Credit: Shutterstock photoBy Mary-Lynn Cesar for Kapitall
Your phone can do just about anything nowadays, including handling most of your money-related needs. Investing, which used to require more money, can be done with a few taps and fewer dollars thanks to several online broker ages' no minimum policies. Paying back friends is a breeze, though it's also making it easier to get nabbed for selling drugs . And mobile payment services are trying to put the nail in cash's coffin.
The greater convenience afforded to the general public through these advances in financial technology, or fintech, has caught Wall Street's eye. In an article published Monday morning, Wiredcovers how various financial companies-from older, online brokerage s to big banks-are trying to compete with the new kids on the block. Their methods? Imitation, corporate-style, and acquisition.
In March, Charles Schwab ( SCHW ) launched its own automated portfolio service, Schwab Intelligent Portfolios, to compete with existing robo-advising offerings. Only issue? Investors must have $5000 to open an account. Last week Experian (OTCMKTS: EXPN) debuted its credit-tracking app, which the credit reporting company hopes can stand up to Credit Karma. However, Experian Credit Tracker costs $4.95 for the first month and $19.95 a month after that, whereas Credit Karma is free. And in February 2014, Spanish bank BBVA ( BBVA ) bought banking startup Simple for $117 million to strengthen its presence in the digital banking space.
Then there are the companies behind the actual hardware associated with banking, namely ATMs. While Quartzshows that the number of domestic ATM transactions is on the decline, the amount of money being moved is rising. This, combined with projections that the global ATM market will grow from 2.6 million in 2014 to 3.7 million systems by 2018, is relatively encouraging for Diebold ( DBD ) and NCR ( NCR ), the world's largest ATM manufacturers.
Nevertheless, the expansion of the ATM market is nothing compared to what's happening with mobile payment services. According to a Morgan Stanley report on the industry, mobile payments have the potential to increase global revenue from $175 billion to $250 billion, with $45 billion coming from developed markets and $30 billion from emerging markets.
So who's faring all right in the fintech battle so far? Below is a list of financial companies that reported positive quarter-over-quarter (Q/Q) growth in sales . The list is split into two groups: stocks that are more profitable than their peers on a trailing twelve months ( TTM ) basis for gross, operating and pretax margin, and stocks that are less profitable than their peers .
More profitable
Click on the interactive chart to view data over time.
1. TD Ameritrade Holding Corporation ( AMTD , Earnings , Analysts , Financials ): Provides securities brokerage services and technology-based financial services to retail investors, traders, and independent registered investment advisors (RIA) in the United States. Market cap at $20.35B, most recent closing price at $37.44.
Sales growth Q/Q at 9.00%.
TTM gross margin at 47.11% vs. industry average at 43.21%.
TTM operating margin at 41.35% vs. industry average at 32.53%.
TTM pretax margin at 40.76% vs. industry average at 35.27%.
Competition: Online brokerages, especially those offering free or low-cost trading.
2. Discover Financial Services ( DFS , Earnings , Analysts , Financials ): Operates as a credit card issuer and electronic payment services company primarily in the United States. Market cap at $25.86B, most recent closing price at $57.96.
Sales growth Q/Q at 7.20%.
TTM gross margin at 46.64% vs. industry average at 36.8%.
TTM operating margin at 45.36% vs. industry average at 33.14%.
TTM pretax margin at 37.74% vs. industry average at 28.24%.
Competition: Mobile payment services, which threaten the company's income from credit cards and Pulse, its domestic interbank electronic funds transfer network.
Less profitable
Click on the interactive chart to view data over time.
3. Diebold Incorporated ( DBD , Earnings , Analysts , Financials ): Provides integrated self-service delivery and security systems and services primarily to the financial, commercial, government, and retail markets worldwide. Market cap at $2.32B, most recent closing price at $35.85.
Sales growth Q/Q at 6.10%.
TTM gross margin at 28.17% vs. industry average at 44.61%.
TTM operating margin at 6.4% vs. industry average at 24.47%.
TTM pretax margin at 5.59% vs. industry average at 24.34%.
Competition: Mobile payment services
4. Fidelity National Information Services Inc. ( FIS , Earnings , Analysts , Financials ): Provides banking and payments technology solutions worldwide. Market cap at $18.67B, most recent closing price at $65.50.
Sales growth Q/Q at 7.40%.
TTM gross margin at 42.29% vs. industry average at 49.35%.
TTM operating margin at 20.26% vs. industry average at 30.41%.
TTM pretax margin at 16.4% vs. industry average at 29.59%.
Competition: Mobile payment services
(List compiled by Mary-Lynn Cesar. Monthly return data sourced from Zacks Investment Research. Profitability data sourced from Fidelity. All other data sourced from FINVIZ.)
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
