Winners and Losers in the Future of Banking

“Banking is necessary, banks are not,” quipped Bill Gates, nearly 30 years ago. And how right he was…

Approximately 2,500 brick-and-mortar bank branches closed in the U.S. last year.

The good ol’ days of heading to the bank teller with a paycheck in hand are well over.

Employers direct deposit that cash straight into our bank accounts… Friends send us money for lunch with the swipe of a finger… And paying for coffee is as simple as tapping your phone on a card reader.

The world has gone digital, and there’s no turning back: 71% of Americans prefer banking this way, with mobile apps now the number-one preferred banking method above all others.

Traditional banks have adapted to this new reality by offering mobile and online banking. But the truth is, millions of Americans have already realized they can skip those traditional institutions altogether with all-digital banking providers.

In fact, 45% of millennials and Gen Zers report only using digital banking, according to a May BMO survey.

With this comparison from Bankrate, it’s easy to see why:

Who needs a bank teller when you can take care of all your banking needs with just a few taps on your smartphone?

Beyond the obvious convenience factor, digital banks also offer real money-saving advantages for consumers, including significantly higher savings account interest rates and lower fees.

The takeaway: Mobile banking apps have become a “must-have” money management tool for Americans. And as investors, we have an opportunity to capitalize on that demand.

“Fintech” (financial technology) companies are at the forefront of this banking revolution, leveraging advancements like artificial intelligence (AI) and blockchain technology to bolster their offerings with a tech-first approach.

➡️ Related: Could this $2 stock be the No. 1 AI play of the decade? See for yourself.

Many of these companies offer digital wallets where consumers can store and make transactions entirely through their mobile devices – a popular feature that 69% of consumers used for payments over the last year.

But not every fintech company is winning those folks over.

That’s where LikeFolio data gives us an edge in the future of banking.

With our real-time read on social media and web data, we can show you the early winners – and losers – of the new digital banking era.

The Fintech Failing to Impress

Let’s talk about PayPal (PYPL).

The company was one of the first true digital wallet providers, launching its electronic payments system in 1999. More than half of U.S. adults report using PayPal at some point or another. It also has Venmo under its belt.

No doubt, PayPal is at the forefront of this fintech revolution.

But here in 2024, it’s struggling to keep up with increasing competition.

As you learned last week, PayPal trails peers in website visits – logging a 7% drop while those competitors see double-digit growth.

With PYPL shares down 80% since 2021, the company’s still relatively new CEO, Alex Chriss, attempted to drum up some excitement – promising to “shock the world” at a January 25 innovation event.

It worked – for a minute. But PayPal’s short-term rally fizzled when Wall Street realized its announcement was less shocking and more business as usual.

The company rolled out a number of developments that could help it catch up, for instance, integrating AI to speed up checkouts for merchants and consumers.

We’ll keep an eye on PayPal to see whether it can turn things around.

But for now, there are much better options…

The Soaring “Super App”

Like SoFi Technologies (SOFI).

We’ve been pounding the table on SOFI since last year, giving our MegaTrends subscribers an early lead when the stock was trading under $5 a share (in May 2023).

Heck, we named it one of our top stocks for 2024 right here in Derby City Daily.

The company offers a true “one-stop” financial services “Super App” where customers can manage multiple accounts, including loans, credit cards, mortgages, and more.

Unlike PayPal, LikeFolio metrics around SoFi look increasingly bullish. Web visits are up 39% year over year, for one. And consumer mentions of SOFI are growing at an impressive clip, up 62% year over year and 91% quarter over quarter.

SoFi reported its Q4 earnings this week, and thanks to LikeFolio’s predictive metrics, Earnings Season Pass members went in expecting a bullish surprise.

The outcome was even better: SoFi reported its first-ever profit with net income of $48 million – beating Wall Street expectations by a mile.

SOFI shares roared more than 20% higher in a matter of hours.

CEO Anthony Noto wants to make SoFi a top 10 financial institution. And this week, he got one step closer to reaching that goal.

The Bottom Line

SOFI proved why it’s one of our favorite picks for 2024 this week while PYPL continued to stumble.

But the truth is, there are endless ways to play the future of banking – from innovators making decentralized finance (DeFi) possible to “Buy Now, Pay Later” (BNPL) platforms meeting the growing demand for flexible payment options.

We’re tracking it all with LikeFolio’s proprietary consumer insights to spot the winners and losers in real time.

In fact, our stock-picking system just triggered a buy alert on one such player after picking up a significant spike in momentum on Main Street.

See how you can join today to get in on this 150% profit opportunity in the lucrative buy now, pay later arena.

Until next time,

Andy Swan
Founder, LikeFolio

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