5 Changes in Fintech That Affect Bank Stocks

April 9, 2021 • Shannon Flynn


The fintech world is ever-expanding. It brings financial control to the consumers, which can put it at odds with traditional banking at times. As fintech evolves, bank stocks may fluctuate or even drop in value.

The valuation of a stock, consumer demands, provided services and individual growth and success of banks and fintech platforms ultimately influence their stocks. Investors may turn away from bank stocks, for instance, if the risk factors outweigh valuation. This disparity leaves room for newer, healthier stocks from the fintech world to take over.

The following changes in fintech can have the biggest influence on bank stocks.

1. Virtual Payments Turn People from Bank Stock to Apps

The growth of e-commerce throughout the pandemic has been one of the biggest influences on fintech platforms. Through attempting to slow the spread of the COVID-19 virus, people turn away from in-person shopping and instead shop online. In fact, e-commerce grew by $263 billion from 2019 to 2020.

With this growth, virtual payments have become a necessity. To shop online and to send payments immediately, fintech apps are the go-to resources. Apps like PayPal, Venmo and CashApp let consumers send and receive money in an instant, which is a step up from standard bank withdrawals and deposits.

As these virtual payment platforms have taken off during the pandemic, especially, investors could turn away from bank stocks to the ones that are capturing people’s attention — fintech apps.

2. Cryptocurrency Services Make Bank Stocks Outdated

Cryptocurrency is already a big deal. In the cyber world, Bitcoin and Ethereum are some of the biggest names. You can purchase, invest, sell and use these cryptocurrencies in some areas as if they were fiat currencies, like the United States dollar.

However, banks typically don’t offer crypto services. Instead, fintech platforms have taken it upon themselves to start the trend. Notably, PayPal now offers crypto services, which helps grow this new field even more.

With an innovative service like this one, the valuation of fintech stocks will increase, which could then leave bank stocks lacking and blending into the background.

3. Adapting to AI Is the New Normal

Of course, fintech and traditional banking aren’t always separate concepts, so fintech isn’t always going to negatively influence bank stocks. One area where they converge most beneficially is through the integration of artificial intelligence into financial services.

Online banking services and financial apps use AI chatbots to interact with consumers and provide immediate assistance. If you want to transfer money into your savings account, for instance, they can help you do so. They can even make predictions on upcoming financial trends.

This efficient and innovative service can add value to a stock, which draws investors in. Thus, fintech integrates into traditional banking efficiently, too.

4. New Ways to Invest Leave Bank Stocks Behind

In more ways than one, investing is another big change in the fintech world. In terms of investing to save or investing in stocks, fintech platforms cover your every need.

You can use fintech platforms like Acorns to set aside money as you see fit, and when investing in stocks, you can use an app like Robinhood. Acorns and Robinhood let you choose when and how you want to invest your money, which provides unique control for users.

Both of these apps showcase how fintech stands out against traditional banking methods. They will no doubt influence how investors choose their stocks.

5. Mobile Banking Resources Are More Appealing

Mobile banking has become a norm. You can control all your financial transactions right from your phone, from depositing a check to transferring money. However, new services and partnerships expand what’s possible for mobile banking.

For instance, banks can integrate with newer fintech platforms to boost the value of both stocks. JPMorgan Chase & Co. partnered with the financial management platform Mint in 2017. The deal allowed Mint to work with customer data and provide improved budgeting and financing services.

It’s likely that banks will continue to partner with fintech companies when they want to make their stock more appealing to investors.

Fintech is Shaking Things up and Creating New Possibilities

Fintech and banks influence each other. Without banks as the foundation, fintech apps wouldn’t be able to operate. Then, fintech platforms also push banks forward towards more innovation. With the right dynamic, both factors can converge, which will, in turn, boost stocks across the board.