The Fintech spectrum encompasses all the companies that have embedded technology into financial businesses. For instance, companies providing new digital payment solutions, or the ones allowing person-to-person online money transfers are called fintechs. It was already time for this sector to start blooming, where the pandemic only accelerated the whole process by creating both the urgency and the necessity of fintech solutions in our day to day lives.
It’s a long long list of services provided by fintechs that one can think of and so do the companies or the stocks when we start digging into the fintech sector. To name a few, following are some financial tech-solutions offered by fintechs:
- Financial Services.
- Financial Software.
- Person-to-Person transactions.
- Online and peer-to-peer payments.
- Mobile Banking.
- International digitized remittances.
- Payment Gateways.
- Money transactions processing.
Investment in stocks in any sector is undoubtedly a question of risk, timing, and current scenario. The fintech sector is no different in this regard, where it surely has huge potential of growth as being a young industry, nonetheless the increased interest rates and higher inflation in post covid scenario has certainly hit the startups of this sector hard enough. Such risks and sector rotations are absolutely normal and should not keep long term investors from getting a piece of the cake. Thus, keeping this in mind, we have brought you some of the best fintech stocks that can prove to be a smart step in your portfolio management:
With over 361 million active customer accounts and CEO Dan Schulman vouching for it to reach the figure of billions in near future, PayPal securely emerges as the industry leader. It started by catering to the online payment needs of its customers, and went on to expand in the flourishing online shopping culture of its massive user base with services like Venmo, peer-to-peer payments, buy-now and crypto, pay-later to name a few. With time the company has not lacked behind in broadening its horizons by acquiring complementing businesses viz. Honey (an e-commerce tool) and strategic partnerships viz. launch of Venmo (person-to-person) payment platform on Amazon.com. With its long history of effective products and continuous advancement in market capture, PYPL is surely a no brainer when putting your bet on this stock.
Upstart Holdings (UPST):
Upstart is an artificial intelligence based lending platform that collaborates with banks and various other credit organizations to provide automated loan and financing approvals to its customers. This stock has witnessed shocking growth in 2021, giving 250% revenue growth over past year and still fairing well above 100% of growth in the present scenario. The fact that it is comparatively a young player in the fintech industry, does not stop it from competing head-on with other major players, owing to its unique and value driven service to its consumers. Credit when based on traditional metrics (education, employment etc.) has always been a hectic go to option for many of us when needing that one little push for higher education, startups, asset building and many more. Upstart is a game changer in many such cases where 70% of its loans are automated and the rest one third are easily dealt through AI, predicting credit worth by non-traditional variables.
Another humongous player in the world of digital payments made and being paid is VISA Inc., which very much defines the movement of money around the globe and certainly proves to be a must buy stock in the fintech category. The company’s origin is almost half a century old and it still holds its position strongly driving the market crazy with its apt innovation, adaptability and best investing strategies. It is one of a kind businesses that lead by example and truly follow their vision of being the best way to pay and be paid, for everyone, everywhere.
Yes, this is an unusual pick in our list of fintech stocks, as it is not purely a fintech company, but Amazon.com has come a long way and marked its presence quite effectively among the fintech players by its strategic partnerships with fintech giants of the world, viz. Affirm Holdings, Block and Intuit etc. It is known to be the leading e-commerce platform around the world with a much satisfied customer base that is now confident and comfortably hooked to online digital transactions on Amazon. From payments and lending to insurances and cash deposits, Amazon is getting ready to take on the financial sector from all sides. However the speculation was around bringing next generation banks but the actual reality revolves around creating a supportive Amazon ecosystem by laying the foundation of financial services for all its consumers and merchants put together.
More than a decade old enterprise, Square works around providing financial solutions to merchants, pertaining to their all sorts of needs under a single umbrella. In a time span of a few years only, businesses of all stature, small, medium and big were able to accept online payments, buy inventory, track sales and apply for loans from a simple application on their mobiles. It started by giving a suite of services to its small business merchants whereby they can easily analyze sales and customer data, create trends and insight reports, employ marketing tactics and much more to simplify their daily processes and bring efficiency and growth together. It has further reached greater horizons by acquiring new businesses like Afterpay, Cashpay and expanding its products and service spectrum attaining a new identity for itself as Block Inc. The two major product lines working through for Square in present times is its Cash app and Square online store.
Looking at the broad spectrum of high yielding fintech stocks and a huge growth promising industry, it surely is a tough call for anyone to choose the best options to park your funds in. The above list gives a fair idea of a few industry leaders and their road to success, but you can still play more safe by investing in fintech ETFs, which puts your money in the best fintech companies together and assuring you appreciable returns based on aggregation.