U.S. Markets close in 44 mins
  • S&P 500

    3,902.99
    -8.75 (-0.22%)
     
  • Dow 30

    31,446.57
    -54.11 (-0.17%)
     
  • Nasdaq

    11,534.86
    -72.76 (-0.63%)
     
  • Russell 2000

    1,776.70
    +10.97 (+0.62%)
     
  • Crude Oil

    109.31
    +1.69 (+1.57%)
     
  • Gold

    1,824.20
    -6.10 (-0.33%)
     
  • Silver

    21.13
    +0.00 (+0.02%)
     
  • EUR/USD

    1.0590
    +0.0031 (+0.2965%)
     
  • 10-Yr Bond

    3.1940
    +0.0690 (+2.21%)
     
  • Vix

    27.23
    0.00 (0.00%)
     
  • GBP/USD

    1.2279
    +0.0009 (+0.0712%)
     
  • USD/JPY

    135.4240
    +0.2540 (+0.1879%)
     
  • BTC-USD

    20,776.92
    -483.21 (-2.27%)
     
  • CMC Crypto 200

    452.59
    -9.21 (-1.99%)
     
  • FTSE 100

    7,258.32
    +49.51 (+0.69%)
     
  • Nikkei 225

    26,871.27
    +379.30 (+1.43%)
     

A Guide to Fintech ETFs

·5 min read

The financial technology or the fintech space is largely altering the traditional banking landscape, globally. The application of innovation technology tools to provide financial services leaves customers craving for more personalized and customer-centric products.

Notably, the combination of financial services and technology is steadily improvising or replacing traditional financial services methods in several fields, such as payments, digital lending, insurance, ecommerce, banking, wealth management and social commerce, per a Market Data Forecast report.

A Vantage Market Research report highlights the growing opportunities in the global financial technology market, which is expected to see a CAGR of 19.8% between 2022 and 2028. According to the report, the fintech space is expected to reach a market value of around $332.5 billion by 2028.

Factors Driving the Fintech Space

The emergence of cutting-edge technologies like AI, cloud computing, big data, the IoT and machine learning is driving the fintech space. The growing popularity of smartphones, rising demand for industrial automation and the increased utilization of wireless communication are boosting the transition to digital platforms.

Going by a Mordor Intelligence report, the fintech space is witnessing operational advancements with the help of robotic process automation (RPA), chatbots and Distributed Ledger Technology (DLT), which are providing an improved agility, efficiency and accuracy.

Apart from showing an increased interest in online shopping, customers are resorting to digital payments to clear their bills. Even, merchants and utility providers are increasingly advocating the same. Per a Statista report, digital payments are expected to stand out as the largest segment of the fintech market with a total transaction value of $1,801,103 million in 2022.

Payment services from tech titans like Google Pay, Facebook Pay, Apple Pay, Amazon Pay, PayPal (PYPL) and Square Inc.’s (SQ) Cash App are the key winners amid the increasing shift to digital payments.

The combination of financial services and technology allowed providers to focus on a more customer-centric approach. According to a Market Data Forecast report, the combination is steadily improvising or replacing traditional financial services methods in several fields, such as payments, digital lending, insurance, e-commerce, banking and wealth management along with social commerce.

Fintech Grooming Traditional Banking Landscape

The traditional firms are feeling the heat of growing digitization and are turning to fintech companies for tie-ups. According to a Mordor Intelligence report, several global banks, insurers and investment managers are looking to collaborate with the financial technology companies over the next three-five years. These firms forecast an average return of about 20% on investment in innovation projects, per the report.

One of the biggest global banks, JPMorgan Chase (JPM) inked a deal to acquire Ireland-based fintech firm Global Shares in March. Through its cloud-based platform, Global Shares helps businesses manage employee stock plans.

Another leading global financial holding company Goldman Sachs (GS) entered into a definitive agreement to acquire GreenSky, Inc., a pre-eminent fintech platform that offers home improvement consumer loan originations.

The growing participation of traditional investment banks and fintech firms with an aim to add cryptocurrency to their products is opening up investment opportunities.

Fintech ETFs to Keep a Track of

Here we highlight some fintech ETFs that can gain from the growing financial technology market:

Global X FinTech ETF FINX

FINX seeks to invest in companies in the forefront of the emerging financial technology sector, which encompasses a range of innovations, comfortably transforming established industries like insurance, investment, fundraising and third-party lending through unique mobile and digital solutions. FINX has an AUM of $697 million and charges 68 basis points (bps) of fees. FINX trades in a three-month average volume of about 257,000 shares (read:Navigating Thematic ETFs in 2022).

ARK Fintech Innovation ETF ARKF

ARKF is an actively-managed ETF that seeks long-term capital growth. ARK Fintech Innovation ETF provides exposure to fintech innovations like mobile payments, digital wallets, peer-to-peer lending, blockchain technology and risk transformation. With an AUM of $981 million, ARKF charges an expense ratio of 75 bps. Moreover, ARKF trades in a three-month average volume of 1.9 million shares.

ETFMG Prime Mobile Payments ETF IPAY

IPAY seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Prime Mobile Payments Index. The index provides a benchmark for investors interested in tracking the mobile and electronic payments industry, specifically focusing on credit card networks, payment infrastructure and software services, payment processing services and payment solutions (such as smartcards, prepaid cards, virtual wallets). With an AUM of $741.2 million, IPAY charges an expense ratio of 75 bps. Moreover, ETFMG Prime Mobile Payments ETF trades in a three-month average volume of about 103,000 shares (read: Follow Warren Buffett With These ETFs).

Ecofin Digital Payments Infrastructure Fund TPAY

TPAY uses a passive management approach and seeks to track the total return performance of the Ecofin Global Digital Payments Infrastructure Index. With an AUM of $8.9 million, Ecofin Digital Payments Infrastructure Fundcharges an expense ratio of 40 bps. It trades in a three-month average volume of about 2,200 shares.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Global X FinTech ETF (FINX): ETF Research Reports
 
ETFMG Prime Mobile Payments ETF (IPAY): ETF Research Reports
 
Ecofin Digital Payments Infrastructure Fund (TPAY): ETF Research Reports
 
ARK Fintech Innovation ETF (ARKF): ETF Research Reports
 
To read this article on Zacks.com click here.
 
Zacks Investment Research