Fintech continues to evolve despite recent weakness

It’s easy to get caught up in the ebb and flow of short-term stock market fluctuations and lose sight of the long-term trajectory. That has been the case with fintech, which has had a tough first half of 2022, but the industry continues to evolve, which should still make the sector a prime play for growth.

Not long ago, fintech was hailed amid social distancing measures brought on by the pandemic, which saw broad appeal for technology stocks that could thrive in a changing world. One such change was the emergence of digital payments to curb the increased need to purchase goods and services online.

As such, fintech companies soared to high valuations before coming back down to earth from late 2021. However, the long-term growth opportunity for fintech still exists with companies like PayPal evolving and creating new products to drive the industry.

“PayPal was one of the early indirect beneficiaries of the pandemic’s economic response, as consumers wary of in-person transactions quickly migrated to PayPal and Venmo, creating higher-than-normal account growth,” an American Banker article said. .

“PayPal has continued its strategy of building a super financial app, including services like one outlet credit product that expands the terms of larger purchases,” the article added.

“While we are focused on bringing more discipline to our operating model and driving operational leverage in our business, we are also investing to grow,” Paypal CEO Dan Schulman said during the company’s first-quarter earnings report. “We see opportunities to accelerate our growth and customer engagement.”

Growth exposure via Fintech

PayPal is one of the holdings of Global X FinTech ETF (FINX). The fund gives growth-hungry investors targeted exposure to the fintech industry as opposed to taking a broader approach with a technology-focused fund.

FINX seeks to provide investment results equivalent to the Indxx Global Fintech Thematic Index. The index is designed to provide exposure to listed companies in developed markets that offer financial technology products and services, including companies involved in mobile payments, peer-to-peer (P2P) and marketplace lending, financial analysis software and alternative currencies, as defined by the index provider.

The fund gives investors exposure to:

• High Growth Potential: FINX provides investors with access to high growth potential through companies that use technological innovations to disrupt and improve the delivery of financial services.
• An unrestricted approach: The fund’s composition transcends classic sector, industry and geographic classifications by tracking an emerging theme.
• ETF efficiency: In a single trade, FINX offers access to dozens of companies with high exposure to the fintech theme.

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