Better Fintech Stock: Upstart vs SoFi The Motley Fool

Fintech providers aim to be faster, serve an underserved population segment, cut costs, and provide better service. For instance, you can now apply for many financial products and services on a smartphone instead of visiting a branch salesperson. Find companies with exciting products and excellent financials for the best possible investment choices for your portfolio.

While it’s smart to be patient with your fintech stocks, you also must be willing to trade—to cut losses or take profits. Do your best to define your exit parameters early on; this encourages you to make logical decisions, rather than emotional ones. Things change quickly in the fintech space, so it’s important to manage your portfolio carefully. Below are four strategies that can help you mitigate the risk of investing in a fast-moving space.

What are Examples of Fintech?

Notably, eBay (EBAY) dropped its former subsidiary Paypal in 2018 to move digital payments to Adyen instead. If you have questions about connecting your financial accounts to a Plaid-powered app, visit our consumer help center for more information. With that in mind, an alternative that lets you profit from the fintech boom without having to pick individual stocks can be an exchange-traded fund (ETF). If this sounds good to you, consider the Global X Fintech ETF (FINX 0.27%). When many people think of Bank of America (BAC 0.28%), they think of old-school banking — literally the opposite of fintech innovation. PayPal has 432 million active accounts in more than 200 countries around the world.

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So far, the team has successfully What to invest in with 10k boosted efficiency and has rolled out exciting initiatives such as Fastlane checkout and the creation of an advertising platform. These two stocks had a lot of hype in 2020 and 2021 but crashed, and they have been trying to reclaim their former glory ever since. Impressed with Visa’s performance, Morgan Stanley analyst James Faucette raised his price target for Visa stock to $291 from $284 on higher EPS estimates. The analyst is positive about the Dow Jones stock based on “limited impact from macro headwinds,” coupled with continued rebound in cross-border travel.

• Over the last decade, as consumers increasingly adopted digital tools, fintech arose as a means to help consumers address financial challenges and make progress toward financial goals.
• With fintech, consumers control and share their financial data as they choose, giving them more control, choice, and access to the financial services they seek.
• Furthermore, the company is increasing its focus on its core Checkout business, its PayPal and Venmo digital wallets, and the Braintree platform.
• If you’re looking to invest in the future of money, start with one of these companies.
• Whenever you have a high-growth and relatively young industry, it can seem intimidating for investors to try choosing one or two stocks.
• However, you might be surprised at how many transactions around the world still involve cash, especially outside the United States.

The company has also taken steps to diversify its revenues so it’s less dependent on transaction fees. Fiserve has diversified customer groups and a consistent track record of performance. The company also produces ample cash flow and has increased profitability in recent years. There is a fair amount of debt on Fiserve’s balance sheet, but it’s being serviced derivatives essentials comfortably. Debt service coverage should improve if Fiserv continues expanding cash flow and profits.

This shift to how to start white label forex brokerage step by step guide 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. Financial products and services that were once the realm of branches, salespeople, and desktops are now more commonly found on mobile devices. Tala seeks to give such consumers better options than local banks, unregulated lenders, and other microfinance institutions. Some examples include transferring money from your debit account to your checking account via your iPhone, sending money to a friend through Venmo, or managing investments through an online broker.

Upstart’s business has evolved over the past couple of years, but it was so susceptible to interest rate changes that investors may hesitate to trust the company until it proves itself for a while longer. The company’s explosive user growth helped it expand its top and bottom lines. It became profitable on the basis of generally accepted accounting principles (GAAP) in 2024 despite facing headwinds caused by a federal student loan repayment pause from 2020 to 2023.

The future of finance: 4 trends driving growth

Fintech affects banking, investing, insurance, payments, fundraising, blockchain, and many other areas. Companies that use fintech are considered to be a part of the new online banking and payment system that includes players like PayPal, Venmo, and Square. These companies offer faster and more efficient ways to exchange money electronically than going through traditional banks. They operate as intermediaries between individuals and traditional banks, but the user experience is much simpler than dealing with a bank because you don’t have to contend with bank rules and its contracts or fees. More broadly, the term fintech also encompasses a rapidly growing industry that serves the interests of both consumers and businesses in multiple ways.

• Per the company’s earnings call, cross-border travel reached 118% of 2019 levels in the second quarter.
• To reduce the volatility in its business, management also began arranging funding partners for its loans, meaning there are committed buyers rather than having to try to sell loans to a live market.
• All information, including rates and fees, are accurate as of the date of publication and are updated as provided by our partners.
• The big banks generate high annual returns, high yields, and are exposed to heavy regulations.
• Financial technology — from digital payment processing to online banking — is nothing new, but the fintech industry has gained serious momentum in the past decade.
• 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.
• From apps and software to algorithms and artificial intelligence, fintech fuses two of the biggest and richest sectors of the economy, finance and tech.

Fintech industry trends

Per the World Bank, about 67% of adults worldwide now make or receive a digital payment. Furthermore, the proportion of adults utilizing digital payments in developing economies increased to 57% in 2021 from 35% in 2014. When you work with the right broker for your needs, it’s much easier to make wise decisions and manage your portfolio. Founded in 2009, Square provides payment acquiring services to merchants, along with related services. The company also launched Cash App, a person-to-person payment network. Square has operations in Canada, Japan, Australia, and the United Kingdom; about 5% of revenue is generated outside the U.S.

Fintech companies can develop those solutions faster than traditional banks, thanks to lower regulatory hurdles and a technology-first mindset. PayPal (PYPL) – PayPal is a leading online payment platform that enables consumers and businesses to send and receive money online. The company has a multibillion-dollar market capitalization and is one of the most widely used payment platforms in the world.

Which Fintech Stocks Should I Buy?

Companies that provide robo-advisors and automated investing include Wealthfront, Stash and Acorns. There’s no question that the fintech sector is growing rapidly and that the space has some exciting investment opportunities. Investors are attracted to ETFs, fintech-focused and otherwise because they enable you to put your money to work in a basket of stocks with just a single investment. Many promising fintech companies are growing revenue at rates of 20%, 30%, or more each year. And there are some excellent long-term investment candidates in this group.