Fintech
3 Fintech Stocks to Buy Now: Q3 Edition
With clear skies on Wall Street, Q3 2024 could be a watershed moment for fintech stocks
The third quarter of 2024 is set to reveal numerous investment opportunities in the fintech landscape. Driven by expectations of a return to optimism across Wall Street, financial technology will become a key growth sector in the months to come.
With the probability of Federal Reserve rate cuts occurred in the United States in the third quarter of 2024, there may never be a better time for investors to add fintech stocks to their wallets.
Crucially, the prospect of rate cuts will encourage higher investment volumes across Wall Street and increase spending power and consumer confidence, to the point where fintech platforms could see higher levels of usage.
As the holiday season approaches, more consumers are likely to adopt investment apps, make more payments, and show a strong interest in using financial services for loans and other purposes.
While the generative AI boom has captured the imagination of retail investors in recent months, the third quarter could belong to financial technology. These three stocks could offer significant growth potential for investors.
Global Payments Inc. (GPN)
Source: ST.art/Shutterstock
Strengthening consumer confidence following the Fed’s rate cuts could lead to a recovery Global Payments Inc. (London share:National Toll Free Number) at a time when the payments technology provider’s shares are steadily declining.
GPN closed the first half of 2024 down 23.96%, more than 55% below its all-time high market value recorded in 2021.
Despite this, Global Payments Inc. remains a leading payments technology and software solutions company that is poised to grow amid growing demand for point-of-sale solutions among retailers and hospitality companies.
Although we have recently seen analysts at Seaport Res Ptn lower estimates for the second quarter of 2024 for GPN slightly to earnings per share of $2.72 for the quarter, up from $2.73, it is worth noting that Global Payments beat earnings estimates for the last four consecutive quarters.
With higher payment volumes expected in Q3 2024 and beyond, we can expect to see further outperformance from Global Payments. After its recent struggles, the stock could represent a large discount for long positions.
PayPal (PYPL)
Source: Tada Images / Shutterstock.com
Following the appointment of CEO Alex Chriss in September 2023, Payment via PayPal (NASDAQ:PYPL) has struggled to generate significant momentum to recover its stock price after closing the second quarter of 2024 more than 80% below its all-time high market value.
However, PayPal’s fortunes may be about to change. Recent news That Apple (NASDAQ:AAPL) will be forced to share some of its payments technology following a deal with European Union antitrust authorities, which has sent PYPL soaring on Wall Street.
Apple’s commitment to open up its near-field communications technology represents a key opportunity for PayPal to provide substantial levels of competition to Apple. As a result of the deal, analysts at Mizuho Securities have assigned PayPal an “outperform” rating with a high target price of $90.
While analysts at Seaport Res Ptn lowered their expectations for Global Payments, PayPal received a small increase to $0.97 per share from initial forecasts of $0.96 per share.
Another source of optimism for PayPal can be found in the performance of the fintech company’s stablecoin, PayPal USD (PLUS USD)which recently passed a Market cap of $500 millionwhose value has nearly doubled in the last month alone.
This conscious expansion into the world of decentralized finance and cryptocurrencies could offer further growth opportunities in a fintech landscape ripe for further innovation.
Nu Holdings Ltd. (NU) Joint Stock Company
Source: fatmawati achmad zaenuri/Shutterstock
One fintech stock that has shown a lot of strength since its Wall Street debut in 2021 is Hu Holdings Ltd. Joint Stock Company (London share:NEW). Operating a digital banking platform in Latin American countries such as Brazil, Mexico and Colombia, the company has become a leading fintech company across the region.
The company provides access to credit and debit cards, mobile banking, savings accounts, cryptocurrency trading, and a variety of other investment products.
As a leading challenger bank in Latin America’s growing fintech ecosystem, investors are very optimistic about Nu Holdings’ long-term prospects. Third-quarter data suggests that well 50 hedge funds were bullish on NUup from 44 who expressed positive sentiment towards the stock in the previous quarter.
Furthermore, Berkshire Hathaway (London share:BRK-ANew York Stock Exchange:BRK-B) underscored his commitment to Nu Holdings by holding more than 107 million shares valued at $776.6 million.
The most important growth driver for Nu Holdings in Q3 2024 comes from the improving economic ecosystem in Latin America. The average inflation rate in the region increased in 2023 reach 14.41%making Latin America’s recent inflation problems much more severe than the world average.
While consumer sentiment is still struggling to gain momentum in the region, we can expect better fiscal control in Q3 2024 to pave the way for rising consumer confidence and increased use of financial services in Latin America. This could help the stock rally beyond the 58.55% growth that Nu Holdings has already achieved in the first half of 2024.
