# Investing in Fintech Trends: How to Get Started Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-10-19 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: Invest in the Fintech Revolution: Exploring Profitable Meta Description: Discover how fintech is changing the financial landscape & learn how to invest in this growing industry. URL: https://financedigest.com/investing-in-fintech-trends-how-to-get-startedhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-1324440713-1736815000181-compressed.jpg) _By_ **_Matthew Frankel,_** _CFP, contributing analyst at The Motley Fool_ You might be surprised at how many different ways you can get in on the fintech revolution. Fintech, short for financial technology, is a broad term that describes technologies that affect the ways we spend, save, and use money. Some [fintech companies develop software to help move money around the world](https://www.financedigest.com/fintechs-support-of-ukraines-digital-businesses-can-be-used-as-blueprint-across-the-world.html "Fintech’s support of Ukraine’s digital businesses can be used as blueprint across the world"). Others design apps that help people track how much they’re saving and spending. Others aim to make banking more efficient and profitable. We could go on, but you get the idea. The point is that there are a _lot_ of [ways that technology can be applied to the financial industry, and, as a result, there are a lot of different ways to invest](https://www.financedigest.com/10-ways-to-put-together-a-killer-investment-pitch.html "10 WAYS TO PUT TOGETHER A KILLER INVESTMENT PITCH") in the fintech revolution. ## **Why invest in fintech?** The world is in the midst of a [digital transformation](https://www.financedigest.com/how-digital-is-transforming-finance-in-2023.html "How Digital Is Transforming Finance in 2023"), and, when it comes to money, we still have a long way to go. Cash is still widely used around the world, particularly in some of the most highly populated areas. Globally, [18% of all transactions still take place in cash](https://www.insiderintelligence.com/content/snapshot-of-cash-usage-around-world), and the cash usage rate is at least double this percentage in Latin America, the Middle East, and Africa. Even in North America, which many people think of as essentially a [cashless economy](https://www.financedigest.com/going-cashless-the-developing-digital-economy.html "Going Cashless — The Developing Digital Economy"), cash makes up 11% of payments. What’s more, [according to the World Bank](https://blog.cfte.education/the-worlds-top-5-unbanked-countries-have-more-than-60-of-their-population-without-bank-accounts/), there were about 1.7 _billion_ people worldwide without access to banking services in 2017, the date of the most recent data. The number may have shrunk a little by the time you’re reading this, but there are still a lot of people in this group. Last, but certainly not least, it isn’t just about cash versus electronic [payments and banking](https://www.financedigest.com/risk-of-uk-balance-of-payments-crisis-under-truss-is-rising-deutsche-bank-warns.html "Risk of UK balance of payments crisis under Truss is rising, Deutsche Bank warns"). There’s an ever-evolving need for the various platforms, apps, and other [technologies that power our finances](https://www.financedigest.com/all-shapes-and-sizes-how-to-match-your-technology-to-your-finances.html "All shapes and sizes: How to match your technology to your finances"). Think about how much [contactless payment technology](https://www.fool.com/investing/2021/01/13/visa-study-shows-growing-use-of-contactless-paymen/) has developed in just the past few years, or how much easier it is to buy a stock than it was a decade ago. The pace of [innovation in the fintech](https://www.financedigest.com/how-partnerships-fuel-fintech-innovation-and-help-banks-deliver-a-better-customer-experience.html "How Partnerships Fuel Fintech Innovation and Help Banks Deliver a Better Customer Experience") world has never been faster or more exciting. The worldwide payment market is estimated to be about $185 trillion in size already, according to Visa, and it is expected to grow significantly in the [years ahead](https://www.financedigest.com/three-waves-of-fintech-disruption-leading-trends-for-the-year-ahead.html "Three waves of Fintech disruption: Leading trends for the year ahead"). ## **Ways to invest in fintech** As mentioned, fintech is a _broad_ category, so [there are quite a few ways to invest in it](https://www.fool.com/investing/stock-market/market-sectors/financials/fintech-stocks/how-to-buy/). Just to name some of the biggest trends you may want to consider: **Payment processing:** These are companies that develop and operate [platforms](https://www.financedigest.com/leading-payment-platform-appoints-new-key-positions-to-help-with-growth.html "Leading Payment Platform Appoints New Key Positions to Help With Growth") that move payments from the payor to the payee. Examples include Block (SQ), which operates the Square [business payments ecosystem as well as the popular Cash App](https://www.financedigest.com/why-mobile-apps-are-crucial-for-a-successful-business.html "Why Mobile Apps are Crucial for a Successful Business"), along with companies such as PayPal (PYPL), Shift4 (FOUR), and Adyen (ADYEY), just to name a few. **[Online and mobile banking:](https://www.financedigest.com/dutch-online-bank-bunq-applies-for-u-s-banking-licence.html "Dutch online bank Bunq applies for U.S. banking licence")** Branch-based banking is full of inefficiencies, and several promising companies are leveraging technology to improve the customer experience. SoFi (SOFI) is a great example of that, and others include Axos Financial (AX) and Green Dot (GDOT). **Online and peer-to-peer (P2P) lending:** The personal lending space has grown tremendously in recent years, and now there are online-based companies that offer auto loans, small [business loans](https://www.financedigest.com/types-of-business-loans.html "Types of business loans"), and mortgage loans as well. Ally Financial (ALLY) is a good example of a technology-focused lender, and Rocket Companies (RKT) is another. **Financial [software](https://www.financedigest.com/how-much-does-cloud-based-financial-software-cost.html "How Much Does Cloud-based Financial Software Cost?"):** As the financial world gets more complicated, the need for innovative software solutions is growing. Bill.com (BILL) is an example of a company whose main product is a software-as-a-service (SaaS) platform, and Paycom Software (PAYC) is another. **Blockchain technology and cryptocurrencies:** Regardless of what you might think about Bitcoin, Ether, and other digital currencies, they’re here to stay, and so is the blockchain technology that powers most of them. Companies such as cryptocurrency exchange Coinbase (COIN), as well as [financial companies](https://www.financedigest.com/how-can-financial-services-companies-compete-more-effectively-in-times-of-uncertainty.html "How can Financial Services Companies compete more effectively in times of uncertainty?") with major blockchain operations such as Block (SQ), could be worth a look if you’re interested in this area. **Insurance technology:** Insurance is a business that has been _begging_ to be disrupted. The processes for buying insurance and submitting claims are clunky at best, and [several companies](https://www.financedigest.com/the-severe-impact-of-downtime-on-companies-bottom-lines.html "The severe impact of downtime on companies’ bottom lines") are trying to find a better way. Lemonade (LMND) is an example of a company that is leveraging [artificial intelligence technology to improve the insurance](https://www.financedigest.com/how-artificial-intelligence-is-simplifying-sanctions-screening-for-insurers.html "How Artificial Intelligence is Simplifying Sanctions Screening for Insurers") industry, and there are several others as well. ## **Don’t want to pick individual fintech stocks?** As with any up-and-coming [technology trends](https://www.financedigest.com/6-technology-trends-banking-2019.html "6 Technology Trends for Banking in 2019"), investing in individual companies comes with quite a bit of risk. Sure, the [businesses that successfully capitalize on their opportunities could be home runs](https://www.financedigest.com/4-signs-you-have-what-it-takes-to-run-a-business.html "4 Signs You Have What It Takes to Run a Business") for patient and risk-tolerant investors, but even the most successful companies can be quite volatile. And there’s a good chance that fintech growth [stocks won’t be able to gain](https://www.financedigest.com/stocks-dollar-gain-on-soft-landing-hopes.html "Stocks, dollar gain on soft landing hopes") traction and won’t be great investments. This isn’t to try to discourage anyone from investing in the fintech space. There are certainly some excellent companies with solid risk-reward dynamics to consider, but it’s important to know what you’re getting into. Alternatively, if you aren’t comfortable trying to pick winners, you could choose to invest in the overall [fintech industry](https://www.financedigest.com/2022-the-year-that-facial-recognition-will-lead-the-fintech-industry.html "2022 – The year that facial recognition will lead the fintech industry") through the exchange-traded fund (ETF) route. The Global X FinTech ETF (FINX) is one excellent example with a diverse [portfolio and reasonable investment](https://www.financedigest.com/three-fundamental-tips-to-enhance-your-investment-portfolio-performance.html "Three fundamental tips to enhance your investment portfolio performance") fees. [Top holdings](https://www.financedigest.com/5-top-tips-when-holding-a-crisis-press-conference.html "5 Top Tips When Holding a Crisis Press Conference") include PayPal, Fiserv, Intuit, and Block, and since no company makes up more than 7.4% of the fund’s assets, no individual stock’s performance will make or break your long-term returns. The bottom line is that there is no shortage of [ways to invest](https://www.financedigest.com/a-two-way-street-chinese-investment-in-the-uk-will-benefit-both-economies.html "A TWO WAY STREET: CHINESE INVESTMENT IN THE UK WILL BENEFIT BOTH ECONOMIES") in the fintech space. But it’s important to do your research before adding shares of any [fintech growth](https://www.financedigest.com/fintechs-must-remove-security-and-compliance-friction-to-unlock-new-growth.html "Fintechs Must Remove Security and Compliance Friction to Unlock New Growth") companies to your portfolio, or to choose a more diversified approach if you’re not comfortable with the potential for large swings in your portfolio. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---