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On October 13, 2017, a sign with the Square logo was seen at the company’s offices in the South of Market (SoMa)… [+] area of San Francisco, California. SoMa is noted for having one of the world’s highest concentrations of technology companies and startups. (Smith Collection/Gado/Getty Images photo)
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Our Fintech theme covers businesses in digital payments and loans, card networks, and insurance technologies that have the potential to disrupt the US insurance and financial services industry, which is worth more than $1.5 trillion. The secular move to digital payments from physical payments, increased acceptance of e-commerce, and the desire to improve financial inclusion in the United States and abroad are all likely to benefit these enterprises. According to the FDIC, around 25% of U.S. households are either unbanked or underbanked, and technology could help bridge the gap. The fintech industry is also expected to be quite profitable. Unlike traditional financial institutions, which have substantial costs associated with branches, staffing, client acquisition, and regulatory overhead, fintech firms operate almost entirely online, with asset-light models allowing them to boost margins. Despite the prospects, the theme has underperformed this year, returning only around 2% year to date, compared to the S&P 500, which has returned over 16% over the same period. Here’s some more information on some of the stocks in our topic, as well as how they’ve performed. PayPal is a major player in the digital payments industry. The company has been the best performer in our topic, with a year-to-date return of 29 percent, thanks to its Venmo peer-to-peer payment software, which has gained traction over Covid-19. The company’s decision to allow clients to purchase and sell popular cryptocurrency Bitcoin on its platform appears to have aided the stock’s performance.
Square, another big digital payments company, has seen its shares rise roughly 12% year to date as its Square Cash app, which was previously known for peer-to-peer payments, expands into banking and investing. The business, like PayPal, is betting big on the crypto industry.

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Visa is the world’s largest provider of electronic payment systems. The stock has underperformed this year, with a year-to-date gain of just over 9%, as a result of the Covid-19-related travel delay, which has resulted in lower cross-border transaction volumes. With the economy recovering, however, the company is seeing an increase in consumer spending, which could help the stock.
ADDITIONAL INFORMATION FOR YOU
Fiserv is a financial technology business that works with banks, thrifts, credit unions, securities broker-dealers, leasing and finance companies, and retailers to deliver financial technology solutions. Year to date, the stock has lost about 4.4 percent.
Lemonade is a technology company that specializes in renters and homeowners insurance, as well as pet insurance and term life insurance. The company, which went public last year, is still the worst performer in our topic, with a year-to-date loss of 21%. Mixed quarterly results and the end of the post-IPO lockup period are likely to blame for the selloff.
Do you believe cryptocurrency has the potential to disrupt the banking industry? Looking for a way to profit from Bitcoin adoption without having to invest in the cryptocurrency? More information on our topic can be found at Cryptocurrency Stocks.
Here you may find all of Trefis’ Featured Analyses and Trefis Data./nRead More

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