As of the date of publication, Dmytro Spilka did not hold (either directly or indirectly) any position in the securities mentioned in this article. The views expressed in this article are those of the author, subject to InvestorPlace.com Publishing Guidelines.
As of the date of publication, the responsible editor did not hold (either directly or indirectly) any position in the securities mentioned in this article.
Dmytro is a London-based finance and investment writer. He is also the founder of Solvid, Pridicto, and Coinprompter. His work has been published in Nasdaq, Kiplinger, FXStreet, Entrepreneur, VentureBeat, and InvestmentWeek.
Fintech
US Agencies Request Information on Bank-Fintech Dealings
Federal banking regulators have issued a statement reminding banks of the potential risks associated with third-party arrangements to provide bank deposit products and services.
The agencies support responsible innovation and banks that engage in these arrangements in a safe and fair manner and in compliance with applicable law. While these arrangements may offer benefits, supervisory experience has identified a number of safety and soundness, compliance, and consumer concerns with the management of these arrangements. The statement details potential risks and provides examples of effective risk management practices for these arrangements. Additionally, the statement reminds banks of existing legal requirements, guidance, and related resources and provides insights that the agencies have gained through their oversight. The statement does not establish new supervisory expectations.
Separately, the agencies requested additional information on a broad range of arrangements between banks and fintechs, including for deposit, payment, and lending products and services. The agencies are seeking input on the nature and implications of arrangements between banks and fintechs and effective risk management practices.
The agencies are considering whether to take additional steps to ensure that banks effectively manage the risks associated with these different types of arrangements.
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Fintech
What changes in financial regulation have impacted the development of financial technology?
Exploring the complex landscape of global financial regulation, we gather insights from leading fintech leaders, including CEOs and finance experts. From the game-changing impact of PSD2 to the significant role of GDPR in data security, explore the four key regulatory changes that have reshaped fintech development, answering the question: “What changes in financial regulation have impacted fintech development?”
- PSD2 revolutionizes access to financial technology
- GDPR Improves Fintech Data Privacy
- Regulatory Sandboxes Drive Fintech Innovation
- GDPR Impacts Fintech Data Security
PSD2 revolutionizes access to financial technology
When it comes to regulatory impact on fintech development, nothing comes close to PSD2. This EU regulation has created a new level playing field for market players of all sizes, from fintech startups to established banks. It has had a ripple effect on other markets around the world, inspiring similar regulatory frameworks and driving global innovation in fintech.
The Payment Services Directive (PSD2), the EU law in force since 2018, has revolutionized the fintech industry by requiring banks to provide third-party payment providers (TPPs) with access to payment services and customer account information via open APIs. This has democratized access to financial data, fostering the development of personalized financial instruments and seamless payment solutions. Advanced security measures such as Strong Customer Authentication (SCA) have increased consumer trust, pushing both fintech companies and traditional banks to innovate and collaborate more effectively, resulting in a dynamic and consumer-friendly financial ecosystem.
The impact of PSD2 has extended beyond the EU, inspiring similar regulations around the world. Countries such as the UK, Australia and Canada have launched their own open banking initiatives, spurred by the benefits seen in the EU. PSD2 has highlighted the benefits of open banking, also prompting US financial institutions and fintech companies to explore similar initiatives voluntarily.
This has led to a global wave of fintech innovation, with financial institutions and fintech companies offering more integrated, personalized and secure services. The EU’s leadership in open banking through PSD2 has set a global standard, promoting regulatory harmonization and fostering an interconnected and innovative global financial ecosystem.
Looking ahead, the EU’s PSD3 proposals and Financial Data Access (FIDA) regulations promise to further advance open banking. PSD3 aims to refine and build on PSD2, with a focus on improving transaction security, fraud prevention, and integration between banks and TPPs. FIDA will expand data sharing beyond payment accounts to include areas such as insurance and investments, paving the way for more comprehensive financial products and services.
These developments are set to further enhance connectivity, efficiency and innovation in financial services, cementing open banking as a key component of the global financial infrastructure.
General Manager, Technology and Product Consultant Fintech, Insurtech, Miquido
GDPR Improves Fintech Data Privacy
Privacy and data protection have been taken to another level by the General Data Protection Regulation (GDPR), forcing fintech companies to tighten their data management. In compliance with the GDPR, organizations must ensure that personal data is processed fairly, transparently, and securely.
This has led to increased innovation in fintech towards technologies such as encryption and anonymization for data protection. GDPR was described as a top priority in the data protection strategies of 92% of US-based companies surveyed by PwC.
Financial Expert, Sterlinx Global
Regulatory Sandboxes Drive Fintech Innovation
Since the UK’s Financial Conduct Authority (FCA) pioneered sandbox regulatory frameworks in 2016 to enable fintech startups to explore new products and services, similar frameworks have been introduced in other countries.
