The financial services industry is one of the most essential sectors in the world, but it remains littered with legacy processes and barriers to digital transformation. However, emerging technology and the recent artificial intelligence (AI) boom have helped accelerate a fintech market full of potential.
Having recorded a value of $294.74 billion in 2023, the global fintech market is expected to reach $1.152 trillion by 2032, representing a compound annual growth rate (CAGR) of 16.5% during this period.
With a market share of 34% in 2023, America’s dominance in the digital transformation of financial services highlights the potential of Wall Street as a home to the industry’s best fintech prospects.
Moving into the third quarter of 2024, we’re set to see some of these high-potential financial services stocks gain fresh resonance as the expected Federal Reserve interest rate cuts bring greater investor optimism to U.S. markets.
At a time when the barriers to retail investors are falling, and the technology to drive digital transformation in financial services is growing, these three stocks could offer the best growth prospects in Q3 2024.
Robinhood (HOOD)
As a stock that’s already climbed 83.59% in the first half of 2024, Robinhood (NASDAQ:HOOD) has already showcased why it’s an excellent choice for investors willing to build their exposure to cryptocurrency-focused stocks.
Robinhood stands as a leading choice for retail investors seeking to buy and sell stocks alongside cryptocurrencies in the United States, and Wall Street guru Cathie Wood has long been an admirer of the innovative platform.
Although there’s plenty to be excited about for HOOD in terms of the company’s pioneering work in adding a cryptocurrency wallet for users and the recent acquisition of Pluto to incorporate AI tools into the platform, it’s likely to be the firm’s exposure to crypto that makes the difference in Q3 2024.
Robinhood’s outperformance in the first half of 2024 wasn’t driven by the firm’s own fundamentals. Rather, it was powered by the strength of Bitcoin, which won Securities and Exchange Commission approval for the launch of a spot Bitcoin exchange-traded fund (ETF) in January.
In April, Bitcoin underwent its fourth halving event, which actively halves the distribution of BTC to miners and historically sparks a cryptocurrency market bull run. Should this rally take place, Robinhood is likely to experience a significant level of growth, making this stick the perfect option for anyone bullish on the prospects of crypto.
Block (SQ)
Although Block (NYSE:SQ) has fallen 10% in the first half of 2024, the stock remains a key option for investors to add a powerful financial services stock to their portfolios.
Following recent stock downgrades that lowered payments giant to $74 from $82, we may be looking at the perfect discounted rate for investors to buy into ahead of Q3 2024.
Despite this, Block remains a key figure in the payments industry and commands a 13.1% share of total industry revenue in the online payment services landscape.
There are also plenty of strong future prospects for Block as a firm that’s consciously shaped itself to grow into the age of Web 3.0.
Block is a pioneering force in the burgeoning decentralized finance (DeFI) and peer-to-peer (P2P) payments landscape, and these Web 3.0 innovations are likely to pay dividends for the stock’s long-term holders in the future.
With Block ending Q2 2024 some 76.68% adrift of its all-time high value recorded in 2021, the stock’s commitment to financial services innovation suggests that it can recapture its former glory in quarters to come.
Freedom Holding Corp (FRHC)
With a market capitalization of around $5 billion, Freedom Holding Corp (NASDAQ:FRHC) is a great small-cap option for investors to buy and hold in Q3 2024.
Freedom Holding Corp has undergone impressive growth in recent years, and the stock is 416% up between the beginning of 2020 and the end of Q2 2024. Coupled with its attractive capitalization, the signs are good that there’s still room for FRHC to rally on Wall Street.
The best prospect for FRHC growth lies in Freedom24, Freedom Holding Corp’s EU-based broker that offers access to international exchanges and over one million exchange-traded instruments.
Freedom Holding Corp was recognized among Italy and Portugal’s best brokers by Rankia in recent weeks and the firm’s ambitious growth plans throughout European markets and beyond make it a strong long-term opportunity for investors.
The broker’s fundamentals are also a cause for investor optimism. Having doubled its revenue to $1.6 billion for the fiscal year ending March 31, alongside an 82% increase in net revenue to $375 million, it’s clear that the company is actively realizing its lofty ambitions and could be an excellent prospect in Q3 2024.
On the date of publication, Dmytro Spilka did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.