Financial technology (fintech) represents a transformative investment space in a hybrid sector merging finance and technology. The companies featured on the screen encompass a variety of services, such as online banking, peer-to-peer payments, insurance, cryptocurrency and cybersecurity, among others. They are relevant because they streamline financial services, apart from enhancing efficiency and security through innovations like mobile banking, online investing and payment processing.
The financial technology space is expected to benefit from expanding transaction volumes resulting from the widespread adoption of digital means. The ongoing digitization movement, triggered by the pandemic, is a major catalyst for this industry.
Here we recommend five fintech stocks with a favorable Zacks Rank to invest. These are: ACI Worldwide Inc. ACIW, Upstart Holdings Inc. UPST, SoFi Technologies Inc. SOFI, Paymentus Holdings Inc. PAY and Enova International Inc. ENVA.
Major Catalysts for Fintech Space
The performance of the fintech space is inversely related to the movement of interest rates. In the last two and a half years, fintech companies borrowed at higher interest rate. This significantly affected their technological improvement and product innovation, a key to the success of this space.
Nevertheless, in November, the Federal Reserve reduced interest rates for the second time this year, lowering the benchmark lending rate by 25 basis points to 4.5-4.75%. This follows a 50-basis-point reduction in September 2024.
The CME FedWatch interest rate derivative tool currently shows a 67% probability that the central bank will further cut the Fed fund rate by another 25 basis points in December. A lower interest rate regime will immensely benefit fintech companies.
Moreover, the industry’s favorable growth trajectory is driven by continuous innovation and the disruption of traditional financial firms. With the expansion of mobile and broadband, fintech is poised for significant growth. The rise of artificial intelligence (AI) technologies and machine learning further revolutionizes banking, payments, and investments, offering efficient and secure financial solutions.
In other words, consumer behavior is shifting toward digital platforms, fueled by convenience and cost-effectiveness. The industry's adaptability to changing technological needs and its ability to meet diverse consumer demands underpin its robust future.
Fintech companies offer exposure to a pioneering space that is redefining personal finance. Fintech's innovative and disruptive nature positions it as a fascinating choice in the evolving financial landscape.
Buy 5 Financial Technology Stocks for December
These five financial technology stocks have strong revenues and earnings growth potential for 2025. Moreover, these stocks have seen positive earnings estimate revisions over the last 60 days. Each of our picks carries a Zacks Rank # 2 Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
ACI Worldwide Inc.
ACI Worldwide develops, markets, installs, and supports a range of software products and solutions for facilitating digital payments in the United States and internationally. ACIW operates in three segments: Banks, Merchants, and Billers.
ACIW powers electronic payments for more than 5,000 organizations around the world. More than 1,000 of the largest financial institutions and intermediaries as well as 300 of the leading global retailers rely on ACIW to execute $14 trillion each day in payments. Further, thousands of organizations utilize our electronic bill presentment and payment services.
Through its comprehensive suite of software and SaaS-based solutions, ACIW deliver real-time, any-to-any payment capabilities and enables the industry's most complete omni-channel payments experience.
ACI Worldwide has an expected revenue and earnings growth rate of 8.1% and 12.8%, respectively, for 2025. The Zacks Consensus Estimate for next-year earnings has improved 2.3% in the last 30 days.
Upstart Holdings Inc.
Upstart Holdings is an AI-lending platform partnering with banks to expand access to affordable credit. UPST offers a cloud-based AI lending platform in the United States. UPST’s platform includes personal loans, automotive retail and refinance loans, home equity lines of credit, and small dollar loans that connects consumer demand for loans to its bank and credit unions.
Upstart Holdings has an expected revenue and earnings growth rate of 29% and more than 100%, respectively, for 2025. The Zacks Consensus Estimate for next-year earnings has improved 33.3% in the last 30 days.
SoFi Technologies Inc.
SoFi Technologies provides various financial services in the United States, Latin America, and Canada. SOFI operates through three segments: Lending, Technology Platform, and Financial Services. SOFI offers lending and financial services and products that allows its members to borrow, save, spend, invest, and protect money. SOFI also offers personal loans, student loans, home loans, and related services.
SoFi Technologies has an expected revenue and earnings growth rate of 16.8% and more than 100%, respectively, for 2025. The Zacks Consensus Estimate for next-year earnings has improved 11.5% in the last 60 days.
Paymentus Holdings Inc.
Paymentus Holdings provides cloud-based bill payment technology and solutions in the United States and internationally. PAY offers electronic bill presentment and payment services, enterprise customer communication, and self-service revenue management to billers through a software-as-a-service technology platform.
PAY’s platform's payment processing includes credit cards, debit cards, eChecks, and digital wallets. PAY serves utility, financial services, government, insurance, telecommunication, real estate management, education, consumer finance, healthcare, and small business industries.
Paymentus Holdings has an expected revenue and earnings growth rate of 19.2% and 15.3%, respectively, for 2025. The Zacks Consensus Estimate for next-year earnings has improved 18.8% in the last 30 days.
Enova International Inc.
Enova International is a provider of online financial services. ENVA offers loans to customers in the United States, the United Kingdom, Australia and Canada. ENVA’s customers include consumers who have bank accounts but use alternative financial credit services because of their limited access to more traditional consumer credit from banks, thrifts, credit card companies and other lenders.
Enova International has an expected revenue and earnings growth rate of 18.8% and 21.3%, respectively, for 2025. The Zacks Consensus Estimate for next-year earnings has improved 6% in the last 60 days.
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See Stocks Now >>Paymentus Holdings, Inc. (PAY) : Free Stock Analysis Report
ACI Worldwide, Inc. (ACIW) : Free Stock Analysis Report
Enova International, Inc. (ENVA) : Free Stock Analysis Report
Upstart Holdings, Inc. (UPST) : Free Stock Analysis Report
SoFi Technologies, Inc. (SOFI) : Free Stock Analysis Report
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