efficiency ratio and thus increasing net margins.
  
• The evolving regulatory environment, such as clarity on stablecoins and support for innovative bank–fintech partnerships, is expected to further strengthen FinWise's ecosystem and addressable market, promoting both loan and fee income growth while offering compliance-driven competitive advantages that support long-term earnings stability.

FinWise Bancorp Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming FinWise Bancorp's revenue will grow by 38.4% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 18.5% today to 16.5% in 3 years time.
• Analysts expect earnings to reach $32.9 million (and earnings per share of $2.37) by about July 2028, up from $13.9 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.1x on those 2028 earnings, down from 16.9x today. This future PE is lower than the current PE for the US Banks industry at 11.3x.
• Analysts expect the number of shares outstanding to grow by 1.96% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.4%, as per the Simply Wall St company report.

FinWise Bancorp Future Earnings Per Share Growth

Risks

• Persistent reliance on wholesale funding, particularly short-duration brokered certificates of deposit (CDs), means FinWise may face rising funding costs as market rates fluctuate or increase, which could compress net interest margin and reduce earnings over the long term.
  
• Gradual but expected ongoing decline in net interest margin, acknowledged by management as part of the bank's risk reduction and asset diversification strategy, could limit profitability growth even as loan balances rise, impacting long-term margins and earnings potential.
  
• Credit quality risk remains, as demonstrated by elevated migration of loans to nonperforming assets (NPAs) and increasing provisions for credit losses; while some of this is offset by insurance recoveries, loan seasoning from periods of lower rates and past stimulus may drive lumpier or higher future credit costs that could pressure net income.
  
• Heavy dependence on fintech and specialty lending partners exposes FinWise to concentration risk; if key partners underperform or market/regulatory conditions shift for these sectors, originations and fee income may decline sharply, negatively affecting revenue and earnings.
  
• Competitive and regulatory pressures in digital banking and fintech could favor larger, more diversified institutions, while increasing compliance and operational costs (e.g., related to emerging technology and data privacy laws) may squeeze operating leverage for a smaller player like FinWise, ultimately weighing on profitability.

Valuation

• The analysts have a consensus price target of $19.667 for FinWise Bancorp based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $199.5 million, earnings will come to $32.9 million, and it would be trading on a PE ratio of 10.1x, assuming you use a discount rate of 6.4%.
  
• Given the current share price of $17.48, the analyst price target of $19.67 is 11.1% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.