3 Fintech Stocks Poised to Profit from the Unbanked Revolution
One of the biggest challenges of identifying which fintech stocks to buy is to identify the company’s which are effectively providing financial services to the world’s 1.4 billion unbanked adults. On top of this, one-third of adults globally are currently underbanked and receive income through sources other than traditional direct debit. Back in 2015, Accenture (NYSE:ACN) declared that the pursuit of financial inclusivity represented a market opportunity worth $380 billion.
The rise of open banking has evolved into a more interconnected open finance movement within the world of fintech. And providing services to underbanked populations has become more effective than ever before.
In a landscape ripe for innovation, let’s take a look at three best fintech stocks to buy to unlock the vast market potential of the world’s unbanked and underbanked communities.
MercadoLibre (MELI)
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Following a Q1 2024 earnings report that saw MercadoLibre (NASDAQ:MELI) earnings jump to an adjusted $6.78 per share on sales of $4.3 billion. The bank, based in Uruguay, experienced a strong price rally on Wall Street.
Moving into Q3 2024, the stock is up more than 10% on the beginning of the year. And MELI’s market capitalization of just under $90 billion suggests that the stock could rally far higher should it unlock the potential of reaching the LATAM region’s 178 million unbanked citizens.
This bodes well for MercadoLibre’s business model. The firm prioritizes next-generation payment and savings platforms within a widely accessible app. This means unbanked users can have access to open banking technology. Providing a service which would be too challenging for traditional financial institutions to supply.
PayPal (PYPL)
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PayPal (NASDAQ:PYPL) has long been identified as an innovator throughout the fintech landscape. Despite the stock’s global popularity, PayPal has struggled severely with the impact of recent global economic uncertainty.
Today, PayPal sits around 80% below its peak share price of $308.53 per share, recorded in July 2021. The impact of historically high inflation and hawkish rate hikes across central banks has contributed to this downturn. However, there appears to be a more positive outlook on the horizon for one of fintech’s most famous names.
Following strong Q1 2024 earnings, PayPal has improved its profit expectations for the year. This development represents a far rosier outlook than its initial prediction of remaining flat. Crucially, total payment volumes using PayPal grew 14% to $403.9 billion in the first quarter of the year, pushing net revenue up by 10% in the process. Supplementing further growth in the future will undoubtedly be PayPal’s long-term commitment to reaching unbanked customers.
Coinbase (COIN)
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Cryptocurrency is one of the most effective ways for unbanked communities to access open banking services. As a Wall Street-listed cryptocurrency exchange, Coinbase (NASDAQ:COIN) has emerged as a trusted option for integrated crypto financial services.
For speculative investors, the appeal of Coinbase is clear. The cryptocurrency exchange has correlated closely with the performance of the wider crypto market since its 2021 Nasdaq listing. COIN posted first-quarter growth of 69% in 2024 as Bitcoin reached fresh all-time highs.
Counting Wall Street icon Cathy Wood as a long-term admirer, Coinbase is expected to become a strong performer over the year ahead. Especially among cryptocurrency enthusiasts who anticipate a Bitcoin rally over the coming months.
For COIN, this could mean that there will be plenty of blue skies ahead for the stock. However, the exchange could also find more resonance as a key alternative option for providing financial services to unbanked communities.
Coinbase features an integrated cryptocurrency wallet app for its users, whereby individuals can hold a wide variety of cryptos. These currencies can then be easily transferred between other crypto wallets and bank accounts.
For countless unbanked individuals, accessing cryptocurrency and decentralized financial services like P2P could prove to be invaluable for both the individual and the stock alike.
On the date of publication, Dmytro Spilka did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
