A number of ASX fintech stocks caught the market’s attention in 2020, as some strong sector narratives emerged in the wake of the COVID-19 crisis.
Chief among them was the rise of the buy now, pay later (BNPL) sector, which caught a huge tailwind from the ecommerce boom as the pandemic caused drastic changes in the way people shop.
B2B payments also saw plenty of activity, with a number of ASX players now competing to get a slice of the multi-billion dollar payments pie as new technology disrupts the sector.
Looking back on the year that was, we’ve provided a summary analysis of each sector with the price action to Friday December 18 — both year-to-date returns, as well as the change since the COVID-19 nadir on March 23.
BNPL
Code Company Price %Yr % – March 23 MktCap APT Afterpay Limited 111.29 280.1% 1150.0% $31.7B SZL Sezzle Inc. 6.4 184.4% 1524.0% $609.8M OPY Openpay Group 2.5 88.7% 622.0% $224.1M SPT Splitit 1.18 71.4% 463.0% $425.1M Z1P Zip Co Ltd. 5.64 56.7% 344.0% $2.9B LBY Laybuy Group Holding 1.34 -5.0% N/A $242.5M HUM Humm Group Limited 1.16 -40.2% N/A $576.0M ZBT Zebit 1.02 -32.0% N/A $96.3M
With the early success of Afterpay (ASX:APT) and Zip Co (ASX:Z1P), the ASX has become home to another six BNPL stocks.
Investors have responded positively to top-line growth rates in the sector, as a number of BNPLs reported a surge in new customers and transaction volume in the wake of the pandemic.
With that top-line growth yet to translate into net profits, BNPL has also become a key talking point among investors.
Will growth rates slow as competition heats up and regulators enforce stricter rules around credit provision and surcharge rules?
Or has the sector been the catalyst for fundamental changes in how consumers pay for goods and services?
Heading into 2021, investors are likely to be keeping a close eye on trading updates and signs of industry consolidation, to see whether the post-pandemic growth rates look sustainable over the medium term.
B2B payments
Code Company Price %Yr % – March 23 MktCap IP1 Int Payment Tech Ltd 0.03 212.2% 867.0% $16.6M CWZ Cashwerkz Limited 0.35 105.9% 133.0% $63.5M 9SP 9 Spokes Int Limited 0.024 50.0% 144.0% $34.3M EML EML Payments Ltd 4.38 -1.4% 230.0% $1.5B TYR Tyro Payments 3.18 -16.4% 185.0% $1.6B QFE Quickfee Limited 0.41 18.8% 193.0% $80.6M CCA Change Financial Ltd 0.13 7.9% 124.0% $52.4M CRO Cirralto 0.036 414.0% 1700.0% $61.1M IOU IOUPay 13 1200.0% 1200.0% $58.6M NOV Novatti 24.5 23.0% 188.0% $55.7M
By the end of 2020, there were nine companies in the payments space looking to build out business models with both a domestic and regional focus across the Asia-Pacific.
There’s some crossover with BNPL, with payments companies such as IOUPay (ASX:IOU) including a BNPL offering as part of their product mix.
To try achieve scale, many companies in the space have taken partnership approach, either joining forces with other ASX companies are coming on board with the global payments giants to enhance distribution.
Across the board, ASX payments small caps outperformed in 2020. But like most sectors, investors that got in at the bottom of the COVID-19 cycle would’ve outperformed, as all 10 companies on the Stockhead list posted gains of at least 100 per cent.
Lending
Code Company Price %Yr % March 23 MktCap PGL Prospa Group 0.89 -50.3% 76.0% $144.0M WZR Wisr Ltd 0.205 20.6% 193.0% $219.3M MME Moneyme Limited 1.48 -5.7% 136.0% $262.6M MNY Money3 Corporation 2.78 25.8% 241.0% $545.5M HMY Harmoney Corp Ltd 2.5 -29.0% N/A $261.4M PLT Plenti Group Limited 1.02 -39.0% N/A $168.9M CI1 Credit Intelligence 0.03 100.0% 20% $34.6M
Like other fintech sectors, the lending cohort has posted some strong returns for investors that took advantage of the COVID-19 selloff.
But the year-to-date returns were a mixed bag — a possible indicator that investors are yet to fully embrace the value proposition of direct lenders compared to red hot sub-sectors like BNPL.
Like payments players, a number of ASX fintech lenders have used partnerships to build out “capital-light” lending models, where larger banking partners provide the balance sheet muscle to underpin loan books.
Consumer lenders such as Wisr (ASX:WZR) and MoneyMe (ASX:MME) then rely on their fintech platforms to improve transaction turnover.
Investing
Code Company Price %Yr % March 23 MktCap DOU Douugh Limited 0.175 702% N/A $66.4M RZI Raiz Invest Limited 0.95 12% 212% $71.2M
Although a smaller cohort, Douugh (ASX:DOU) and Raiz Invest (ASX:RZI) both use tech platforms to offer customers exposure to savings products and simple investment vehicles.
Douugh got off to a particularly hot start after joining the ASX boards in October, rising from a listing price of 3c to a high of more than 30c.
Raiz bounced back from the March selloff to climb steadily throughout the year, with investors focused on whether it can continue building user numbers for its savings and investment app with a growth strategy focused on south-east Asian markets.
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