Fintech

The 7 Best Fintech Stocks to Buy Now: Summer 2024

Published

9 months ago

29 July, 2024

fintech stocks to buy - The Top 7 Fintech Stocks to Buy Now: Summer 2024

There is a lot of money in money. The fintech sector is expected to maintain a Compound annual growth rate of 16.5% between now and 2032. That growth rate should be music to the ears of fintech investors, but not all stocks have performed well.

Many established banks have unattractive long-term results. For example, Citigroup (London share:C) has been declining for the past five years, despite a good rally since the beginning of the year. Fargo Wells (London share:WFC) remained unchanged for several years before posting a 22% gain year-to-date.

As established banks offer lower P/E ratios, investors may want to look fintech stocks with higher valuations that also promise better growth prospects. Depending on where you look, you may find fintech stocks with decent valuations and promising growth prospects. Wondering which fintech stocks look the most attractive as the summer begins to wind down? Here are some of the best fintech stocks to consider for long-term returns.

Holding Company (NU)

Source: Lais Monteiro / Shutterstock

New participations (London share:NEW) is a Brazilian digital bank that recently has surpassed 100 million customersThe shares are up 53% year to date and are trading at a P/E ratio of 48. That’s a higher valuation than most banks, but the financials make it easier to understand.

While most banks have flat or mild revenue growth, Nu Holdings posted 69% year-over-year revenue growth in first quarter 2024. Net income rose 167% YOY in the same quarter, with a net profit margin of 13.8%. The majority of Nu Holdings’ customers are active, with an activity rate of 83% at the end of the quarter. The fintech company offers bank accounts, credit cards, brokerage accounts, loans, and other financial products to keep customers engaged.

Wall Street analysts believe the stock has more room to grow. The average target price implies a 17% increase from current levels. The higher price target of $16 per share suggests a potential gain of 29%.

Robinhood (HOOD)

The Robinood app logo with the Robinhood (HOOD) website logo in the background.

Source: Fluna nightEtJ / Shutterstock.com

Robin Hood (NASDAQ:HOOD) is another fintech stock that has had incredible success this year. Shares are up 71% year-to-date, while revenue and earnings have skyrocketed. Cryptocurrency traders have played a role in the company’s 40% annual revenue growth in first quarter. Cryptocurrency transaction revenue jumped 232% year-over-year to $126 million. This represented more than 20% of total revenue. Stock and option transaction revenue had year-over-year gains of 44% and 16%, respectively.

Robinhood has two other components of total revenue: interest revenue and other revenue. These segments are up 22% YOY and 35% YOY, respectively. The majority of the “Other Revenue” category is made up of Robinhood Gold, an innovative financial product that could challenge other banks and brokerages to offer something similar in the future.

Profits are also up. Robinhood reported $157 million in net income compared to a net loss of $511 million in the same period last year.

American Express (AXP)

the American Express logo engraved in the wood

Source: First Class Photography / Shutterstock.com

American Express (London share:ASCENT) makes money from transaction fees, annual fees, and other costs associated with owning a credit or debit card. The business model has worked well for decades, and the stock trades at a reasonable valuation. The stock’s P/E ratio of 18 looks attractive, given the company’s financial performance in recent quarters.]

Second quarter 2024 revenue increased 8% YOY to $16.3 billion. Net income grew at a faster pace, 39% YOY, to $3.02 billion. Revenue marked an all-time high for the company, as individuals and businesses opened 3.3 million new cards. American Express also raised its full-year EPS forecast from $12.65-$13.15 to $13.30-$13.80.

Shares are up 31% year to date and have climbed 94% over the past five years. American Express also offers a yield of 1.14% and has consistently maintained a double-digit dividend growth rate for several years. Wall Street analysts have rated the stock as Moderate purchase.

SoFi (SOFI)

SoFi Technologies, Inc. logo with stock chart in the background. is an American online personal finance and online banking company.

Source: Poetra.RH / Shutterstock.com

SoFi (NASDAQ:SOPHIE) is a digital bank that offers credit cards, brokerage accounts, bank accounts, loans, and other financial products. The company has not delivered pleasing returns since it became a publicly traded company, but skyrocketing revenue and net income growth suggests that the tide is turning.

