The industry of financial services has experienced an enormous transformation over the last times, due to technological advancements. From the mobile banking experience to transactions with blockchain technology technological advancements have revolutionized how we deal with our financial affairs. The transformation is what has led to the concept “FinTech,” which stands for financial technology.
One of the best instances of this could be the FTSE FinTechZoom Index. Simply put, it is an index which tracks the progress of the top 100 firms that are listed in the London Stock Exchange (LSE) who provide the financial sector with technology. It began trading in September of 2020, and immediately gained the interest from financial experts.
The Emergence of FinTechZoom
The concept of establishing an exclusive index of FinTech businesses was inspired by the rising need for services in the field of financial technology. As more and more customers opted for internet banking and digital payments, the traditional banks were facing fierce competition from agile and innovative startup. They focused on using technologies to provide financial services that are available, reliable as well as cost-effective.
In the year 2020 in 2020, the LSE collaborated with China Securities Index Co Ltd (CSI) to create an index called the FTSE China A Innovative Technologies Index. It marked the start of an era of new the world of FinTech investments as it offered investors the opportunity to monitor the progress of leading Chinese firms that provide the most cutting-edge technology for financial services.
The success of FTSE China A Innovative Technologies Index resulted in the development of a comparable index that is geared towards British-based FinTech firms, dubbed FTSE 100 FinTechZoom. The index is owned by both the LSE as well as CSI the constituents of which are selected from the FTSE 100 index.
The Benefits of Investing in FTSE 100 FinTechZoom
Making a bet in the FTSE 100 FinTechZoom has become an appealing feature to many investors due to the potential of significant returns and benefits of diversification. A few of the main advantages are:
- Exposition to Emerging technologies: The businesses which are included in the index are on the cutting edge of technological developments in the world of finance. It gives investors the chance to benefit from the opportunities for growth offered by the newest technologies.
- Diversification: Because the index consists of businesses from different industries including banks, insurance and payment, it provides diversification benefits for investors. This lowers the risk that comes when investing in one firm or industry.
- Performance: Performance: The FTSE 100 FinTechZoom has performed excellently since its introduction and has outperformed other major indexes such as those of the S&P 500 and Dow Jones Industrial Average (DJIA). In the middle of March 2021, the FTSE 100 FinTechZoom had earned nearly double that from the S&P 500 in a span that lasted six months.
The Top Constituents of FTSE 100 FinTechZoom
In March 2021 the five top constituents of the index were:
- Sage Group PLC: A British firm that develops enterprise-level software and gives payroll and accounting services.
- Hargreaves Lansdown PLC: A Financial services firm offering the investment platform along with pension administration as well as consulting services for individual customers.
- the LSEG plc. London Stock Exchange Group is a leading global financial market infrastructure service provider.
- Experian PLC is an Irish firm that offers consumer credit information which provides data analytics as well as decision-making tools for companies.
- Intuit Inc.: an American accounting and financial software firm accurate famous for its flagship product QuickBooks that is utilized by small-sized businesses to handle accounting requirements.
The Future of FTSE 100 FinTechZoom
The future of the index appears promising because the demand for technology-related financial services is predicted to increase. As technology advances within areas like artificial intelligence, blockchain, as well as digital banking, the firms which are part of this index have the potential to profit from these developments.
Furthermore, with the current COVID-19 epidemic accelerating the transition toward digital payment and banking on the internet as well, the demand for technologies for financial transactions is going to improve. This offers a fantastic possibility for investors wanting to invest in the sector.
Conclusion
In the end, the FTSE 100 FinTechZoom is a an indication of the fast-growing nature of technology for financial services and their influence on the conventional financial service. With more firms continuing to develop and implement technology-based solutions, it’s likely to witness an even greater rise in the amount of indexes focusing on the performance of these companies. Its potential to provide significant returns as well as diversification benefits as well as diversification benefits, making a bet in an index like the FTSE 100 FinTechZoom can be an attractive investment opportunity for investors seeking for a way to acquire an exposure in this fast expanding industry.