KBW, a Stifel company, and Nasdaq announced the launch of the KBW Nasdaq Financial Technology Index (Ticker: KFTX), a preeminent index designed to precisely track the performance of those companies that leverage technology to deliver financial products and services. Their distribution is nearly exclusively electronic, with limited or no “bricks and mortar,” and their revenue mix is predominantly fee-based. These firms leverage new assets such as advanced data aggregation and analysis, innovative technology, and creative thinking.
FinTech is a relatively new industry designation garnering increasing investor attention. There is a lack of a consistent definition of FinTech in the marketplace and the term is used to describe many different types of companies classified in various industries. KFTX leverages KBW’s expertise in financial services and Nasdaq’s long history creating innovative, market-leading transparent indexes, to provide investors with the most precise index representation of FinTech available in the market today.
The 49 FinTech companies included in the KBW Nasdaq Financial Technology Index represent roughly one-fifth (18%) of the investable domestic financial universe and nearly 4% of the investable domestic equity universe to account for approximately $785 billion in total market cap.
“Technology is changing the way financial services are both created and delivered to the market, and our launch of the KBW Nasdaq Financial Technology Index reflects the investment community’s growing interest in FinTech. KBW has long been recognized as the specialist in financial services, and we are proud to combine our deep-rooted knowledge of FinTech with the expertise of Nasdaq as a leading index provider to bring this unique and innovative index to the market,” said Fred Cannon, Global Director of Research at KBW. “The KFTX provides a relevant benchmark within the FinTech space, which will be valuable to the increasing number of investors closely watching this area.”
Since the financial crisis, the arrival of big data, mobile technology and a somewhat distracted traditional financial services industry have led to the acceleration and interest in FinTech. This has resulted in significant funding flows into the space with investments in the sector increasing from low-teens growth in 2010-2012, to massive 68% and 191% growth, reaching $3 billion and about $10 billion in 2013 and 2014, respectively. The global consulting firm Accenture estimates that more established companies in the financial services industry are the recipients of a slight majority of the overall investments in FinTech, versus upstarts.
The 49 companies included in the KBW Nasdaq Financial Technology Index are:
ACI Worldwide, Inc. (ACIW), Alliance Data Systems Corp. (ADS), American Express Co. (AXP), Bankrate, Inc. (RATE), Black Knight Financial Services, Inc. (BKFS), Blackhawk Network Holdings, Inc. (HAWK), BofI Holding, Inc. (BOFI), Broadridge Financial Solutions, Inc. (BR), Cardtronics, Inc. (CATM), CBOE Holdings, Inc. (CBOE), CME Group, Inc. (CME), CoreLogic, Inc. (CLGX), Dun & Bradstreet Corp. (DNB), Envestnet, Inc. (ENV), Equifax, Inc. (EFX), Euronet Worldwide, Inc. (EEFT), EverBank Financial Corp. (EVER), EVERTEC, Inc. (EVTC), FactSet Research Systems Inc. (FDS), Fair Isaac Corp. (FICO), Fidelity National Information Services, Inc. (FIS), First Data Corp. (FDC), Fiserv, Inc. (FISV), FleetCor Technologies, Inc. (FLT), Global Payments, Inc. (GPN), Green Dot Corp. (GDOT), Intercontinental Exchange, Inc. (ICE), IHS Markit Ltd. (INFO), Jack Henry & Associates, Inc. (JKHY), LendingClub Corp. (LC), MarketAxess Holdings, Inc. (MKTX), , MasterCard, Inc. (MA), Moody's Corp. (MCO), MSCI, Inc. (MSCI), Nasdaq, Inc. (NDAQ), PayPal Holdings, Inc. (PYPL), S&P Global, Inc. (SPGI), SEI Investments Co. (SEIC), Square, Inc. (SQ), SS&C Technologies Holdings, Inc. (SSNC), The Western Union Co. (WU), Thomson Reuters Corp. (TRI), Total System Services, Inc. (TSS), Vantiv, Inc. (VNTV), VeriFone Systems, Inc. (PAY), Verisk Analytics, Inc. (VRSK), Virtu Financial, Inc. (VIRT), Visa, Inc. (V), and WEX, Inc. (WEX).
The Index will be rebalanced quarterly and members will be updated annually on the third Friday in December.
“We are excited to continue our valued relationship with KBW and to partner on a creating a benchmark for the evolving FinTech industry,” said Dave Gedeon, Vice President and Head of Research & Development, Nasdaq Global Indexes. “The index will serve as the benchmark for investors interested in companies that leverage technology to deliver financial products and services and we look forward to collaborating on additional innovative products in the future.”
In addition to the KFTX, there is a total return version of the Index that has been simultaneously launched – KBW Nasdaq Financial Technology Total Return Index (KFTXT).
The KBW Nasdaq indexes are closely watched benchmarks and are widely cited in the media as barometers for the strength of the financial sector. The targeted sectors include banking, asset management, broker/dealer, insurance, financial technology, equity REITs and mortgage finance. With the addition of today’s index, the KBW Nasdaq index family now includes: