Fintech ETFs, including the ARK Fintech Innovation ETF (NYSEARCA: ARKF), are filling important voids during the coronavirus pandemic and speeding along customers’ move away from traditional purveyors of financial services.
The actively managed ARKF invests in equity securities of companies that ARK believes are shifting financial services and economic transactions to technology infrastructure platforms, ultimately revolutionizing financial services by creating simplicity and accessibility while driving down costs.
Whether its facilitating rapid loan approvals and disbursements, digital wallets, or equities trading, fintech companies have a variety of tailwinds, some of which stem from the COVID-19 pandemic. Add contactless payments, a core competency for several ARKF components, to that list.
“The market assumes that COVID-19-related adoption of digital payments is a near-term benefit for Payments providers, offsetting some of the consumers spend headwinds,” said Morgan Stanley in a recent note. “However, digitization of Payments is part of a multi-year secular growth driver in Payments, with COVID-19 as just the latest accelerator.”
Fintech allows financial firms to leverage cutting edge technology to reduce costs, improve decision making and risk controls, remove middlemen, and enhance customer experiences. A thematic approach includes investments that stand to benefit from structural change driven by demographic and technological changes.
At the industry level, contactless are viewed as a futuristic concept, but integral to the ARKF thesis, that future is now. Contactless payments could see their share of all payments rise 10% to 15% because of the coronavirus.
“More broadly, industry analysts expect digital payment methods, which were already enjoying rapid growth, to gain traction even more quickly as Americans change their habits,” reports American Banker.
With COVID-19 flaring up again in some large states, contactless payments and the ARKF components with exposure to that theme stand to benefit again.
“As in-person dining was banned early on in the pandemic and curbside pickup turned into a thing, online payments, particularly using mobile apps, quickly became more ubiquitous. The eventual easing of social distancing orders is unlikely to slow that momentum because many consumers who downloaded mobile apps when the pandemic hit have simply grown used to not waiting for their sandwiches or caramel macchiatos,” according to American Banker.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.