Top 10 Fintech Stocks to Watch in 2023 CFTE

Broadly, the term “financial technology” can apply to any innovation in how people transact business, from the invention of digital money to double-entry bookkeeping. Since the internet revolution, financial technology has grown explosively. Fintech also includes the development and use of cryptocurrencies, such as Bitcoin. While that segment of fintech may see the most headlines, the big money still lies in the traditional global banking industry and its multitrillion-dollar market capitalization.

Fintech is also susceptible to hacking, which often leaves users vulnerable not only because their money might be stolen but their data as well. All these considerations need to be taken into account to develop a sound policy on fintech. Naturally, fintech is often described as a disruptor in the finance world. The financial services once recognized as the domains of banks, individual salesmen and desktop computers are now available on mobile phones with a single touch of the finger. Like other industries where digitization has led to serious introspection, finance appears to be struggling over how to deal with the new phenomenon. Fintech has changed the world, for better or for worse, and it is time that traditional power centres realized this.

• Before the coronavirus outbreak, a consolidation wave boosted some payment stocks and private companies.
• From 2018 or so to 2022, there was a shift to consumer-oriented services.
• She covers finance as well as real estate, technology, pop culture, and more.
• However, the business continues to do well, with the company consistently beating quarterly earnings expectations this year.

In Q2, MercadoLibre’s commerce revenue grew 23% to $1.4 billion, while fintech revenue jumped 113% to $1.19 billion. Total payment volume came in at $30.2 billion, marking a 72.3% year-over-year increase. The majority of Wall Street pros think V is one of the best fintech stocks moving forward. All in all, Visa scores a Strong Buy rating with 19 Buy recommendations and three Hold ratings.

Should You Invest In Fintech Stocks?

Rather, competing with lighter-on-their-feet startups requires a significant change in thinking, processes, decision making, and even overall corporate structure. In addition, it’s important to be sure there’s plenty of room for the growth rate to be sustained. As an example, if a company https://investmentsanalysis.info/ has $1 billion in annual sales and grew its revenue by 30% last year, I’d be more excited if the overall market size were $50 billion than I would if it were $3 billion. Before the coronavirus outbreak, a consolidation wave boosted some payment stocks and private companies.

An American multinational financial technology company operating an online payments system in the majority of countries that support online money transfers, and serves as an electronic alternative to traditional paper methods. This shift to a digital-first mindset has pushed several traditional institutions to invest heavily in similar products. For example, investment bank Goldman Sachs launched consumer lending platform Marcus in 2016 in an effort to enter the fintech space.

Futu Holdings (NASDAQ: FUTU)

Cash App’s gross profit growth rate, excluding Afterpay, could improve in the second half of the year, driven by the increased adoption of recent commerce and financial services product launches. Analyzing recent acquisitions or funding rounds of similar companies helps investors understand a fintech’s relative value and its potential for growth. Customers can use the company’s APIs to accept payments through their website or app.

• Togut is not alone in his bullish view toward one of Wall Street’s best fintech stocks, with 27 out of 35 analysts have a Buy rating for Block stock.
• Customers can trade more than 250 currencies and make quick crypto withdrawals, a popular differentiating point.
• It currently has 1.2 billion customers worldwide (¾ of whom are in China) and aims to grow to 2 billion over the next decade.
• It is worth noting that most of the underlying “plumbing” (i.e., the nuts and bolts that underpin financial transactions) is still almost entirely provided by traditional banks.

Payoneer Global (PAYO) holds a Relative Strength Rating of 77 out of a best-possible 99. Digital financial services make it easy to manage your money without having to go to the bank in person. how much do forex traders make However, Square’s portfolio has expanded over the years, and now it offers a wide variety of financial services. This is definitely one of the top fintech stocks to watch in the coming months.

How Are Private Companies Valued?

PayPal socialized that concept and Venmo and Cash App took it a step further. Read on to learn about how fintech is changing the financial industry, the benefits of investing in fintech, five fintech stocks to watch, plus tips on managing the risks of your fintech portfolio. A COVID-related boost for fintech stocks may be fading, but the long-term prospects for the financial technology industry remain strong. Some activities within financial services, such as business lending, are particularly capital intensive. Large institutional players (including banks, large investment funds, and tech companies) are increasing their allocation and attention to the sector, getting more and more involved, both through investing and building products.

Instead of providing your credit card information every time you buy something online, you can connect to your PayPal account. Many people use PayPal to make personal payments, and it’s also an excellent way for small businesses to manage their sales. Take advantage of the changing finance industry, and invest in its most promising stocks. Start by deciding how much of your portfolio you will devote to fintech.

What are the driving forces of bank competition across different income groups of countries?

Revenue grew 7% year over year during the second quarter of this year on an 11% boost in the total value of payments it processed. Operating profit was up nearly 25% year over year thanks to curbs on expenses for marketing, administration, and support operations. Fintech is one of the biggest growth markets of the 21st century, and it can be a great sector for long-term investors to put their money to work. Conduct due diligence before investing in any specific fintech stock, but remember that it’s never a bad time to add the stocks of well-run, innovative companies to your portfolio. Most fintech businesses depend on consumers and businesses being willing and able to spend money, which can decline rapidly in uncertain times.

As for consumers, the younger you are, the more likely it will be that you are aware of and can accurately describe what fintech is. Consumer-oriented fintech is mostly targeted toward Gen Z and millennials, given the huge size and rising earning potential of these generations. Trends toward mobile banking, increased information, data, more accurate analytics, and decentralization of access will create opportunities for all four groups to interact in unprecedented ways. Amanda Bellucco-Chatham is an editor, writer, and fact-checker with years of experience researching personal finance topics. Specialties include general financial planning, career development, lending, retirement, tax preparation, and credit. Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia.

Exploring The Best Fintech Stocks: Key Players And Innovators

But what makes Ant Financial so interesting and such a good example of what the current state of fintech is? It is the fact that it is following the trajectory and trends we have identified at record speed – the company is shifting from being a pure payment business toward being more of a full-range financial services company. Financial services, as an industry, has traditionally had extremely high barriers to entry.

In the fintech space, common competitive advantages also include such things as proprietary technology, patents, and other intellectual property. I mentioned insurance tech company Lemonade in the previous section; although it’s small and in a crowded industry, the company has an artificial intelligence quote platform superior to what’s currently on the market. In the short term, there may be slower growth as banks impose tighter lending standards in a higher-for-longer interest rate environment. If it continues to string together profitable quarters, investors may be rewarded by taking a small position and adding to it over time.

First-Class Fintech Stocks to Watch

To decide which fintech stocks to purchase, focus on innovative companies with durable competitive advantages and excellent management teams. Fintech, short for financial technology, is an umbrella term describing technology solutions that streamline money management, banking and investing. With that in mind, we have shortlisted five fintech stocks for long-term investors. Using the TipRanks database, we narrowed the search to find names that have earned Moderate Buy or Strong Buy ratings from Wall Street pros. What’s more, each offers significant upside potential to current levels based on their consensus price targets. Chime is a fintech company that provides banking services, although technically speaking, it is not a bank.