Consider Investing in These Flourishing Fintech Sectors
Financial technology (fintech) has become essential in day-to-day processes. It’s now a vital aspect of driving the economy. The fintech industry in the UK is currently valued at a whopping £11 billion — the second largest in the world after the United States.
Such a robust market value also shows just how lucrative it can be to invest in fintech. This is in line with what we previously explained about steadily growing your stock market portfolio by investing in technology shares. Tech stocks, like those from fintech firms, are high growth but relatively low risk. This means that you’ll want to invest in fintech firms that are already valuable and are likely to experience exponential growth in the coming years.
And while the local fintech industry is vast, it can be difficult to determine which sectors you should consider investing in. So, we’ve rounded up some of the flourishing fintech sectors that you should look into in 2022.
Digital Payment Processing
Digital payment methods are becoming a popular mode of transaction in the UK. The British Retail Consortium article titled “Trends in Digital Payments in 2022: What to Expect?” found that this payment method accounted for £255,819 million worth of transactions in 2021 alone. As such, businesses are exploring fintech technologies that can boost their operations. Worthy investments in this sector should provide several digital payment options. This is how FIS’ Worldpay services help businesses today adjust. Its mobile card machines accept payments from both credit and debit cards. These machines are also compatible with digital wallets like Apple Pay, Android Pay, and Samsung Pay to name a few. Having more payment options allows businesses to welcome more customer transactions — and this is inspiring more businesses to invest in the growing sector.
Mobile savings applications
As the cost of living goes up more people are trying to improve their savings in the UK. At least 32% of the population is deliberately expanding their savings, reaching an average of £4,500 in their bank accounts. Beyond mere spending trackers, leading automatic saving apps like Plum, Chip, and Cleo employ artificial intelligence to split a user’s income to maximise their savings. The app bases this on transaction history, spending patterns, and income. Such a highly-personalised approach to saving is encouraging more to use these apps, as they give users who struggle with financial decisions clear advice that they can follow.
Recent Regtech advancements are focusing on minimizing fraud-related noncompliance risks. The sector’s projected 16.5% CAGR growth in 2029 is mainly due to the industry’s focus on developing better fraud detection technology. For instance, companies like Elliptic utilise blockchain analytics to immediately flag fraudulent activity. The tool can trace money laundering or unauthorised changes to transactions by following records on the blockchain. With RegTech reducing fraud-related noncompliance weaknesses this way, the sector is growing to be an essential investment.
The most game-changing contributions in insurtech are all about risk management for insurance agencies. With machine learning and AI, major insurtech companies like CFC Underwriting, Concirrus, and Cytora can collect data on individuals, political climates, and natural disasters. This enables them to make risk assessments on clients, sectors, and locations. Anticipating and preventing risk helps insurance agencies save more, making insurtech a great investment.
The fintech industry is rapidly growing — making it an ideal place to source tech stocks for your portfolio. Looking into the offerings and technological developments of the industry’s most promising sectors should help you make the best decision on which companies to invest in.