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Startups Entering Emerging Markets Should Help Fintech ETFs

This article was originally published on ETFTrends.com.

In other parts of the globe, financial startups are finding opportunities, especially with the rising use of the smartphone in emerging markets (EM). This should put financial technology-focused exchange-traded funds (ETFs) on the radars of prospective ETF investors.

For example, one startup is looking to challenge the big banks in the country of Nigeria, per a report by TechCrunch.

“Fintech startup FairMoney is building a challenger bank in Nigeria,” the report noted. “The company first started offering microcredit and now plans to expand to current accounts and savings. FairMoney just raised an $11 million Series A round (€10 million) led by Flourish, DST Global partners and existing partners Newfund, Speedinvest and Le Studio VC.”

FairMoney provides a mobile app that gives users the ability to obtain a loan directly from their smart device. It’s underwriting feature allows a user to answer some questions by using the financial data obtained, the startup can deliver a credit extension decision in a matter of minutes.

“Like many challenger banks, FairMoney wants to become a financial hub for all your banking needs — one app to rule them all,” the report noted. “That’s why the ability to hold money in your FairMoney wallet will be key. For users without smartphones, the startup is also working on an SMS interface to transfer money.”

With fintech startups entering the global market space and challenging banks at their own lending game, this could fuel more interest in fintech ETFs.

The payment processing space is seeing a growing number of big bets placed by venture capitalists, which could give financial technology exchange-traded funds (ETFs) a boost. It’s a $1.9 trillion industry that the largest tech firms are trying to tap into.

Payments are increasingly going digital with a number of start-ups seeing venture capital seed money to help facilitate online purchases. According to research company Pitchbook, data shows that investors put $18.5 billion into the payment processing sector in 2018–an increase of five times the previous year.

ETFs to look at in the growing fintech space include the Global X FinTech ETF (FINX) and the  ARK Fintech Innovation ETF (ARKF) . ARKF invests in equity securities of companies that ARK believes are shifting financial services and economic transactions to technology infrastructure platforms, ultimately revolutionizing financial services by creating simplicity and accessibility while driving down costs.

FINX seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Indxx Global Fintech Thematic Index. The underlying 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.

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