Despite the recent weakness thanks to inflation and rising interest rate fears, the broad technology sector has been hit especially hard, including fintech. However, investors can take a “buy the dip” approach and gain exposure to fintech as the sector continues to evolve via industry trends.
That said, it sets up fintech as an ideal growth play. Traditional financial firms are looking to integrate fintech products as the space gains more traction working alongside the current financial sector establishment.
“Fintech, or financial technology, is transforming the way we manage our money. From mobile banking to cryptocurrency, there are a multitude of innovative financial products and services that are changing the financial landscape,” a Finextra blog noted.
While the financial sector could be especially resistant to change, the fintech disruption accelerated during the height of the COVID-19 pandemic. As such, financial firms had to take on an “adapt or die” mentality by embracing fintech, and given its still-nascent status, fintech is continuously evolving and adopting trends that could further propel the space in the future.
“In 2023, there are 10 fintech trends that are particularly noteworthy, including the rise of decentralized finance, the adoption of artificial intelligence in financial services, and the growth of digital wallets and contactless payments,” the blog added. “As consumers increasingly embrace these technologies, it is important for businesses to stay ahead of the curve in order to remain competitive in the digital finance revolution.”
As Fintech Evolves, Get Simple Exposure
Fintech exposure can be attained, but with a vast number of companies operating in the space, it could be daunting to determine where to invest. There’s an easier way: the ARK Fintech Innovation ETF (ARKF).
With its active management, the fund seeks long-term growth, investing in domestic and foreign equity securities of companies that are engaged in the fund’s investment theme of fintech innovation. A company is deemed to be engaged in the theme of fintech innovation if it derives a significant portion of its revenue or market value from the theme of fintech innovation, or it has stated its primary business to be in products and services focused on the theme of fintech innovation.
As per the product website, the advisor defines “fintech innovation” as the introduction of a technologically enabled new product or service that potentially changes the way the financial sector works, which ARK believes includes but is not limited to the following business platforms: transaction innovations, blockchain technology, risk transformation, frictionless funding platforms, customer-facing platforms, and new intermediaries.
For more news, information, and analysis, visit the Disruptive Technology Channel.