What are Fintech Stocks and ARK Fintech? Best Fintech Stocks to Watch in 2021

July 16, 2021

Fintech is disrupting traditional banking. Recently, JPMorgan CEO Jamie Dimon was quoted saying “Absolutely we should be scared s---less about that,” regarding Fintech. So if Fintech is scaring the banking giants, maybe it's worth taking a look at some Fintech stocks to invest in. Let's talk about that.

Most people feel that “blockchain is the major invention on the internet since the internet itself,” and the frequent ups and downs in cryptocurrencies has piqued the interest of many. Nevertheless, fintech is a large area in and of itself, and cryptocurrency is only a subset of it. Last year's pandemic spurred the cashless payments area to develop by leaps and bounds, and its benefits have enticed many to stick with it long after the viral crisis has passed. Although cryptocurrencies or bitcoins are still subject to numerous challenges, fintech has a plethora of different goods and services on which investors may rely for greater profits.

Tap and Pay Is the New Card Payment Standard

Payment processing, online and mobile banking, online and peer-to-peer lending, person-to-person payments, financial software and services are all included under the fintech umbrella. However, one of the more appealing parts has been its tap-and-pay services. According to a Precedence Research research published in a globenewswire.com article, the worldwide contactless payment market size was $1.05 trillion by transaction value in 2019 and is expected to grow at a CAGR of 20.01 percent to reach $4.60 trillion by 2027.

Fintech Isn't Just Payment Gateways

Fintech, in addition to payment gateways and contactless payment services, offers artificial intelligence (AI)-powered banking, lending, and other financial services. Companies such as Upstart provide online lending platforms that employ artificial intelligence (AI) to automate the loan process and provide better security to avoid fraud.

Furthermore, technology such as robo-advisers and AI-powered financial management services are gaining traction. This simplifies investing for novice traders by providing simple account setup, strong goal setting, portfolio management, safety, exclusive client support, complete portfolio coaching, and, most crucially, cheaper fees than individual advisers.

IPOs Drive Growth in the Fintech Sector

Initial public offerings (IPOs) and finance, among other things, continue to promote the fintech sector. Marqeta, Inc. started trading on the Nasdaq under the ticker code MQ in June. The firm's IPO price was $27 per share, and it ended 13 percent higher the next day at $30.52, giving it a market worth of slightly more than $16 billion.

Marqeta is the creator of a payment technology that detects possible fraud and ensures money is correctly delivered. Indeed, the pandemic-driven adoption of fintech has bolstered this firm, allowing it to issue over 320 million cards to customers so far.

Fintech stocks are becoming increasingly attractive in the stock market nowadays as the world is moving toward a cashless society.  Some fintech businesses make banking and financial services more convenient for clients. Others simply enable banks and other conventional financial institutions to improve the efficiency of their entire operations.

Not sure if you’re fully aware what Fintech means and comprises? Read this 101 guide on Fintech

Extras: What is Fintech ARK?

ARK Fintech Innovation ETF

ARK Invest in asset management company has built an entire ETF or exchange traded fund around fintech. The ARK F ETF focuses on a few areas of fintech digital wallets, blockchain technology, mobile payments, lending, risk transformation, artificial intelligence and e-commerce.

Some of the biggest holdings in this ETF are Tesla, Square, Coinbase, Zillow, Shopify and PayPal. They're aiming to provide exposure to fintech innovations that could revolutionize the financial industry and possibly even impact every sector of the global economy. An ETF is a great way to dip your toes into investing. With ETFs you can invest in one fund but actually be invested across a bunch of companies. ARK is led by CEO Kathy Wood. There are some very exciting things coming from ARK as the long-term potential of these funds could be massive.

Fintech Stock Classifications:

Fintech is a wide word that refers to any firm that uses technology in the financial sector. Fintech encompasses a wide range of businesses. A few of the products and services they provide are as follows:

  • Processing of payments
  • Banking via the internet and mobile devices
  • Peer-to-peer (P2P) lending and online lending
  • Person-to-person transactions
  • Financial software
  • Services in the financial sector

Fintech's potential is extremely appealing. Despite the tremendous increase in cashless payments last year, there are still a large number of transactions conducted in cash throughout the world. In reality, as consumers become more accustomed to online banking services, the fintech sector will continue to expand. As a result, we've compiled a list of fintech stocks to keep an eye on.

Some of the Best Fintech Stocks to Watch in 2021:

  • SoFi Technologies Inc. (NASDAQ: SOFI)
  • Upstart Holdings Inc. (NASDAQ: UPST)
  • Paysafe Ltd. (NYSE: PSFE)
  • PayPal Holdings Inc. (NASDAQ: PYPL)
  • Square Inc. (NYSE: SQ)
  • Goldman Sachs (NYSE: GS)
  • MercadoLibre (NASDAQ: MELI)
  • Ally Financial Inc. (NYSE: ALLY)
  • Lemonade, Inc. (NYSE: LMND)
  • Coinbase Global, Inc. (NASDAQ: COIN)
  • CPI Card Group Inc. (OTC: PMTS)
  • Greenbox (Nasdaq: GBOX)
  • Green Dot Corp. (NYSE: GDOT)
  • Katapult Holdings (Nasdaq: KPLT)
  • World Acceptance Corp. (Nasdaq: WRLD)
Who are the top Fintech disruptors? Read here

Conclusion: 

To be clear, investment in fintech stocks is not appropriate for individuals who have a limited tolerance for inconstancy and financial risk. Fintech, like any new and fascinating sector, is going to be full of a tumultuous ride as it grows. Fintech stocks, on the other hand, might be a fantastic way for long-term investors to capitalize on one of the most exciting growth trends in the business world.

More on Fintech:
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