The potential of the financial technology (fintech) sector, and fintech stocks operating in this space, is mind-blowing. Even though cashless payments have increased in recent years, most transactions are still done with cash. However, that, too, may change. In fact, according to PwC, global cashless payment volumes are expected to jump to more than 80% by 2025.
According to the Pew Research Center, about 40% of Americans have gone cashless, up from 24% in 2015. The number of Americans that still rely on cash is steadily decreasing at the same time, from 18% in 2018 to 14% last year. That benefits the fintech market, which could be worth nearly $699 billion by 2030. Accordingly, investors may be well-served by investing in fintech companies with strong market positions.
Here are three such fintech stocks that top my list right now.
SoFi (NASDAQ:SOFI) is one of the top fintech stocks on my list, with impressive double-digit revenue growth in recent quarters, alongside narrowing losses. This company’s focus is to make it easier for its 5.2 million users to manage their money in one app. Thus, as far as simplicity is concerned, there’s a lot to like about SoFi’s business model.
The company’s strong growth has resulted in improving financials. Notably, SOFI’s Q4 loss narrowed to $40 million, or 5 cents per share. Analysts were only looking for a nine-cent loss. Adjusted EBITDA came in a $70 million, ahead of the $5 million adjusted EBITDA year over year.
As Mizuho noted, “The big beat on revenue and adjusted EBITDA are major positives of the 4Q results. The promise to deliver positive GAAP net income in 4Q 2023 should be well-received, as GAAP losses were a key deterrent in 2022 for FinTech investors.”
For those looking for a fintech stock with improving fundamentals, SoFi certainly looks like a buy here.
FinTech ETF (FINX)
Or, look at an ETF such as the Fintech ETF (NASDAQ:FINX). With an expense ratio of 0.7%, the ETF invests in companies on the leading edge of the emerging financial technology sector. This includes industries that are currently transforming, like insurance, investing, fundraising, and mobile and digital solutions.
PayPal (NASDAQ:PYPL), Fiserv (NASDAQ:FISV), Block (NYSE:SQ), Global Payments (NYSE:GPN), and Coinbase (NASDAQ:COIN) are some of its top holdings. Plus, we have to consider that according to Global X, in 2020, the number of online banking consumers was nearing 1.9 billion, and by 2024 that could be up to 2.5 billion—all thanks to the digital transformation of society.
Thus, for those looking for a wide range of diversification in the fintech sector at a relatively low cost, FINX stock is a great option to consider.
Adyen (OTCMKTS:ADYEY) is a potentially massive global technology company that provides payment solutions, including in-person, online, risk management, and financial products to digital businesses, mobility, subscription, and marketplaces. Better, all the payments processed through McDonald’s (NYSE:MCD), for example, go through Adyen. Its customer list includes other monster blue-chip companies like Microsoft (NASDAQ:MSFT) and Booking Holdings (NASDAQ:BKNG), among others.
While earnings weren’t hot all around, the company still reported net revenue growth of 30% year-over-year to €721.7 million. Processed volume increased by 40% year over year, as well. Accordingly, while the stock did see a good deal of downgrades recently, the risk is still well worth it for those looking for a higher-risk, higher-upside bet.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.