Together, the most prominent financial technology companies are now sitting at $1.07 trillion. According to a report by the CNBC, such giants pertain to MasterCard, PayPal, Square, and Visa.
Meanwhile, the “big six” banks, which consists of the Bank of America, Citigroup, Goldman Sachs, JPMorgan, Morgan Stanley, and Wells Fargo, are at less than $900 billion combined together. The shares of these banks, the report noted, have taken a hit due to low interest rates along with fears of increasing loan defaults amid the coronavirus (COVID-19) pandemic.
A significant amount of gains in market value have risen as well. Amid the pandemic, investors have rewarded software companies. Data from the ETFMG Prime Mobile Payments ETF found that mobile payments stocks are up by approximately 10% in 2020. Meanwhile, down about 20% this year is the Financial Select Sector SPDR Fund.
As a response, payment companies have invested in a push toward traditional banking over the recent years. On September 15, 2020, Square announced that it will allow individuals using Cash App to access earnings ahead of schedule. This would, according to the CNBC, incentivize these individuals to sign up for the direct deposition option within the application.
Venmo, which is owned by PayPal, also allows users access to their earned amounts. As for traditional banks, they are under pressure due to fears of the aforementioned increasing loan defaults and low interest rates.
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