Revenue increased 37% year-over-year in first quarter. Profit came in at $88.0 million compared to a net loss of $34.4 million in the same period last year. SoFi also ended the quarter with 8.1 million active members. This is a 44% YOY improvement for the fintech company.

Wall Street Analysts they rated the stock as Hold at different price points. The average target price suggests SoFi should gain 10% from current levels. The highest target price of $12 per share suggests a more optimistic gain of 62% from current levels. SoFi can reach the latter target price if revenue and profit margins continue to rise.

Morning Star (MORN)

Morning Star (NASDAQ:MORNING) is an investment research firm that helps investors make data-driven decisions with their portfolios. The company offers a range of products covering data analytics, market insights, simulations and other areas. The shares are up 18% year to date and have more than doubled in the past five years.

The stock has a P/E ratio of 57 and a yield of 0.50%. Morningstar recently increased its dividend by 8% year-over-yearfrom a quarterly payment of $0.375 to $0.40 per share. Morningstar has a good history of maintaining a solid dividend growth rate for several years.

The Morningstar second quarter results suggest the rally may continue. Revenue increased 13.3% YOY to $571.9 million. Meanwhile, diluted net income per share jumped 90.5% YOY to $1.60. Profits came in at $69.1 million, with a net profit margin of 12.1%. Morningstar’s revenues also increased 13.2% YOY over the past six months.

Moody’s (MCO)

A silver Moody's Corporation (MCO) sign.

Source: Daniel J. Macy / Shutterstock.com

By Moody (London share:MCO) is a risk management firm that has produced similar earnings to Morningstar. The stock is up 18% year to date and has gained 121% over the past five years. Moody’s trades at a P/E ratio of 44 and offers a yield of 0.76%. Moody’s has increased its dividend for 15 years while maintaining a Annualized dividend growth rate of 11.82% in the last decade.

The fintech company reported strong second-quarter results. Revenue increased 22% year-over-year to $1.8 billion, while adjusted diluted EPS increased 43% year-over-year to $3.28. Moody’s maintained the same year-over-year revenue growth rate over the past six months, while EPS increased 26% year-over-year compared to the previous six months. Earnings are accelerating and outpacing revenue growth, translating into higher profit margins.

Moody’s Investors Service Revenue was a key driver of growth. This segment grew 36% YOY compared to a 7% YOY increase in Moody’s Analytics revenue.

Seen (V)

various Visa branded credit cards

Source: Kikinunchi / Shutterstock.com

Visa (London share:AND) is another credit and debit card issuer that deserves a closer look. The stock hasn’t done well this year and is flat so far. However, it has a yield of 0.80% and has consistently maintained a double-digit dividend growth rate.

The credit and debit card issuer’s financials were strong, despite flat year-to-date performance. Visa reported 10% year-over-year revenue growth in the third quarter of its fiscal year 2024. Net income jumped 17% year-over-year to $4.9 million. Visa ended the quarter with a net profit margin of 54.7%. The company regularly achieves net profit margins above 50%. Cross-border volume increased 14% year-over-year in the third quarter, contributing to the strong earnings report.

Visa has many fans on Wall Street. The stock is rated as Strong buy with an average price target that predicts a gain of 22% from current levels. The higher price target of $345 implies that the stock can gain an additional 33%.

As of this publication date, Marc Guberti held a long position in SOFI. 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.

Marc Guberti is a freelance finance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including US News & World Report, Benzinga, and Joy Wallet.

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Fintech

US Agencies Request Information on Bank-Fintech Dealings

Published

9 months ago

30 July, 2024

FinCrypt Staff

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?

Published

9 months ago

30 July, 2024

FinCrypt Staff

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.

Sebastian Malczyk

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.

Arid Islam

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.

George Blandford

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.

Dr. Rhett Stubbendeck

CEO & Co-Founder, Leverage Planning

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Fintech

M2P Fintech About to Raise $80M

Published

9 months ago

30 July, 2024

FinCrypt Staff

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.

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Fintech

Scottish financial technology firm Aveni secures £11m to expand AI offering

Published

9 months ago

30 July, 2024

FinCrypt Staff

Aveni, Investment Management, AI, NLP, UK

By Gloria Methri

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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.”