FinTech is Sexy and These Stocks Look Attractive

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The TSX Information Tech index is up 18% over the past year, which is relatively steep in comparison to the lagging 11% drop in the TSX Composite. However it’s the Financial Technology sector that’s grabbing all the headlines, putting the phrase “FinTech” into almost every investor’s mind. Today, we roundup some of our favorite FinTech companies that might sail through the clouds.

Alex Cutulenco | November 23, 2015:

Financial technologies, or FinTech, is somewhat of a nascent industry, which is combining the power of technology and bringing it into the long-standing, brick and mortar financial services industry. FinTech can range from anything such as online payment processing and commercial lending, to online customer onboarding. Technology is revolutionizing the way consumers and businesses transact, by moving it to the Cloud. This has had a major impact on the current state of the financial services industry, as it has the power to lower fees and commissions banks charge, providing for faster processing of lending requests, and making transactions more efficient. The change is making large financial institutions reorganize (as seen with TD Bank Group announcing management changes to its TD Ameritrade division – TD’s online brokerage arm), and possibly think about acquiring FinTech companies, which are stepping on their toes. Today, we roundup some of our favorite FinTech companies that might sail through the clouds.

VersaPay (TSXV: VPY)

Price: $1.25 | Market Cap: $32.2 million

VersaPay is financial technology company that has developed a proprietary SaaS solution, VersaPay ARC, focusing on accounts receivable management designed for mid-sized businesses. The group also offers business and consumer customers a cloud-based credit card and electronic funds transfer service with PayPort and similar services to third-party technology partners via the VersaPay Gateway. Company has generated $5.2 million in revenue over the past 12 months.

IOU Financial (TSXV: IOU)

Price: $0.55 | Market Cap: $33.9 million

IOU Financial is a developer of a proprietary online software that allows small businesses to apply for a working capital loan, via an online process and, if accepted, have the funds transferred to their account within a matter of 24-48 hours. The Company developed an algorithm to access the lender and their ability to pay back the loan, effectively making sure not to give out bad loans to unworthy clients. IOU Financial has been lending to small businesses since 2008 and has funded over $270 million in loans.

Related: See Frank Holmes’ insight into IOU Financial by watching his interview with SmallCapPower >> 

TIO Networks (TSXV: TNC)

Price: $1.72 | Market Cap: $102.6 million

TIO Networks is the leading multi-channel expedited bill payment processor serving the largest telecom, wireless, cable and utility bill issuers in North America. TIO integrates its Transaction Processing System to the accounting back-office of the biller partners (such as AT&T for telephone/WiFi bill payments), which allows billers to post payments accurately and quickly to the appropriate customer accounts. Once integrated with a biller, TIO is able to offer to the billers’ customers the ability to pay their accounts through multiple access points, including self-service kiosks, POS/clerk-assisted locations, smartphone applications and more. The Company has generated $68.3 million in revenues over the past 12 months.

Alex can be reach at: alex@gravitasfinancial.com

Read more analyst insights from Alex Cutulenco