We recently compiled a list of 10 Best Fintech Stocks to Buy Now. In this article, we’ll take a look at where Fiserv, Inc. (NYSE:FI) stacks up against other fintech stocks. If you are interested, you can also read our article on 12 Best Financial and Fintech ETFs to Buy.
Fintech services have become an integral part of our lives in recent years, significantly changing the financial sector. Consumers no longer need to queue at banks to get their statements, participate in money transfers or carry heavy wallets to pay for groceries in cash only. Mobile banking, credit cards and digital wallets have revolutionized the way people manage their finances.
Global fintech industry
A report released in May last year by the Boston Consulting Group (BCG) forecasts that the fintech sector is expected to grow more than six times to reach a size of $1.5 trillion by 2030, compared to its current level of $245 billion. The sector’s share of the financial services industry is also expected to increase from 2% to 7% during this period, with Asia Pacific expected to overtake the United States to become the world’s largest fintech market.
The fintech industry in Asia Pacific is expected to grow 27% by then, with China, India and Indonesia leading the way due to their large unbanked populations and large number of small businesses in these country. North America, particularly the United States, however, will continue to remain a critical market and be at the forefront of innovation in the industry. The market is also expected to witness significant growth in emerging economies in Latin America and Africa.
That said, even though the market is expected to grow in the coming years, 2023 was a tough year compared to the boom of previous years. According to KPMG, this is the slowest year in the global fintech sector since 2017, with approximately $114 billion in global investments through 4,547 agreements. Financial experts say high inflation and ongoing military conflicts in Ukraine and the Middle East have led investors to become cautious in their spending.
The decline in fintech investments was seen across various regions, with Asia Pacific seeing its biggest decline, from $51 billion in 2022 to just under $11 billion in 2023. Investments have also halved in Europe, the Middle East and Africa, from $49.6 billion to $24.5 billion. . In the Americas, investment slowed by 22% during the period. For 2024, US rating agency Fitch Rating forecasts mixed results for fintech companies in North America and Europe, with revenue growth expected but EBITDA margins likely to remain subdued.
Rise of the AI generation in Fintech
Generative AI, or Gen AI, has taken much of the global financial services industry by storm. According to McKinsey, this technology is expected to add between $200 billion and $340 billion to the market over the next few years. Fintech companies are actively following the trend and ensuring they adapt to the capabilities and risks of the AI generation. Between 2022 and 2023, the share of fintech companies that have improved their artificial intelligence capabilities increased from 30% to 70%. On the other hand, around 90% of fintech companies surveyed in March this year by McKinsey reported having centralized Gen AI functions in place. According to experts, the use of this technology is poised to make fintech companies more agile and efficient in the coming years.
Methodology
Insider Monkey’s database of 920 hedge funds was evaluated for the first quarter of 2024. We have chosen the 10 best fintech stocks to buy now based on hedge fund sentiment towards each stock. Stocks are listed in ascending order of hedge fund holders in each company.
Why are we interested in stocks that hedge funds are piling into? The reason is simple: our research has shown that we can outperform the market by imitating the stocks selected by the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Fiserv, Inc. (NYSE:FI)
Number of hedge fund holders: 69
American technology and financial services company Fiserv, Inc. (NYSE: FI) is fifth on our list of best fintech stocks to buy with 69 hedge fund holders, according to Insider Monkey. The Company provides financial services to customers in a variety of financial industries, including banks, credit unions, thrift stores, mortgages, insurance companies, leasing companies and retailers. In September last year, the Fortune 500 company landed the top spot in the IDC FinTech Top 100 2023 ranking of global fintech providers.
Over the past year, Fiserv, Inc. (NYSE: FI) has experienced many ups and downs. While its revenue and operating margins have increased on the one hand, its share price has remained volatile and marked by fluctuations, having fallen by 7% since April 1. Analysts cite rising inflation and fierce competition in the fintech sector as reasons. for volatility. However, they remain optimistic about the company’s financial future, with at least 35 analysts maintaining a “Strong Buy” rating for Fiserv, Inc. (NYSE: FI).
global FI ranks 5th on our list of the best fintech stocks to buy. You can visit 10 Best Fintech Stocks to Buy Now to see other fintech stocks that are on hedge funds’ radar. While we recognize the potential of IF as an investment, our conviction lies in the belief that IA stocks hold more promise in terms of higher returns in a shorter time frame. If you’re looking for an AI stock that’s more promising than FI but is trading at less than 5x earnings, check out our report on the cheapest AI stock.
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Disclosure: None. This article was originally published on Initiated Monkey.