5 best fintech stocks to buy now 
If you've ever applied for a mortgage preapproval or bought insurance online, you likely saved time and money by working with a fintech company. Fintech stocks have taken the world by storm, providing tech-minded investors an avenue to combine their vision with some of the top healthcare and finance companies. Read on to learn more about which fintech companies stocks are in the news, what to look for in fintech investments, and some of the best fintech stocks of 2023. Bill Clinton is back.
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- Online lending: Previously, getting a mortgage loan meant going to your local bank or credit union, applying for a loan in person and waiting through the manual underwriting process. Fintech companies have streamlined and digitized the mortgage process, allowing most buyers to get pre-approved shortly after submitting their funding application.
- Robo-advisers: While most people will require a helping hand when choosing investments and investing timelines, not everyone has the funds to hire a personal financial advisor. Robo-advisers use customized consumer profiles outfitted to manage risk tolerance based on user data to recommend investments without a human assistant. This technology makes advisory services significantly more accessible in terms of both types of customer assistance and in terms of cost.
- Blockchain and cryptocurrencies: Blockchain and cryptocurrency technologies have challenged traditional payment systems, proposing a decentralized method to send money without a central transaction authority. While cryptocurrencies have proven to be more volatile assets when compared to other types of fintech offerings, a small amount of exposure can provide a unique level of exposure to social media-driven assets.
Incorporating multiple types of fintech companies into your portfolio can help increase diversification, limiting loss in each area in the event of a sudden market turn. It can be essential in the tech sector, where consumer trends change rapidly according to evolving consumer preferences. Understanding the dynamics of fintech stocks While fintech advancements like online banking and bill payments have become commonplace, the industry continues expanding and handling ongoing cybersecurity concerns. Over the next five years, over 90% of banks aim to expand fintech operations, including mobile and remote banking services. This expansion is projected to respond to the rise of digital-only banks, which can offer higher yields due to their lower overhead costs. Social media also plays a role in fintech expansion, with enhanced customer connectivity being another top area for projected growth. In addition to providing services in more areas, fintech has been disruptive thanks to its ability to offer more options for remote processing. The shift towards digital payments and the increasing adoption of contactless transactions have been significant trends even following the COVID-19 pandemic lockdowns. Fintech companies involved in mobile payments, digital wallets and contactless payment solutions have been positioned to benefit from this shift in banking demand, especially among smaller businesses. While interest in cryptocurrency has lulled in 2024, open banking initiatives and the integration of application programming interfaces (APIs) in financial services have been driving innovation. Fintech companies facilitating seamless data sharing allow for better connection between the customer and the advertiser, improving the value of advertising relationships. This can open fintech stocks as potential advertisement investments, especially those focusing on natural API integration. There are currently several opportunities for investment in the fintech sector, including the following innovations at the forefront of the industry. - Embedded finance: Banking stocks, specifically, spearhead the embedded finance trend, which involves incorporating financial services through a third-party company. For example, retail stores may incentivize users with discounts and rewards when they pay using store credit cards using their mobile app. These embedded financial services provide a more streamlined experience for the user, which can lead to more money spent per purchase.
- Decentralized finance: Decentralized finance (DeFi) is a blockchain-based financial system that aims to recreate traditional financial instruments using decentralized technologies. These systems provide remote verification of transactions and contract fulfillment without needing a third-party intermediary, which decreases the chance of human error and eliminates staffing bottlenecks. With more than $83 billion in transactions as of 2022, DeFi is a growing trend among fintech companies.
- Environmentally responsible investments: The growing focus on environmental, social and governance (ESG) factors has increased interest in green finance and sustainable investing. Fintech companies that facilitate sustainable investment options or can support tools that hold companies accountable for their environmental impact (like carbon footprint tracking) may be better poised for success.
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- Addressing unmet needs: Fintech companies often address unmet needs in the financial market. For example, a major benefit of fintech companies that offer mortgage solutions is allowing the borrower to apply for a loan at any time by utilizing online underwriting processes. Applying for a mortgage loan is possible if you work a traditional 9-to-5 job when banks are traditionally open for in-person services. This inclusivity can allow you, as an investor, to put money into companies serving underserved segments of the market.
- Technological innovation: Fintech companies are at the forefront of technological innovation, leveraging artificial intelligence, big data, blockchain and other cutting-edge technologies. As these technologies continue to advance, fintech firms may benefit from staying ahead of the curve, meaning that the top fintech stocks may offer you the chance to benefit from these innovations.
