Investing in a Fintech stock requires time and study due to the growth the financial sector is experiencing. Because of this, investors should study the markets or face dire consequences.
In this article:
- A Disclaimer About Public Fintech Companies and Recommendations
- Alibaba Group (NYSE:BABA): A Chinese Giant with Financial Technology Expertise
- Intuit (INTU): One of the Most Well-Known Fintech Companies
- SS&C Technologies (SSNC): A Fintech Stock Most Investors Do Not Know
- Jack Henry & Associates (JKHY): Payment Processors for Financial Institutions
- J.P. Morgan Chase & Co. (JPM): The Banking Titan Is Also A Fintech Giant
- Fintech Companies Inside Your IRA
Fintech Stock | Financial Technology Stock Options Inside Your IRA
A Disclaimer About Public Fintech Companies and Recommendations
The list of Fintech companies in this article doesn’t constitute investment advice. Rather, examples listed here are for informational purposes.
- The stocks listed here have been analyzed by finance websites The Motley Fool and Kiplinger. An investor should review if the purchase or disposal of a Fintech stock aligns with his or her investment philosophy before going even further with the details of the company.
- For investors, knowing the basics and reading frequently asked questions about stock investing can function as a good starting point.
- A Fintech (aka Financial Technology) stock can provide investors exposure to the relatively stable banking and finance sector as well as the volatile tech sector.
- Lastly, any IRA can accept public Fintech stocks, while other stocks traded outside the public markets, like the NYS, can stay inside a self-directed IRA.
1. Alibaba Group (NYSE:BABA): A Chinese Giant with Financial Technology Expertise
Alibaba Group (NYSE:BABA), one of the top 10 most valuable global brands, dominates the massive Chinese market. Known for pioneering “Singles Day,” held on November 11, this massive giant has its dragon claws on every proverbial pie — from e-commerce to retail.
Investors can also categorize BABA as a Fintech company due to its payment processing services as well as its Fintech Holdings company, Ant Financial.
Ant Financial is the world’s highest-valued Fintech company, at $150 billion as of 2017. This Alibaba company also functions as the investing arm of the Chinese titan.
Ant Financial controls and operates Alipay, which is the world’s largest mobile and online payment platform. Also, Ant Financial controls the world’s largest short-term and money market fund as well as a credit rating system for third parties.
Recently, the company started making facial recognition technology, together with other financial technology disruptors that can serve businesses and individuals faster.
Alibaba itself uses financial technology. Dubbed as the “Amazon of China,” Alibaba is known in the West as an online retail giant.
However, with a very active financial technology research team as well as an investing arm, Alibaba can function as a Fintech stock that also provides exposure to the massive Chinese market.
2. Intuit (INTU): One of the Most Well-Known Fintech Companies
Have you ever used QuickBook or heard about TurboTax?
Inuit (INTU) owns and operates these two well-known tax and financial software products. This popular brand accounts for around 95% of its revenue from the United States.
With the complexity of filing for taxes as well as accounting and documenting business income and losses, Intuit serves a niche that other companies like Microsoft have tried to conquer, yet the company has maintained its stronghold.
However, it’s not all happiness and rainbows for Inuit yet; Intuit investigations are still underway due to supposedly misleading statements, as well as questionable marketing practices.
- Intuit claims to provide free tax services and help for those who earn less than $66,000 a year.
- However, reports state that Intuit made finding the free version difficult, which can prompt lower-income taxpayers to use the paid version.
While its brand power and deep pockets may seem to push Intuit up on the Fintech stock hierarchy, there are also opportunities to buy low if the investigation decides unfavorably against Intuit. This is why it’s essential for investors to research not just the fundamentals but also market news when investing in a stock or a sector in general.
3. SS&C Technologies (SSNC): A Fintech Stock Most Investors Do Not Know
SS&C Technologies (SSNC) is a financial technology company that operates globally and serves hedge fund managers, mutual funds, asset managers, and other high net worth financial service providers.
Rather than provide these services themselves, SSNC focuses on a B2B platform. The company makes up-to-date software that helps financial managers and controllers in making decisions.
SSNC has operations and business presence in Asia, Europe, North America, and Australia. With their presence, a lot of hedge fund managers and financial institutions with global or local assets will want to employ their services, which creates a virtuous cycle wherein SSNC grows faster and more managers employing SSNC, which makes it grow faster.
Most of their services and software include:
- Portfolio management
- Administration of funds
- Recording, managing, and analysis of financial data
- Administration of employee benefits
- Transactions for investment firms, especially with settling and trading assets
- Reconciliation of portfolios (cash and stock records)
- Research and development
- Outsourcing of processes and transactions to reduce costs
- Risk and compliance services
SSNC is purely a Fintech stock, which investors may want to buy or avoid depending on their investment philosophies. For those who want a more diversified Fintech stock, SSNC may not be for you.
However, for those who are confident with the financial sector, particularly wealth management, SSNC may prove to be a great candidate for an IRA.
4. Jack Henry & Associates (JKHY): Payment Processors for Financial Institutions
For investors looking for another purely Fintech stock, Jack Henry & Associates can serve as a potential stock candidate. Known mostly in the financial circles, but not the investing public, JKHY provides businesses, banks, and financial institutions all over the world fast processing of transactions, especially payment processing.
How useful is JKHY? For multinational companies with branches all over the world, sending a bank wire may take too much time, as well as carry additional fees.
Using JKHY as the payment processor allows banks, credit unions, and other financial institutions cheaper and faster buying and selling of assets.
Of course, JKHY is also pioneering research and development in the Fintech world, particularly in making transactions faster as well as more secure. With the globalization of the economy and business operations of corporations, investors may find value in JKHY as long as the company continues being profitable.
5. J.P. Morgan Chase & Co. (JPM): The Banking Titan Is Also A Fintech Giant
J.P. Morgan Chase & Co. doesn’t need any introduction for most investors. Being the largest bank in the US, this financial titan is known not just for its investment and banking operations but also for making great strides in financial technology.
This peculiar diversified specialization in finance means that the Fintech arm of JP Morgan will always have at least one client: themselves. As JP Morgan has massive assets under management as well as other horizontally integrated operations in the finance sector (banking, investments, asset management, etc.), they have:
- Massive amounts of data to use for improving current Financial Technology infrastructure
- Market expertise that can be utilized for fast application of already researched technologies
- A great network with companies and entities that may be possible clients, which also helps to make marketing and selling Fintech products easier
JPM has set aside $125 million for Fintech initiatives for nonprofit groups, showcasing its serious and genuine intention for the Fintech sector. With a giant like JPM supporting the growth of the Fintech world, investors may feel that investing in any Fintech stock may work for their portfolio after careful consideration.
On the business side, JPM also organizes conferences with leading Fintech executives to plan more on how the whole Fintech sector moves. For example, on June 26, 2019, JPM organized the NextGEN Payment and Fintech Forum to talk about areas with high potential for growth like payment processing and digital commerce.
Fintech Companies Inside Your IRA
These five Fintech companies constitute just a small number of the massive Fintech sector, especially because most Fintech stocks are also banking or finance stocks, with holding companies in a close second.
It bears repeating that before buying or disposing of a Fintech stock inside your IRA, researching comes first. Investors should ensure their investment aligns with their risk profile to help weed out bad investment decisions that one may regret later.
Having a Fintech stock inside your IRA can do both bad and good. Make the Fintech stock investment a great one by studying more about how IRAs work and the specific details about the company.
Do you have a particular Fintech stock in mind? What research have you done regarding your investment? Share your reasons with us in the comments section below!