Coronavirus Could Have Long-Term Benefits for Some Disruptive ETFs

The COVID-19 is disrupting supply chains and providing hurdles for an array of industries, but from that disruption could come positive outcomes for investors considering some next-generation technology segments, including fintech, which is accessible via the  ARK Fintech Innovation ETF (NYSEArca: ARKF).

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.

Cashless payments, one of the cornerstones of the fintech movement, are in style as businesses look to stem the spread of the coronavirus while keeping workers and customers out of harm’s way.

“Globally, businesses and governments are promoting cashless payments to combat COVID-19,” said ARK Invest in a recent note. “According to Peter White, a microbiology professor at the University of New South Wales, cash notes have the potential to be “super spreaders”, as COVID-19 lives longer on objects than on human hands because enzymes in human sweat break down the virus more quickly.  As a result, governments in India, Ghana, Kenya, Australia, Israel and the UAE are waiving fees for mobile payments and banning cash for public transport, among other measures.”

Powered By Innovations

ARKF member firms are companies are powered by innovations and are working to disintermediate or bypass the current financial markets and challenge traditional institutions by offering new solutions that are better, cheaper, faster, and more novel and secure.

“Credit and debit cards do not seem to be a solution to the problem. In a LendEDU study last year, Mike Brown showed that cards harbor even more germs than New York City Penn Station bathrooms,” notes ARK. “Because mobile phones change hands less often than credit or debit cards, mobile probably is the safest means of payment.”

The payment processing space is seeing a growing number of big bets placed by venture capitalists, which could give financial technology ETFs a boost. It’s a $1.9 trillion industry that the largest tech firms are trying to tap into.

Looking ahead, the global mobile payment technology market is expected to reach $3.4 trillion by 2024, at a compound annual growth rate of 60% between 2018 and 2024, according to Zion Market Research. In 2017, the market was at $123.5 billion.

“Having pivoted as agile industry disruptors for years, innovative companies already are helping users navigate the challenges of the COVID-19 crisis and serving as backstops until the US government distributes stimulus payments of $1,000-2,000 to adults,” according to ARK. “In days, for example, Square enabled its merchants to offer curbside pickup and announced that it will add a local delivery feature. In addition, it gave away $100,000 to Cash App users in the largest Cash App Friday ever and is offering discounts of 10% on grocery purchases at stores like Walmart through its Boost instant discount program.”

For more on disruptive technologies, visit our Disruptive Technology Channel.

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.