The coronavirus pandemic has reshaped the fintech space, boosting digital payment and online banking across the world. The mass population switched from banknotes to tap-and-pay modes, as this reduced the risk of transmission of the virus. From e-commerce giants to tiny physical retailers, the need for digital payment systems continues to grow.
Digital payments have been popularized because they allow consumers to send money quickly, easily, and cheaply across the world. Additionally, areas such as business-to-business payments are revolutionizing payment methods. Companies like AvidXChange, MineralTree, and Billtrust are targeting billing and payment processing. With the help of artificial intelligence (AI), fintech companies even help small businesses automate and remove labor-intensive red tape. Rather than requiring employees to manually process each invoice / payment, automated AI-based systems handle these functions or routines at the same time, and let staff deal with problematic transactions and focus on business-centric approaches. customer.
Trends such as cryptocurrency, online and mobile banking, online and peer-to-peer lending, person-to-person payments, software and financial services will continue to drive the fintech space, even as the economy continues to grow. returns to the pre-pandemic stage. And why not? Mobile apps like Amazon Pay, Square, and PayPal are replacing bank cards (credit and debit cards), while cryptocurrencies are gaining in importance and may become a mainstream form of payment like fiat money.
Additionally, advancements in technology have mitigated issues like cybersecurity when it comes to digital financial transactions. While AI helps detect fraud, clearing and settlement, digital identity and payments, cloud computing is helping to do away with paper systems in business-to-business payments.
The fintech space is also being boosted by new startups, IPOs, and mergers. Robinhood, which went public in July, had gained more than 50% in one month. Another fintech startup, Toast, an all-in-one point-of-sale and restaurant management and payment platform for foodservice and hospitality, seeks to raise $ 18 billion in IPO by selling 21 , 7 million shares priced between $ 34 and $ 36 each.
Earlier in September, fintech start-up Pagaya Technologies Ltd., announced that it would go public through a merger with a specialist acquisition company, EJF Acquisition Corp., with a deal valued at around $ 9 billion. of dollars.
Overall, FinTech companies are constantly evolving, from compromising transaction fees to attract merchants, to payment ecosystems, to creating simple two-way platforms for merchants and consumers. According to a forecast of market data report, fintech services have a 25% global adoption rate, which includes banking and payments, financial management, finance and insurance. In fact, the global fintech market is expected to reach $ 324 billion by 2026, at a CAGR of 23.4% between 2021 and 2026.
Top 5 FinTech Picks
The explosion of fintech is not surprising, especially since the tech-savvy millennium is driving massive change in the banking and financial sectors. They are not only adopting mobile banking and tap-and-pay services, but are also forcing traditional banks to equip themselves with technologies to facilitate transactions. Given the changing trends and positive outlook for fintech, we have selected five stocks that are likely to benefit the most.
MercadoLibre, Inc. (MELI – Free Report) operates e-commerce platforms. Its Mercado Pago payment platform also processes payments outside of MercadoLibre’s e-commerce platform. The company’s expected profit growth rate for the current year is over 100% compared to the Internet industry – Zacks’ projected profit growth of 13.5%. Zacks’ consensus estimate for the company’s current year earnings has been revised more than 100% up in the past 60 days.
MercadoLibre currently has a Zacks Rank # 1 (strong buy). You can see The full list of today’s Zacks # 1 Rank stocks here.
Visa inc. (V – Free Report) operates like a payment technology company. It offers VisaNet, a transaction processing network that enables authorization, clearing and settlement of payment transactions. In August, the company bought $ 150,000 from CryptoPunk 7610, a non-fungible token (NFT) business from Larva Labs. Visa believes these NFTs will play an important role in the future of retail, social media, entertainment and commerce.
The company, which is part of Zacks’ financial transaction services business, has forecast profit growth of 15.5% for the current year. Zacks’ consensus estimate for the company’s current year earnings has been revised up 3.6% in the past 60 days. Visa currently holds a Zacks Rank # 2 (Buy).
Green Dot Company (GDOT – Free Report) operates as a financial technology company and bank holding company. It offers a bank as a service (BaaS) platform used by giants like Apple, Uber and Stash. This Zacks Rank # 2 company which belongs to the Zacks financial transaction services industry has a forecast profit growth of 6.2% for the current year. Zacks’ consensus estimate for the company’s current year earnings has been revised up 5.2% in the past 60 days.
Global Payments Inc. (GPN – Free Report) provides payment technologies and software solutions for card, electronic, check and digital payments. The company’s expected profit growth rate for the current year is nearly 28% compared to the projected profit growth for Zacks’ financial transaction services industry of 19.3%. Zacks’ consensus estimate for current year earnings for this Zacks Rank # 2 company has been revised nearly 2% up in the past 60 days.
LendingClub Corporation (CL – Free Report) provides a range of financial products and services through a technology-driven platform. The company has over 3.5 million members, deep data capabilities, and an efficient operating platform. In the second quarter of 2021, LendingClub’s revenue more than tripled to $ 204.38 million.
The company’s expected profit growth rate for the current year is 92.2% compared to the 20.5% projected profit growth for the Zacks Financial – Miscellaneous Services industry. Zacks’ consensus estimate for the company’s current year earnings has been revised up 1.8% in the past 60 days. LendingClub currently carries a Zacks Rank # 2.