Heard of fintech? If you read the news with any consistency, then you’ve surely come across the term by now. 

Fintech, or financial technology, is quickly transforming the banking industry, and bringing significant changes to many other areas of the global economy as well, especially eCommerce. 

As of February 2020, there were 8,775 fintech startups in the USA, more than any other region, though the US is by no means the only country embracing this nascent industry. There were about 7,385 such startups across Europe, the Middle East regions, and Africa.

The industry has only grown since then, aided in part by a pandemic that created a sudden and global premium for remote services, especially remote financial services. 

Or as Forbes put it: “Frenzied at-home trading and sky-high asset valuations became hallmarks of the stock market’s pandemic year, fueling a period of explosive growth for a crop of investing-focused fintech companies at the center of it all.”

Though dismissed as a fad just a few years ago, now the biggest financial firms and publications have daily stories about how and where to invest in fintech. 


Because fintech drastically lowers the service costs of many financial transactions while simultaneously providing streamlined outcomes with automated financial operations, said Bardya Ziaian, the CEO of Sittu Group and an innovator in the Canadian fintech industry. 

So for starters, fintech is cheaper for many customers than conventional banking. It’s also part of the larger trend of cashless transactions. 

Most people, especially in the younger generations, now eschew the use of cash in most transactions, Bardya Ziaian said. Whether it’s a morning smoothie or online banking, the use of cash declines every year. Fintechs will benefit from this change as they flourish when more transactions take place on their platforms. 

Digital payments actually comprise 25 percent of the fintech ecosystem. And it’s not like smart phones are going anywhere. According to TechCrunch, about 90 percent of smartphone users make payments on their phone.

The other salient point is about data. The fintech industry has been an early adopter of data-gathering, using it primarily to draw conclusions about customer spending patterns. While many media outlets continue to question the ethics of data-mining, the reality embraced by every major eCommerce retailer is that customers now expect online businesses to offer personalization — and that requires data. 

“Fintechs have proven themselves extremely adept at leveraging the huge amounts of data out there to provide solutions that modern consumers want,” Ziaian said. “This trend isn’t going anywhere. It’s the future.”

So we’ve established that fintech is here to stay and will continue to grow in future years. 

Where should you, the investor, start putting their money? 

You could start with one of the fintech companies you’re already using in your daily life. The main services in fintech are: payment processing, financial software, online and mobile banking, online and peer-to-peer (P2P) lending, and financial services, and person-to-person payments. 

Unless you’ve been living under a rock the last 10 years, you’ve likely already embraced at least one or more of those services. 

That’s why when Motley Fool announced their Top 5 fintech companies for investing, the candidates weren’t newcomers, but fintech companies that have shown reliable growth for a number of years. 

The picks include Square, which you’ve likely used at a coffee shop or farmers market to pay for small items. Square processes card payments at a rate of over $100 billion, according to Motley Fool, it has a thriving small-business lending platform, as well as increased use among larger vendors. 

There’s also PayPal, founded by now-richest-person-in-the-world Elon Musk. Now the leader of online payments, it also owns person-to-person payment platform Venmo, and is venturing into the eCommerce space as well. 

The third pick from Motley Fool is the most interesting: Goldman Sachs. It’s an odd choice for fintech, given that Goldman Sachs is one of the oldest companies in conventional banking. But the company is now embracing fintech, 

“And unlike most other fintechs, Goldman’s massive investment banking business tends to be better in turbulent markets, making this a less cyclical fintech stock,” Motley Fool wrote. 

There’s plenty to explore about fintechs and investing, but this should help you get started.