4 Fintech Stocks Investors Will Love This May

A financial revolution has gripped Wall Street’s blue chip firms. From banking behemoths to asset management giants to even financial service players like MetLife and American Express, all are transforming the way they conduct business. These blue chip firms not only are the users but also investors in the most ground-breaking fintech, or financial technology firms, on Wall Street.

Fintech has, undoubtedly, combined the latest technological improvements with financial applications to help businesses drastically alter the broader industry and provide better, faster, cheaper and more appropriate financial services.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="What is Fintech?” data-reactid=”26″>What is Fintech?

Just a few years back, online banking seemed like a daydream. After all, who would have thought that you need not visit your bank’s local branch to carry out banking transactions. But now, almost all your banking activities can be fulfilled from anywhere. And it’s all because of financial technologies, including mobile banking apps, P2P payments and AI-powered banking platforms, to name a few.

So, basically fintech describes any organization that uses software and other technologies, including cryptocurrency, to provide financial services. Such companies use the Internet or even cloud services to execute financial services. 

At the beginning, fintech referred to such technologies that were used in back-end systems of banks and other financial institutions. But now, it includes a slew of other applications that are more consumer-friendly. You can easily handle your portfolio, trade stocks, manage insurance and pay for food through this financial technology.

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Banks, in particular, are able to make faster and better underwriting decisions with the help of financial technology. In fact, fintech is assisting banks in handling risks in a better way. Solid new sets of data and machine learning algorithms help banks and even insurers go through loads of information to quickly track financial fraud. 

These financial technologies can also be used to confirm borrowers’ identity and help ease the flow of credit to individual lenders and small business houses. Many of these technologies, by the way, can detect theft and those who are trying to dodge sanctions. Meanwhile, mega banks are using AI to gain a sound understanding of markets and operational risks.

At the same time, trading houses and exchanges are able to spot manipulations with the help of algorithms that study languages.

Insurtech has revolutionized  the insurance industry and includes everything, from home insurance, car insurance to data protection. And how can we forget Robo-advising? It has provided algorithm-based asset recommendations that has improved efficiency and reduced costs.

Last but not the least, mobile payment apps like Venmo are helping consumers easily exchange money and pay online or through mobiles. And with more number of consumers being comfortable in using smartphones, this payment app should gain popularity. By the by, Apple and Alibaba have already entered the mobile payment business with Apple Pay or Alipay.

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Fintech companies, thus, are well poised to become a high-growth market in the near term. Cash is no longer convenient, and it’s more economical for financial institutions and individual customers to use technologies nowadays. 

To top it, market-cap weighted performance of fintech companies have in fact been better than FAANG stocks since early 2016, says Morgan Stanley. What’s more, major fintech players are expected to outperform FAANG stocks through 2021, the bank noted. This calls for investing in fundamentally sound fintech firms for better returns. We have selected four such firms that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="PayPal Holdings, Inc. PYPL operates as a technology platform and digital payments company. The company’s total revenues and earnings per share grew in the first quarter of this year. New user growth was cited as a reason behind the strong show.&nbsp;” data-reactid=”52″>PayPal Holdings, Inc. PYPL operates as a technology platform and digital payments company. The company’s total revenues and earnings per share grew in the first quarter of this year. New user growth was cited as a reason behind the strong show. 

The company currently has a Zacks Rank 2. The Zacks Consensus Estimate for its current-year earnings has increased 3.5% over the past 60 days. The stock’s expected earnings growth for the current year is 23.1%, higher than the Internet – Software industry’s projected rally of 14.8%. The stock also boasts a Growth Score of B.