Financial technology (fintech) has seen healthy adoption over the last decade. An entire generation of teenagers is not thinking twice about going cashless as they can exchange money with friends with just a few taps on their phone. However, the technology is different than the companies that provide that technology. Furthermore, many fintech stocks have underperformed in recent years.  

That could be changing. Fintech underpins much of the online, e-commerce space. Also, it’s not surprising that traditional banks are also embracing fintech as their tech-savvy customer base is no longer content with doing banking by the same rules. 

Fintech is winning the argument. But as the sector continues to grow, it can’t avoid regulatory headwinds. Specifically, the sector is one of the biggest adopters of blockchain technology and its offshoot, cryptocurrency. There are also concerns about data privacy and cybersecurity.  

That’s where investors have to be careful. Some of the smaller names in this space may not make it to the finish line. However, there are several established fintech stocks that are ahead of the regulatory curve. Here are three for you to consider.  

PayPal (PYPL) 

Not even rising year-over-year (YOY) revenue and earnings has been enough to get investors excited about PayPal (NASDAQ:PYPL). The stock is down 20% in the last 12 months but has been notably higher in the last three months. That could be due to expectations of lower interest rates. 

Rate cuts could help the sector in general, and even more for companies that have managed to weather higher interest rates as PayPal has. In fact, it’s hard to say exactly why investors have turned away from PayPal. It might be due to the company’s exposure to blockchain technology. 

As anyone that’s been on the platform knows, PayPal allows customers to sell a limited range of cryptocurrencies. The lack of regulation around crypto continues to be a concern of lawmakers. Furthermore, since the PYPL stock chart shows a decent correlation with the price of Bitcoin (BTC-USD) in the last few weeks, there could be something to that. 

But if you’re simply looking at fintech stocks for their valuation, PayPal looks like an attractive alternative at just 15 times forward earnings. That’s nearly 66% below its historical mean of around 48 times earnings.   

Block (SQ) 

Block (NYSE:SQ) is another company that will benefit from a more favorable regulatory environment surrounding cryptocurrency. Blockchain technology reminds me a bit of what’s happening in the electric vehicle (EV) space. There are issues about scalability, complexity, and interoperability surrounding blockchain, but it’s not going away.  

Also, Block is further along the path than most fintech companies. The company looks to be on firm financial footing, and analysts are projecting strong growth. For example, the company’s Bitcoin revenue was up $2.4 billion in the last quarter and is up 37% YOY.  

However, the growth is coming from more than Bitcoin. If you take Bitcoin away revenue is still up 16% YOY.  

The consensus price target is 26% above its closing price on January 24, 2024. Furthermore, out of 49 analysts that have offered a rating on SQ stock in the last three months 20 give the stock a Strong Buy.  

SoFi Technologies (SOFI) 

SoFi Technologies (NASDAQ:SOFI) has been a polarizing stock since it first went public in 2021. The company has had a number of wins since going public in 2021, most notably getting its banking license in 2022, but that’s been of little comfort to SoFi shareholders. 

The company states that it has now reached an inflection point which is reflected in its ratio of financial products to lending products. Furthermore, the company is showing steady revenue growth. The next bar to climb over is positive earnings.  

The company is expecting to do that at some point in 2024. However, the macroeconomic concern is how lower interest rates expected at some point in 2024 will affect the company’s earnings due to SoFi’s fair value accounting practices.  

I’ll admit it’s hard to recommend SOFI stock in the short term. Short interest above 10% makes SOFI stock prone to volatility. The company is also particularly sensitive to the Biden administration’s determination to cancel student loan debt.  

Polarizing stocks require conviction. If you’re willing to ride out the volatility, SoFi looks like a solid choice for long-term growth. Having said that, don’t expect this to be a get-rich quick stock.  

On the date of publication, Chris Markoch 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.