There’s tension between fintech companies and the traditional banks that are eager to become technologically inclined. This is likely to be a protracted tussle, but just a few days into 2020, the ARK Fintech Innovation ETF (NYSEARCA: ARKF) is again strutting its stuff.
The actively managed fintech ETF is up 3.73% to start the new year after hitting an all-time high on Wednesday. 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.
Fintech is disrupting some bank services, mostly to the benefit of customers and banks are taking note.
“We can count the rise of new fintech players among the most significant payments industry trends of the last decade. It’s not just Venmo; everything from consumer banking to small business financing saw an influx of new, dynamic brands looking to cut-in on turf previously reserved for traditional institutions,” reports Business 2 Community.
Fintech Is A Growth Market
Data confirm fintech is a growth market and players need to be nimble in this space.
“The global fintech market was valued at about $127.66 billion in 2018, and is expected to grow to $309.98 billion at an annual growth rate of 24.8% through 2022,” according to a recent Business Research report.
Electronic and mobile payments are expected to be key drivers of fintech growth in the coming years and it appears some market observers are awakening to the potential offered by some ARKF holdings.
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
Related: Big Banks Need More Tech And That Could Stoke Fintech M&A
Indeed, ARKF makes a for a credible play on fintech consolidation, but there’s good news for the fund and bad news for banks: many ARKF fintech names can thrive on their own.
“Simply buying and incorporating the competition may work for now, but it may not be sustainable. Fintech innovation will keep pushing forward. Buying every upstart company with a novel idea isn’t a strategy that can work time and again, and trying to build-out offerings to counter every fintech inroad could be unfeasible,” according to Business 2 Community.
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.