The value of fintech stocks continues to skyrocket, making fintech businesses an increasingly valuable investment.

In the first three quarters of 2021, investments poured into fintech companies, almost doubling total fintech investments in all of 2020, according to new reports from PitchBook.

Fintech startups have matured in the last few years, with the biggest companies now major players in the venture capital sector. That means the newest fintech businesses can expect massive funding rounds as investors double-down on their faith in the staying power of fintech in the stock market.

The conventional wisdom about fintech for the last few years has been that the industry would never become a major player in the financial services sector. That idea has now been thoroughly disproven by the heavy investment of the last year and a half.

Many of the biggest fintech players have become desirable for acquisition by traditional financial institutions looking to upgrade their increasingly obsolete systems. Fintech companies have seen spectacular success by creating products that appeal to modern consumers for their convenience while still proving themselves a viable alternative to the traditional channels for finance.

Several of the biggest fintech players have seen massively successful funding rounds in 2021.

Those include:
  • Stripe, which raised $600 million, and saw its valuation rise to $95 billion
  • FTX, which raised $900 million and now has an $18 billion valuation
  • Chime, which raised $750 million for a $25 billion valuation
While some still fear that fintech companies represent new competition for traditional banking institutions, it’s more likely that they are simply a new part of the financial ecosystem, said Bardya Ziaian, a Canadian entrepreneur who has founded several fintech companies.

Traditional banks like Citigroup and JPMorgan have recently reported continued growth and value in the stock market even as fintech has received massive funding from investors who see them as the future of the financial industry.

“It shouldn’t be that surprising,” Bardya Ziaian said. “Most people now use some kind of digital payment system that makes the most basic transactions more convenient, streamlined and transparent.”

While fintech has set the stage for a financial revolution with its more customer-centric approach to banking, there are other disruptive elements still to come.

The next phase of fintech growth will likely be about leveraging the power of the blockchain. That’s one of the main conclusions from Visma | Onguard’s Fintech Barometer, which has several years of data about fintech companies.

The number of organisations aiming to undergo digital transformation within the next 6 to 11 months has more than doubled from 17 percent in 2019 to 35 percent in 2021, according to Visma’s research.

Of those, about two-thirds, or 65 percent, have either already adopted the technology or figured out the first steps for adoption. That’s an increase from 2018 when the number was 51 percent.

The research clearly shows that the financial industry is increasingly aware of the necessity of adopting fintech services and other digital transformation strategies, especially given the economic impacts of the pandemic, according to an article in Fintech Magazine.

“Four years ago, nobody could have predicted the kind of world we’d be living in today, and our findings have really demonstrated just how much of an impact the challenges of the last year have had on the attitudes of finance professionals towards issues like innovation and fintech,” said Raymon van Viegen, CFO at Visma | Onguard. “This translates to a growing trend towards digitisation, data-driven insights and a growing revolution in fintech adoption, with more organisations enthusiastically undertaking digital transformation initiatives within shorter timeframes than in previous years.”