In the lexicon of disruptive technologies, fintech is just getting started, indicating there’s still attractive long-term growth prospects with the ARK Fintech Innovation ETF (NYSEARCA: ARKF).
ARKF member firms are companies that 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.
The broader financial services industry, including traditional offerings such as bank branches and insurance, drives $3 trillion in economic impact. There’s plenty of space for ARKF to move into.
Moreover, data confirm that even before the coronavirus pandemic, which is sparking increased use of cashless/contactless payments, many customers were reducing visits to bank branches.
“Once consumers have grown accustomed to using primarily digital payments, many will not revert to traditional means,” according to UBS.
A Changing Landscape in Finance
The move to cashless and contactless payments isn’t going to abate when the coronavirus is defeated. Demographic tailwinds could see to this being a move with major long-term implications.
Cards and digital payments are slowly but surely usurping cash as primary forms of payment.
“The coronavirus pandemic accelerated a shift to online payments and e-commerce, but growth will likely continue well after the virus is contained, according to the bank. UBS expects financial technology firms to post earnings growth in the ‘mid-to-high teens’ through 2030 and become one of the fastest-growing industries around the world,” according to Business Insider.
Adding to the excitement are a myriad of financial services segments fintech companies are interested in.
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.
“Looking beyond the medium term, fintech companies will expand into new services including online lending, investing, and insurance-tech, UBS said. These businesses offer higher margins and stronger growth. Implementation of blockchain and AI technology can make such services far easier to scale, the bank added,” reports Business Insider.
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.