A primary component of the long-term fintech investment thesis is that how people pay for goods and services is changing. The ARK Fintech Innovation ETF (NYSEARCA: ARKF) is an example of exchange traded fund at the epicenter of that change.
The coronavirus pandemic ushered along adoption of cashless payment technologies – a theme that the actively managed ARKF adeptly responded to.
“The coronavirus pandemic accelerated payments industry digitization by two to three years, as lockdowns, restrictions, and ongoing consumer health concerns upended daily life in ways that trickled into spending trends and consumer habits,” reports Business Insider.
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.
A New Payment Generation System Springs to Life
For fintech investors, ARKF offers allure because as an actively managed fund, it’s not constrained by an index. The ETF can reach into a wide variety of fast-growing fintech segments, including payment processing.
“The power dynamics in the payments industry are changing as businesses and consumers shift dollars from cash and checks to digital payment methods. Cards dominate the in-store retail channel, but mobile wallets like Apple Pay are seeing a rapid uptick in usage and paving the way for the future of payments,” according to Business Insider.
ARKF is also leading a digital wallets boom. Think Square’s Cash App or PayPal’s Venmo, both of which are making peer-to-peer (P2P) exchanges easier.
“The digitization of payments isn’t just contained to retail, though, with real time mobile P2P payments, digital remittances, and digital business payments continuing to blossom as change spreads through the ecosystem. Mobile proximity payment volume accelerated to $131.36 billion, per Insider Intelligence estimates, as major wallets added users at a record clip in 2020,” adds Business Insider.
Digital wallets are potentially massive threats to traditional financial institutions because a platform such as Cash App faces significantly lower customer acquisition costs than traditional banks.
ARKF is higher by 116.54% over the past year and up 2.25% over the past month.
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.