As Bulk Buying Surges And Fintechs Rise, Investors Have An Opportunity To Capitalize

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This winter has left consumers walking a tightrope between bulking up on essential supplies and staying true to their budgets. 

But in that struggle, there’s opportunity — particularly, for savvy investors who are keeping a close eye on emerging industries like fintech. By combining financial services with digital tools, the fintech market has continued to grow during the COVID-19 pandemic, providing consumers and businesses with a way to interact without meeting face-to-face. 

Combine that with more and more consumers adopting fintech on a global scale, and investors may have future opportunities to mine. Here are three trends to watch.  

  • Ease and automation fuel fintech use among consumers
  • Keep a close eye on the types of brands that are collaborating
  • Brands that put emphasis on education experience are positioned to thrive

Ease and automation fuel fintech use among consumers 

Even though recent surveys have found that a third of consumers stockpiling groceries for the winter have gone into debt to do so, overall, the pandemic has provided ample opportunity for Americans to tackle their negative balances. According to the New York Fed, credit card balances dropped for three straight quarters in a row by the end of Q3 2020. While stimulus checks and pauses on student loans and mortgages contributed to the decrease, consumers have also begun to rely on the ease of digital platforms to help them manage their finances.

Payment and money transfers, in particular, have earned widespread adoption globally, with 75% of consumers using at least one service, according to Ernst & Young. While individual apps like PayPal Holdings Inc PYPL have dominated the market, big banks like JP Morgan Chase & Co JPM have also developed quickpay functions to allow consumers to send and receive money digitally.

And these trends are expected to grow, with eMarketer predicting that 78% of millennials will be using digital banking by 2022.  

Keep a close eye on the types of brands that are collaborating 

Imagine your average consumer. On a given day, you might use a banking app to check your balance, then open a separate app to check your investments. Later, you go to the store and purchase groceries with Apple Pay from Apple Inc. AAPL, which reminds you that you need to send the $20 you owe your friend via PayPal. Four apps later, they’re back at home. 

That app fatigue has a toll. Ernst & Young found that 60% of consumers who have adopted fintech want to see all their financial products in one place, so expect to see more and more companies joining forces to meet consumer expectations. 

Collaboration can also extend to actual products in the financial space. For example, Apple Card, a joint effort between Apple and Goldman Sachs Group Inc. GS allows customers to earn cashback while linking their iPhone and other technologies directly to their shopping experiences.

The problem is in too many services suddenly existing in too many differing places. Eventually, the U.S. market may find itself developing versions of a “super-app.” These apps, which dominate in China, combine dozens of services into one single place. For example, WeChat, owned by Tencent Holdings Ltd. TCEHY, offers users calling and texting services, on top of food delivery, ride-sharing, and even a portal for scheduling doctor’s appointments. Getting in on the ground floor of a future technology conglomerate could reap substantial benefits. 

Any way to make a more seamless experience for a consumer is likely to pick up traction, so investors should keep an eye on organizations that announce new collaborations and explore investment opportunities before the stock prices surge. 

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Brands that put emphasis on education experience are positioned to thrive 

As more and more Americans are moving their financial lives online, astute investors should take note that there is still ample work to be done in the financial education space. Companies that provide ways to increase financial literacy, like those with helpful financial tool offerings, can help build brand loyalty in a growing industry. 

Particularly in emerging markets, fintech companies are in a unique position to provide both services and education to previously unbanked individuals. Companies in Nigeria and Peru, for example have already seen success with targeted education campaigns and the “gamification” of personal finance. 

By focusing on education, collaboration or automation, investors with a keen eye can identify fintech companies that are worth gambling on.

Joshira Maduro is a research analyst at LendingTree, where she supports content covering credit card news and partnerships. She utilizes her background in market research and branding to develop insightful pieces on better ways to spend and travel. 

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