This has reduced the “crippling effect on innovation” caused by a “one size fits all” regulatory approach, which would also require machines to be built to complete regulatory compliance before any testing. Successful applications within sandboxes give regulators the confidence to move forward and address gaps in laws, regulations, or supervisory approaches. This has led to widespread adoption of new technologies and business models and helped channel private sector dynamism, while keeping consumers protected and imposing appropriate regulatory requirements.
Co-founder, UK Linkology
GDPR Impacts Fintech Data Security
A big change in financial regulations that has had a real impact on fintech is the 2018 EU General Data Protection Regulation (GDPR). I have seen how GDPR has pushed us to focus more on user privacy and data security.
GDPR means we have to handle personal data much more carefully. At Leverage, we have had to step up our game to meet these new rules. We have improved our data encryption and started doing regular security audits. It was a little tricky at first, but it has made our systems much more secure.
For example, we’ve added features that give users more control over their data, like simple consent tools and clear privacy notices. These changes have helped us comply with GDPR and made our customers feel more confident in how we handle their information.
I believe that GDPR has made fintech companies, including us at Leverage, more transparent and secure. It has helped build trust with our users, showing them that we take data protection seriously.
CEO & Co-Founder, Leverage Planning
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Fintech
M2P Fintech About to Raise $80M
Application Programming Interface (API) Infrastructure Platform M2P Financial Technology has reached the final round to raise $80 million, at a valuation of $900 million.
Specifically, M2P Fintech, formerly known as Yap, is closing a new funding round involving new and existing investors, according to entrackr.com. The India-based company, which last raised funding two and a half years ago, previously secured $56 million in a round led by Insight Partners, earning a post-money valuation of $650 million.
A source indicated that M2P Fintech is ready to raise $80 million in this new funding round, led by a new investor. Existing backers, including Insight Partners, are also expected to participate. The new funding is expected to go toward enhancing the company’s technology infrastructure and driving growth in domestic and international markets.
What does M2P Fintech do?
M2P Fintech’s API platform enables businesses to provide branded financial services through partnerships with fintech companies while maintaining regulatory compliance. In addition to its operations in India, the company is active in Nepal, UAE, Australia, New Zealand, Philippines, Bahrain, Egypt, and many other countries.
Another source revealed that M2P Fintech’s valuation in this funding round is expected to be between USD 880 million and USD 900 million (post-money). The company has reportedly received a term sheet and the deal is expected to be publicly announced soon. The Tiger Global-backed company has acquired six companies to date, including Goals101, Syntizen, and BSG ITSOFT, to enhance its service offerings.
According to TheKredible, Beenext is the company’s largest shareholder with over 13% ownership, while the co-founders collectively own 34% of the company. Although M2P Fintech has yet to release its FY24 financials, it has reported a significant increase in operating revenue. However, this growth has also been accompanied by a substantial increase in losses.
Fintech
Scottish financial technology firm Aveni secures £11m to expand AI offering
By Gloria Methri
Today
- To come
- Aveni Assistance
- Aveni Detection
Artificial intelligence Financial Technology Aveni has announced one of the largest Series A investments in a Scottish company this year, amounting to £11 million. The investment is led by Puma Private Equity with participation from Par Equity, Lloyds Banking Group and Nationwide.
Aveni combines AI expertise with extensive financial services experience to create large language models (LLMs) and AI products designed specifically for the financial services industry. It is trusted by some of the UK’s leading financial services firms. It has seen significant business growth over the past two years through its conformity and productivity solutions, Aveni Detect and Aveni Assist.
This investment will enable Aveni to build on the success of its existing products, further consolidate its presence in the sector and introduce advanced technologies through FinLLM, a large-scale language model specifically for financial services.
FinLLM is being developed in partnership with new investors Lloyds Banking Group and Nationwide. It is a large, industry-aligned language model that aims to set the standard for transparent, responsible and ethical adoption of generative AI in UK financial services.
Following the investment, the team developing the FinLLM will be based at the Edinburgh Futures Institute, in a state-of-the-art facility.
Joseph Twigg, CEO of Aveniexplained, “The financial services industry doesn’t need AI models that can quote Shakespeare; it needs AI models that deliver transparency, trust, and most importantly, fairness. The way to achieve this is to develop small, highly tuned language models, trained on financial services data, and reviewed by financial services experts for specific financial services use cases. Generative AI is the most significant technological evolution of our generation, and we are in the early stages of adoption. This represents a significant opportunity for Aveni and our partners. The goal with FinLLM is to set a new standard for the controlled, responsible, and ethical adoption of generative AI, outperforming all other generic models in our select financial services use cases.”
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