Fintech is a rapidly growing sector that has the potential to revolutionize the financial industry. Fintech companies are disrupting traditional financial institutions and paving the way for a more efficient and accessible financial ecosystem. The global fintech market had a value of approximately $194.1 billion in 2022 and is expected to grow at a CAGR of 16.8% to reach $492.81 billion by 2028.
Key Fintech Subsectors to Watch
Some of the key fintech subsectors to watch include digital payments, robo-advisors, and wealth management, and blockchain and cryptocurrencies. Investing in fintech ETFs can provide exposure to a diversified portfolio of fintech companies and help mitigate risks associated with investing in individual startups. Fintech ETFs to consider include Global X FinTech ETF (FINX), ARK Fintech Innovation ETF (ARKF), and ETFMG Prime Mobile Payments ETF (IPAY).
Digital Transformation in the Banking Industry
The rise of fintech startups and changing customer expectations have driven digital transformation in the banking industry. Digital technology has improved customer experience, increased operational efficiency, and reduced costs for financial institutions. Mobile devices and the internet have contributed to the growth of digital banking, allowing banks to offer personalized services to customers through data analytics and machine learning algorithms.
COVID-19 Pandemic Accelerates Fintech Disruption
The COVID-19 pandemic has accelerated the trend of fintech companies disrupting traditional financial institutions. Fintech companies have been able to pivot quickly to the new realities of the pandemic, providing solutions that meet the changing needs of consumers. Contactless and instant digital payments have become increasingly popular, and fintech companies have been quick to offer solutions that enable contactless payments, such as mobile payment apps, digital wallets, and QR code payments.
Bank of Montreal’s Stake in LendingClub Co.
Bank of Montreal Can recently purchase a stake in LendingClub Co., a leading credit services provider in the United States. LendingClub Co. has an online platform that connects borrowers with investors, combining machine learning technology with traditional underwriting processes. LendingClub Co. has disrupted the traditional banking model, attracting the attention of several hedge funds and institutional investors, including Vanguard Group Inc., Rubric Capital Management LP, State Street Corp, Harspring Capital Management LLC, and Dimensional Fund Advisors LP.