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The world of fintech is getting bigger every year. The sector's growth is being fueled by significant factors such as more powerful technological advancements in the field, greater accessibility, and reduced costs, all of which are driving consumer demand even higher.
According to a report by exploding topics, the estimated value of the global fintech market in 2023 is $165.17 billion. As more individuals switch from traditional in-person banking to modern alternatives like e-wallets, mobile banking, and cryptocurrencies, fintech is quickly reaching new heights.
Interestingly, the fintech market increased from approximately $105.41 billion in 2021 to over $131.95 billion in 2022 in just one year. According to projections, the fintech sector might reach $324 billion by 2026 and grow by an average of 25.18% annually.
First-Half 2023 Performance
As per KMPG, the first half of 2023 posed challenges for the global fintech market, as both the total funding amount and the number of deals declined. Funding dropped from $63.2 billion in the second half of 2022 to $52.4 billion in the first half of 2023.
In the initial six months of 2023, the United States took the lead in fintech funding, allocating a substantial $34.9 billion. This amount constituted more than two-thirds of the worldwide total of $52.4 billion. Furthermore, within the same timeframe, the United States was the base for five out of the seven fintech deals valued at over $1 billion.
Within the broader region, fintech funding in the Americas also experienced growth, rising from $28.9 billion during the latter part of 2022 to $36 billion in the early months of 2023.
Given the ongoing geopolitical and macroeconomic uncertainties, it's anticipated that fintech funding might remain subdued in the second half of 2023. However, if the market stabilizes, there's a possibility of cautious improvement in fintech funding. One promising area for increased investor interest in the latter half of 2023 is artificial intelligence.
AI and Fintech
According to ResearchAndMarkets.com, AI in the fintech market will witness a remarkable CAGR of 23.6% from 2023 to 2028. Significant factors contributing to this expansion include the rising adoption of AI in finance to counter online banking fraud, as well as the increasing trend of digitalization in the financial, banking and insurance sectors.
ETFs in Focus
Investors looking to tap into the growth prospect of the fintech sector can look into the following ETFs.
Ark Fintech Innovation ETF employs an active strategy and has a basket of 31 securities. The fund has amassed an asset base of $913.26 million and charges an annual fee of 0.75%. ARKF has major allocations to the North American region with a share of 76.37% of the funds. It has invested around 61.73% in large-cap securities.
Ark Fintech Innovation ETF has gained 37.77% year to date. However, ARKF has witnessed a sharp decline of 17.46% over the past month (as of Aug 18).
Capital Link Global Fintech Leaders ETF (KOIN - Free Report)
Capital Link Global Fintech Leaders ETF seeks to track the performance of the AF Global Fintech Leaders Index with a basket of 38 securities. The fund has gathered an asset base of $13.16 million and charges an annual fee of 0.75%. KOIN has major allocations to the United States with an exposure of 42.80%, followed by Japan with 12.93%. The fund has invested about 74.09% of its assets in large-cap securities, decreasing the fund’s volatility.
Capital Link Global Fintech Leaders ETF has gained 6.77% year to date but has fallen by 5.14% over the past month (as of Aug 18).
Global X FinTech ETF seeks to track the Indxx Global FinTech Thematic Index with a basket of 63 securities. The fund has gathered an asset base of $381.63 million and charges an annual fee of 0.68%. KOIN has major allocations to the United States with an exposure of 71.6%. The fund has invested about 49.05% of its assets in large-cap securities, followed by 42.05% in mid-cap securities.
Global X FinTech ETF has gained 9.24% year to date but has fallen by 14.16% over the past month (as of Aug 18).
BlackRock Future Financial and Technology ETF (BPAY - Free Report)
BlackRock Future Financial and Technology ETF employs an active strategy and has a basket of 36 securities. The fund has amassed an asset base of $4.23 million and charges an annual fee of 0.70%. ARKF has major allocations to the United States with a share of 65.94% of the funds. The fund has invested around 3929% in large-cap securities, followed by 26.64% in small-cap securities.
BlackRock Future Financial and Technology ETF has gained 3.92% year to date. However, BPAY has witnessed a decline of 4.27% over the past month (as of Aug 18).
ETFMG Prime Mobile Payments ETF seeks to track the Prime Mobile Payments Index with a basket of 52 securities. The fund has gathered an asset base of $404.82 million and charges an annual fee of 0.75%. KOIN has major allocations to the United States with an exposure of 75.72%. The fund has invested about 51.13% of its assets in large-cap securities, followed by 30.34% in mid-cap securities.
ETFMG Prime Mobile Payments ETF has gained 3.85% year to date but has witnessed a sharp decline of 10.06% over the past month (as of Aug 18).
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)
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A Guide to Fintech ETF Investing
The world of fintech is getting bigger every year. The sector's growth is being fueled by significant factors such as more powerful technological advancements in the field, greater accessibility, and reduced costs, all of which are driving consumer demand even higher.