- Participation in the cashless economy: As digital payments become increasingly prevalent, fintech companies facilitating online transactions and digital payments stand to benefit from the growth of the cashless economy. If you believe that consumer preferences will continue to trend toward cashless payments, investing in fintech companies might provide the chance to be an early adopter in these sectors.
As with any investment sector, only invest as much money as you can afford to lose comfortably in an individual fintech company. 5 best fintech stocks to buy now Now that you understand how to buy fintech stocks and some benefits of adding these assets to your portfolio, you can consider individual investment options. Our top fintech stocks list will provide a place to get started. | Name | Fintech stock symbol | Market capitalization | Industry | | Block | NYSE: SQ | $41 billion | Digital payments | | Adyen | OTC: ADYEY | $50 billion | Digital payments | | Coinbase Global | NASDAQ: COIN | $20 billion | Cryptocurrency sales and purchases | | Western Union | NYSE: WU | $4.47 billion | Forex transfers | | SoFi Technologies | NASDAQ: SOFI | $8.94 billion | Mortgage and loan services | Block Inc. If you're like most investors, you likely know of Block Inc. (NYSE: SQ) by its former name, Square Inc. A top name in fintech, the company was co-founded by Jack Dorsey (also the co-founder of Twitter) and focused on providing various financial tools and services primarily geared toward small businesses and individuals. Square's core offering is its point-of-sale system that allows companies to accept card payments using mobile devices or dedicated hardware. For example, if a small business is selling its products at an offsite location, Square's technology can empower them to collect credit card payments in addition to cash. Square is the parent company of several additional app-based payment systems, including Cash App and AfterPay. It had a total market capitalization of $41 billion in February 2024, making it one of the most prominent names in digital payments. Adyen N.V. While Adyen N.V. (OTC: ADYEY) isn't yet on the level of competitors like PayPal regarding name recognition, it has begun making waves with European investors. Founded in 2006 in the Netherlands, Adyen has rapidly grown into a leading payment service provider with a strong international presence, expanding beyond Europe and into the Asia Pacific, Latin America and Africa. Adyen's primary business provides seamless and comprehensive payment processing solutions to businesses, enabling them to accept various payment methods online, in-store and through mobile channels. The company's platform handles payments across multiple geographies and currencies, making it an attractive choice for global businesses. Despite its $50 billion market capitalization in 2024, Adyen maintains a fintech stock price of less than $20 a share, making it an appealing choice for lower-value investors. Coinbase Global Inc. Discussing fintech and cryptocurrency without mentioning Coinbase Global Inc. (NASDAQ: COIN) is impossible. It was one of the first cryptocurrency exchanges to appeal to traditional investors and a more mainstream audience. Coinbase is notable for being one of the first and easiest providers of Bitcoin market services. Since joining the market space in June 2012, Coinbase has expanded beyond Bitcoin into hundreds of additional digital assets. As a fintech stock, Coinbase's value is tied to the growing popularity and adoption of cryptocurrencies worldwide. The company's revenue primarily comes from transaction fees and other services related to cryptocurrency trading, and the company has gained attention as one of the largest and most reputable cryptocurrency exchanges. It can be an attractive investment option for investors interested in the potential of the digital asset market who are looking for more established options to put funds into. Western Union Company While Western Union Company (NYSE: WU) is not a fintech company in the traditional sense, its online financial transaction service company has become indispensable in an interconnected world. Western Union is a leader in international payment processing, allowing users to send money across currencies to friends and family living abroad. Its primary business model involves collecting transaction fees in exchange for providing payment transfer services. Western Union has embraced several fintech innovations. For example, it has developed online platforms and mobile applications to enable customers to conveniently initiate money transfers and track transactions from their devices. These digital platforms aim to offer a user-friendly experience and streamline the transfer process, allowing customers to complete financial transactions from their phones. Western Union can be another of the top cheap fintech stocks with a per-share price of less than $13 in 2024. SoFi Technologies Inc. Rounding out our list with a top choice for tech-forward investors, SoFi Technologies Inc. (NASDAQ: SOFI) is an appealing option for online loan and lending investors. SoFi offers a comprehensive suite of financial products, including student loan refinancing, personal loans, mortgages, home loans and investment services, all available online or using a mobile application. This diverse product range allows the company to cater to customer needs across various life stages. SoFi operates as a digital-first financial institution, providing online and mobile banking solutions that align with the preferences of tech-savvy customers. In addition to lending, SoFi offers investment services, including stock and ETF trading, automated investing through robo-advisors, and retirement accounts. This diversity can make SoFi a more inclusive investment for buyers looking for a one-stop shop for fintech innovation. Its total market capitalization of $8 billion adds a lower-cap exposure option to your portfolio. How to evaluate fintech stocks As you compare fintech stocks, it's important to look beyond stock prices to determine the underlying value and sustainability of the company attached. While high profits and investor hype might drive a stock price up in the short term, they may not be indicators that the company will survive in the long run. Investigate the following financial factors to determine if a stock is poised for long-term success. - Total payment value: The total payment value indicates the scale of payment transactions and the company's ability to capture market share. Investing in companies with higher total payment values exposes you to companies better suited to handle large volumes of global payments.
