The fintech industry has seen rapid growth in recent years and shows no signs of stopping. Fintech is present in our everyday lives, whether we realize it or not. From sending money to your friends online to paying for a car ride using your wallet app, fintech is here to stay.
According to the Global Fintech Adoption Index, the fintech industry grew by a massive 48% between 2015 and 2019. Experts are also forecasting the global fintech market will be worth up to $190 billion by 2026, with a compound annual growth rate of more than 13%.
In this article, we’ll give you an introduction to the fintech industry and list the top 5 best fintech stocks in the current market to consider for your portfolio.
What does Fintech mean?
Fintech is short for finance and technology – a broad term referring to any business that uses technology to streamline and improve various financial services.
For example, Kabbage, a fintech giant, leverages Big Data and advanced, sophisticated algorithms to let users make instant lending decisions and loan each other money digitally (P2P lending) without the need of a traditional financial institution. In other words, Kabbage uses technology to simplify and enhance the lending process.
Another example is smartphone apps that use near-field communication (NFC), quick reference (QR) codes, or barcodes to initiate in-store payment instead of a physical credit/debit card or gift card. Apple Pay and apps from merchants like Starbucks are among the most popular apps in this category.
Different types of Fintech
As fintech is an umbrella term – any business can represent fintech as long as they use technology to improve financial processes. That’s why fintech can be found in a wide range of sectors, from HR & Payroll to eCommerce & Marketing.
3 Best Fintech stocks to buy in 2022
There’s a wide range of fintech companies to keep an eye on and invest in. Just remember, investing is a long-term game and you might see your stock swing significantly along the way.
Below are the top 3 fintech stocks that you should consider buying:
Visa Inc. (NYSE: V)
Visa is the world’s leader in digital payments and one of the biggest fintech companies. Visa is not a traditional bank – it does not issue credit or debit cards. It’s a payment processor, providing the network between the bank issuing the card and the merchant accepting that card as payment. In return, Visa receives a fee from every transaction that takes place on its network in exchange, resulting in billions of dollars in profit and revenue each year.
According to Visa’s 2021 shareholder letter, the company expanded its reach to more than 80 million merchants, a 14% rise. Visa has also invested more than $9 billion in technology over the last five years and continues to do so to ensure that its users are comfortable and secure in shopping digitally.
Paypal Holdings, Inc. (NASDAQ:PYPL)
PayPal Holdings (NASDAQ: PYPL) has become a household name for online payments over the last two decades. It has more than 400 million users in more than 200 markets all over the world. More importantly, PayPal’s peer-to-peer mobile payment service Venmo has grown into an industry leader and continues to expand its massive user base at an incredible pace. In 2022, PayPal is launching Pay With Venmo on Amazon.com Inc.’s (AMZN) platform. This partnership comes as online purchasing activity has skyrocketed during the worldwide Covid-19 pandemic, with 47% of Venmo users expressing interest in paying with Venmo when checking out with merchants, according to Venmo’s Behavior Study.
Logan Purk, a senior research analyst at Edward Jones, says, “It’s likely they will continue to deliver on their long-term growth algorithm, which is 20%-plus growth, which we think over time results in fairly attractive returns for shareholders.” He continues, “PayPal continues to expand its services such as peer-to-peer payments, Venmo, crypto, and buy-now, pay-later,” which will definitely strengthen PayPal’s position in the Fintech space.
Intuit Inc. (NASDAQ: INTU)
Have you ever used TurboTax to file your tax return?
Intuit owns TurboTax and other financial software like Quickbooks, Mint, and Credit Karma. This company is listed as one of our top picks due to its established customer base and rapid growth. The company’s revenue increased to $2 billion in the most recent quarter from $1.3 billion just a year ago, and it expects to reach $12 billion in 2022, equivalent to a 26% to 28% increase. Intuit has been striving to build a complete and perfect platform for SMEs businesses, streamlining complex and lengthy accounting processes.
Another fintech tool (not a fintech stock) that can also help you transform your accounting and financial process digitally is Shoeboxed. Shoeboxed is an online receipt scanner app that allows you to turn your stacks of paper documents into digital with just a click. AI-powered technology automatically extracts and categorizes important data from your receipts. Fast and secure, Shoeboxed is the best option to digitize your accounting procedures.
The COVID-19 pandemic caused a permanent shift to digital preference in almost every aspect of life, especially in banking and payments.
Fintech companies have grabbed this opportunity and shown robust growth, promising a bright and fruitful future for fintech stocks investors.
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