With many financial technology (fintech) stocks underperforming in 2024, William Blair analysts believe the industry has suffered from poor competitive differentiation, aging tech stacks, and lower-than-appreciated entry barriers. This shift reflects the adverse effects of higher interest rates, questionable strategic rationale for M&A activity, growing competition from vertically integrated POS software, and inconsistent financial performance.
The current environment has pressured legacy fintechs to push more aggressively into vertical market software and innovative merchant-facing solutions. To William Blair analysts, however, only a few organizations have succeeded.
William Blair’s financial services and technology analysts acknowledge that a sharp valuation reset alone is not enough to attract new flows. In Fintech: Taking the Long View, William Blair research analysts Andrew W. Jeffrey, CFA, and Cristopher Kennedy, CFA, explore how fintech companies can combat the current environment, including:
- Why we continue to believe the banktech industry represents an attractive market for long-term investors
- The ways bank technology providers should be able to navigate a potential slowdown in the economic cycle and recent pressures among financial institutions
- How providers that excel in speed, convenience, and brand trust and loyalty may be able to sustain premium pricing and take share
William Blair analysts identified potential drivers for investment returns, including wide, competitive moats augmented by above-industry organic revenue growth at scale and ongoing share gains powered by distinctive software and value-added services.
For more information about William Blair’s financial services and technology research please contact us or your William Blair representative.