According to a report by exploding topics, the estimated value of the global fintech market in 2023 is $165.17 billion. As more individuals switch from traditional in-person banking to modern alternatives like e-wallets, mobile banking, and cryptocurrencies, fintech is quickly reaching new heights.
Interestingly, the fintech market increased from approximately $105.41 billion in 2021 to over $131.95 billion in 2022 in just one year. According to projections, the fintech sector might reach $324 billion by 2026 and grow by an average of 25.18% annually.
First-Half 2023 Performance
As per KMPG, the first half of 2023 posed challenges for the global fintech market, as both the total funding amount and the number of deals declined. Funding dropped from $63.2 billion in the second half of 2022 to $52.4 billion in the first half of 2023.
In the initial six months of 2023, the United States took the lead in fintech funding, allocating a substantial $34.9 billion. This amount constituted more than two-thirds of the worldwide total of $52.4 billion. Furthermore, within the same timeframe, the United States was the base for five out of the seven fintech deals valued at over $1 billion.
Within the broader region, fintech funding in the Americas also experienced growth, rising from $28.9 billion during the latter part of 2022 to $36 billion in the early months of 2023.
Given the ongoing geopolitical and macroeconomic uncertainties, it's anticipated that fintech funding might remain subdued in the second half of 2023. However, if the market stabilizes, there's a possibility of cautious improvement in fintech funding. One promising area for increased investor interest in the latter half of 2023 is artificial intelligence.
AI and Fintech
According to ResearchAndMarkets.com, AI in the fintech market will witness a remarkable CAGR of 23.6% from 2023 to 2028. Significant factors contributing to this expansion include the rising adoption of AI in finance to counter online banking fraud, as well as the increasing trend of digitalization in the financial, banking and insurance sectors.
ETFs in Focus
Investors looking to tap into the growth prospect of the fintech sector can look into the following ETFs.
Ark Fintech Innovation ETF (ARKF - Free Report)
Ark Fintech Innovation ETF employs an active strategy and has a basket of 31 securities. The fund has amassed an asset base of $913.26 million and charges an annual fee of 0.75%. ARKF has major allocations to the North American region with a share of 76.37% of the funds. It has invested around 61.73% in large-cap securities.
Ark Fintech Innovation ETF has gained 37.77% year to date. However, ARKF has witnessed a sharp decline of 17.46% over the past month (as of Aug 18).
Capital Link Global Fintech Leaders ETF (KOIN - Free Report)
Capital Link Global Fintech Leaders ETF seeks to track the performance of the AF Global Fintech Leaders Index with a basket of 38 securities. The fund has gathered an asset base of $13.16 million and charges an annual fee of 0.75%. KOIN has major allocations to the United States with an exposure of 42.80%, followed by Japan with 12.93%. The fund has invested about 74.09% of its assets in large-cap securities, decreasing the fund’s volatility.
Capital Link Global Fintech Leaders ETF has gained 6.77% year to date but has fallen by 5.14% over the past month (as of Aug 18).
Global X FinTech ETF (FINX - Free Report)
Global X FinTech ETF seeks to track the Indxx Global FinTech Thematic Index with a basket of 63 securities. The fund has gathered an asset base of $381.63 million and charges an annual fee of 0.68%. KOIN has major allocations to the United States with an exposure of 71.6%. The fund has invested about 49.05% of its assets in large-cap securities, followed by 42.05% in mid-cap securities.
Global X FinTech ETF has gained 9.24% year to date but has fallen by 14.16% over the past month (as of Aug 18).
BlackRock Future Financial and Technology ETF (BPAY - Free Report)
BlackRock Future Financial and Technology ETF employs an active strategy and has a basket of 36 securities. The fund has amassed an asset base of $4.23 million and charges an annual fee of 0.70%. ARKF has major allocations to the United States with a share of 65.94% of the funds. The fund has invested around 3929% in large-cap securities, followed by 26.64% in small-cap securities.
BlackRock Future Financial and Technology ETF has gained 3.92% year to date. However, BPAY has witnessed a decline of 4.27% over the past month (as of Aug 18).
ETFMG Prime Mobile Payments ETF (IPAY - Free Report)
ETFMG Prime Mobile Payments ETF seeks to track the Prime Mobile Payments Index with a basket of 52 securities. The fund has gathered an asset base of $404.82 million and charges an annual fee of 0.75%. KOIN has major allocations to the United States with an exposure of 75.72%. The fund has invested about 51.13% of its assets in large-cap securities, followed by 30.34% in mid-cap securities.
ETFMG Prime Mobile Payments ETF has gained 3.85% year to date but has witnessed a sharp decline of 10.06% over the past month (as of Aug 18).
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)