Fintech, or financial technology, is a sector that has transformed the banking industry in the past decade. In essence, fintech companies use innovative software and platforms to offer financial services that are faster, more convenient and sometimes cheaper than traditional banks. Fintech stocks have also helped to expand access to banking for millions of people who were previously underserved or unbanked.
With the macro environment less cloudy than it used to be thanks to falling inflationary pressures, this may be a good time to invest in revolutionary fintech stocks that are redefining banking.
Nu Holdings (NU)
Nu Holdings (NYSE:NU) is the holding company of the largest digital bank in Latin America, Nubank. With over 90 million customers in Brazil, Mexico and Colombia. Nubank offers a range of products, such as credit cards, personal loans, savings accounts and insurance. While 94% of Nubank’s users are in Brazil, the company has made impressive strides to grow its business in its new markets, with Mexico being a main geography of interest. The Brazilian digital bank’s customer count in Mexico reached around 4.1 million as of their third quarter earnings report.
Overall, Nubank’s Q3 2023 financial performance continued to be impressive with revenue growth hitting 53% year-over-year (YOY). Despite higher interest rates, which could have negatively affected the demand for credit cards and personal loans, Nubank’s credit card and personal loan portfolios have instead expanded to $15.1 billion, up 48% YOY, while deposits totaled to $19.1 billion.
Shares are up 103% in 2023 YTD, and as Nubank continues to break into Mexico, where the company has applied for a banking license to offer savings accounts, the company can expect strong growth for years to come.
MercadoLibre (MELI)
MercadoLibre (NASDAQ:MELI) is the Latin American fintech company to make it on this list. While MercadoLibre has made a name for itself through its ecommerce business, the platform’s fintech arm, Mercado Pago, has also received much attention recently and could help shake up the fintech landscape in Latin America.
Mercado Pago provides payment solutions for online and offline transactions, such as mobile wallets, QR codes, prepaid cards and credit lines. Moreover, the digital wallet mainly targets small, underserved vendors and helps them formalize their business by extending sales beyond cash payments. Mercado Pago processed over $47.3 billion in total payment volume in Q3 2023, up 47% YOY. Additionally, MercadoLibre’s total net revenue grew 69% YOY to $3.8 billion, driven by strong growth in e-commerce, logistics and fintech segments.
SoFi (SOFI)
Among fintech stocks, SoFi (NASDAQ:SOFI) is a leading online platform. The company provides a range of financial products and services, such as personal loans, mortgages, student loans, investing, banking and insurance. The company has been able to grow significantly since the Great Recession, which saw many traditional banks retreating from unsecured personal lending and mortgages.
Currently, SoFi is one of the largest providers of student loan refinancing in the U.S., with millions of loans originated since the platform’s inception, and as student loan payments have resumed, the company could expect more growth in that particular product segment.
In late November, the company announced it would stop issuing and servicing cryptocurrency accounts. Though this might be unfortunate for crypto enthusiasts, I think it will allow the company to focus on other initiatives, such as its Galileo product, that could gain more traction in the years to come.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
