Fintech Industry Innovation Should Power This ETF

The financial technology (fintech) industry thrived during the pandemic and is expected to continue to do so under a wave of innovation, which bodes well for ETFs like the Global X FinTech ETF (FINX).

“According to the Global Fintech Adoption Index 2019, fintech adoption was doubling every two years before the pandemic struck,” an Analytics Insight article noted. “From 2015 to 2019, the industry grew from 16% to 64%. This growth can be credited to fintech’s developed agility compared to brick-and-mortar financial institutions. When the world was struck by the COVID-19 pandemic, fintech became an essential sector for businesses to survive the chaotic times.”

“The true power of fintech enabled the rapid migration to digital payments at a time when even the skeptics had no choice but to embrace the new transaction solution,” the article added. “This digital transformation of the finance industry is expected to grow and continue in 2021. If 2020 was about the adoption of fintech, 2021 and beyond will be about innovation and survival.”

Per its fund description, FINX seeks to provide investment results that correspond to the Indxx Global Fintech Thematic Index. The index is designed to provide exposure to exchange-listed companies in developed markets that provide financial technology products and services, including companies involved in mobile payments, peer-to-peer (P2P) and marketplace lending, financial analytics software, and alternative currencies, as defined by the index provider.

The fund gives investors exposure to:

  • High growth potential: FINX enables investors to access high growth potential through companies that are applying technological innovations to disrupt and improve the delivery of financial services.
  • An unconstrained approach: The fund’s composition transcends classic sector, industry, and geographic classifications by tracking an emerging theme.
  • ETF efficiency: In a single trade, FINX offers access to dozens of companies with high exposure to the fintech theme.

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The Desire for Convenience

Social distancing measures only pushed fintech further into the forefront. The use of contact-less payments should continue to push more companies to innovate their current products and services to meet the demands of consumers.

“During the onset of COVID-19, convenience became a priority for people to buy goods and services. Social distancing and quarantine made people inevitably embrace contactless fintech solutions,” the Analytics Insight article said further. “According to a survey conducted by the Nation Retail Federation in America, 19% of people made their first contactless payment in May, at a time when locals were hoarding hand sanitizers and grocery packages. In 2022 and beyond, this desire for convenience will continue with newer demands from the public, that is what fintech companies should be prepared for.”

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