Fintech
3 Fintech stocks ready to profit from the unbanked revolution
One of the biggest challenges is identifying which fintech stocks buying means identifying companies that actually provide financial services to the whole world 1.4 billion adults without access to banking services. On top of this, a third of adults globally are currently unbanked and receive income through sources other than traditional direct debit. In 2015, Accenture (NYSE:ACN) stated that the pursuit of financial inclusion was a noteworthy market opportunity 380 billion dollars.
The rise of open banking has evolved into a more interconnected open finance movement within the fintech world. And providing services to underbanked populations has become more effective than ever.
In a landscape ripe for innovation, we take a look at the three best fintech stocks to buy to unlock the vast market potential of the world’s underbanked and underbanked communities.
MercadoLibre (MELI)
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Following a Q1 2024 earnings report that saw MercadoLibre (NASDAQ:APPLES) earnings rose to an adjusted $6.78 per share on revenue of $4.3 billion. The Uruguay-based bank saw a sharp rise in prices on Wall Street.
Entering the third quarter of 2024, the stock is up more than 10% from the start of the year. And MELI’s market capitalization of just under $90 billion suggests the stock could rise much higher if it unlocks the potential to reach markets in the LATAM region. 178 million citizens without an account.
This bodes well for MercadoLibre’s business model. The company prioritizes next-generation payment and savings platforms within a widely accessible app. This means that users without bank accounts can have access to open banking technology. Provide a service that would be too challenging for traditional financial institutions to provide.
PayPal (PYPL)
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PayPal (NASDAQ:PYPL) has long been identified as an innovator across the fintech landscape. Despite the stock’s global popularity, PayPal has struggled mightily with the impact of recent global economic uncertainty.
Today, PayPal is about 80% below its peak stock price of $308.53 per share, recorded in July 2021. The impact of historically high inflation and rate hikes by banks power plants contributed to this decline. However, there appears to be a more positive outlook on the horizon for one of the most famous names in fintech.
After strong earnings in the first quarter of 2024, PayPal has improved its profit expectations for the year. This development represents a much rosier outlook than the initial forecast to remain stable. Crucially, total payment volumes through PayPal grew 14% to $403.9 billion in the first quarter of the year, pushing net revenue up 10%. Supporting further future growth will undoubtedly be PayPal long-term commitment to reach non-banking customers.
Currency base (COIN)
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Cryptocurrency is one of the most effective ways for unbanked communities to access open banking services. Being a cryptocurrency exchange listed on Wall Street, CoinBase (NASDAQ:CURRENCY) has emerged as a reliable option for integrated crypto financial services.
For speculative investors, Coinbase’s appeal is clear. The cryptocurrency exchange is closely correlated with the performance of the broader cryptocurrency market since its listing on the Nasdaq in 2021. COIN experienced first-quarter growth of 69% in 2024 as Bitcoin hit new all-time highs.
Counting Wall Street icon Cathy Wood as longtime admirer, Coinbase is expected to become a strong performer over the next year. Especially among cryptocurrency enthusiasts who expect a Bitcoin rally in the coming months.
For COIN, this could mean there will be plenty of clear skies for the stock. However, the exchange could also find greater resonance as a key alternative option for providing financial services to unbanked communities.
Coinbase has a built-in cryptocurrency wallet app for its users, whereby individuals can hold a wide variety of cryptocurrencies. These currencies can then be easily transferred between other crypto wallets and bank accounts.
For countless unbanked individuals, access to cryptocurrency and decentralized financial services like P2P could prove invaluable to both the individual and the stock.
As of the date of publication, Dmytro Spilka did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to InvestorPlace.com Guidelines for publication.
Dmytro is a finance and investment writer based in London. He is also the founder of Solvid, Pridicto and Coinprompter. His work has been published in Nasdaq, Kiplinger, FXStreet, Entrepreneur, VentureBeat and InvestmentWeek.