The ARK Fintech Innovation ETF (NYSEARCA: ARKF) is at the epicenter of seismic shifts in the financial services and a growing number of data points confirm as much.
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.
In 2018, global payments revenues topped $1.9 trillion, driven in large part by North America and Europe, but with significant contributions from emerging markets, too, reports Visual Capitalist. The compound annual growth rate for that revenue steam is expected to be 7% through 2023.
A recent report by Moody’s Investors Service indicates that over the course of the coronavirus pandemic, some European countries with previously low penetrations of digital payment transactions are experiencing surges on that front.
ARKF is already levered to the ex-US fintech theme as four of its top 10 holdings are international companies. International firms dot the fund’s 30 other components, including some with exposure to Europe. As is the case in the U.S., many international banks are playing catch-up against pure-play fintech companies.
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“Pivotal factors – including core infrastructure, consumer behavior, and rising revenues – provide a glimpse into the rapidly changing payment horizon,” reports Visual Capitalist.
Another important growth driver for the fintech space is the digital wallet boom – PayPal’s (NASDAQ: PYPL) Venmo and Square’s (NYSE: SQ) CashApp. Global digital wallet users could surpass four billion in 2023, up from 2.3 billion just two years ago.
“ARK defines digital wallets as smartphone-enabled financial ecosystems that provide access to a variety of services including wealth management, insurance, instant payments, and crypto assets,” according to a recent report by the asset manager.
“As digital wallets go mainstream, transaction volumes are estimated to reach $9 trillion annually,” according to Visual Capitalist. “Online purchases and digital commerce will drive this growth.”
Other growth fintech growth catalysts include contactless payments, facial recognition, increased adoption of cryptocurrency, and in-app payments.
“Over the last decade, the digital payments landscape has undergone a structural shift. Consumer behaviors are changing—moving towards contactless and cashless transactions. Meanwhile, as the magnitude of COVID-19 grows, these trends have only accelerated,” reports Visual Capitalist.
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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.