- Churn rate: A fintech company's "churn rate" is the percentage of users who discontinue using the service or app within an outlined period, usually 30 days. High churn rates indicate that companies are losing customers quickly after acquisition, which can lead to higher customer acquisition costs and lower the possibility of long-term success.
- Competitive advantages: Besides churn rate, it's important to consider the specific competitive advantages each fintech stock offers over others on the market. With a large amount of competition within the sphere, factors like proprietary patents, big-name tech investments and other intellectual properties can play a major role in company longevity.
- Cyclicality: Cyclicality refers to how sensitive an industry or business is to recessions and other economic fluctuations. A cyclical business is one whose fortunes rise and fall with the economic cycle. For example, industries like hotels can be highly cyclical, experiencing a downturn during tough economic times when fewer people travel. If you're investing in a company that relies on cyclical industries to support its revenue, your portfolio may experience more volatility.
Consider your unique risk tolerance when selecting fintech stocks, as these companies tend to be more volatile thanks to their comparatively short average company history. Building a successful fintech portfolio Fintech stocks can add a unique level of exposure to a high-tech, expanding industry to your portfolio. Use the following tips to manage portfolio volatility when working with these investment options: - Thoroughly research each investment option: Make sure to consider both the pros and cons of each investment option, emphasizing company history. While past performance does not guarantee future success, a longer company history may indicate that a stock is better suited to manage market volatility. Ensure that high-risk investments like penny stocks only make up a small percentage of your overall portfolio.
- Examine underlying fundamentals: Pull a recent corporate statement or balance sheet to look for items like cash flow, debt and customer acquisition costs before investing. While tech companies tend to have higher debt levels (especially in the early stages of investing), an excessive debt burden may indicate an unsustainable model.
- Consider a fintech ETF: Fintech ETFs like the Ark Fintech Innovation ETF (NYSE: ARKF) and the Capital Link Global Fintech Leaders ETF (NYSE: KOIN) base their holdings on a fintech-influenced index. Purchasing shares of these ETFs provide instant access to a "basket" of these stocks and diversification within the industry. Invest in an ETF if you don't have the time or research to investigate individual companies independently.
Investing in the future of finance Regarding finance, consumer trends indicate that customers will continue to reward companies that make connecting with online applications and services easier and more intuitive. However, it's important to understand and remember that no individual company can guarantee returns, no matter how promising they seem. Investing in a tech-oriented ETF or multiple funds of a similar nature can provide exposure to the sector while protecting you against loss potential. FAQs Still wondering, "What is a fintech stock, exactly?" The following answers to some of the most common industry questions will clear up any last-minute confusion. What is a fintech stock? A fintech stock refers to the shares of a company operating in the financial technology (fintech) sphere. Fintech companies use technology and innovation to provide financial services and solutions, disrupting traditional financial processes by offering more convenient services to consumers. Investors can buy these stocks in the stock market to gain exposure to the growth potential and innovation in the fintech sector, which might fuel further preferences toward fast, easy-to-use services. Is fintech a good investment now? Fintech can be a good investment for 2023, as it focuses on providing customers with more convenient financial services. However, like any other space of new invention and innovation, fintech investing also comes with risk. For example, online insurance and financial product providers may be over-invested because online underwriting is a newer process. Avoid investing too much capital into individual companies to even out your holdings and limit the risk of loss. Is fintech a good long-term investment? Fintech is an attractive option for long-term investors, but it does come with some caveats you'll need to consider. Fintech companies are experiencing rapid growth due to increasing consumer demand for digital financial services and the continuous advancement of technology. Fintech companies may benefit from a broader customer base and expanding market opportunities as the world moves towards digitization and cashless transactions. Written by Sarah Horvath Read this article online › Recommended Stories: | 
