Fintech: Thriving In The Era Of Retail Engagement

What Is It All About?

Democratizing access to financial services is happening now. Our strategy focuses on identifying the leaders of this transformation across four verticals: financial software, next-generation financial services, the payment industry, and blockchain technology. We target companies that enable and accelerate financial digitalization, to capture the long-term trends reshaping how individuals and businesses interact with money.

We emphasize “new fintech” as companies founded after the Great Financial Crisis, when traditional banks shed non-core activities. These firms were born in the cloud era, built on APIs, and engineered for scale, enabling them to out-innovate legacy financial institutions.

While these verticals increasingly converge, we publish separate reviews on our Blockchain & Digital Assets and Stablecoins (formerly Mobile Payments) strategies.

A Look In The Rearview Mirror

Our strategy once again outpaced the median of our peer group, extending a three-year period of substantial outperformance. Over the three years ending November 2025, the strategy delivered +132%, compared with +56% for the median peer and +67% for the MSCI ACWI.

This differential is not the result of a single theme; it reflects structural choices embedded in our approach.

What worked

The main performance engine this year was our overweight in neobanks and neobrokers. Retail investors were more active than ever across stocks, ETFs, and options. They accounted for 20–21% of U.S. daily equity volume in 2025 and nearly half of options activity, with zero-commission platforms powering a surge in participation. Retail traders consistently bought the dip (particularly during the April sell-off when institutional investors were de-risking).

This structural engagement supported platforms such as Robinhood in the U.S., Futu in Asia, Nu Holdings in Latin America, and Swissquote in Europe. As customer habits shift toward mobile-first money management, these platforms continue gaining market share from traditional financial institutions. As they grow at the expense of incumbents, the best hedge for a banker’s personal wealth is arguably to invest in a fintech strategy like ours.

Our differentiated exposure to blockchain also continued to add value. While crypto-related equities showed mixed results this year (as discussed in the Blockchain outlook), the overall contribution of our 20% allocation was again positive, whereas most peers remain structurally underexposed to the theme. This positioning reflects our long-standing view that blockchain enhances every financial vertical, from software to brokerage to payments. A clear example is the positive contribution from Coinbase Global Inc, which is increasingly becoming a key partner for traditional financial institutions.

Another decision that supported our relative outperformance was our underweight in the payment industry. Payment stocks remained under pressure throughout the year, as concerns about inflation and a softening job market weighed on consumer sentiment (even though overall consumption levels held up).

What did not work

Our software exposure detracted from performance despite broadly solid fundamentals. Both vertical (sector-specific) and horizontal (multi-industry) software corrected sharply as investors reassessed the impact of AI on the sector. Valuation multiples contracted significantly: the forward P/S ratio for financial software in our universe has reverted to late-2022 levels, while forward P/E ratios near 22x are roughly 25% below the Nasdaq-100 and at lows last seen in 2016.

What We Are Watching

Agentic fintech and AI monetization

2026 will mark the acceleration of agentic AI across financial services. Fintechs and banks are opening their rails to autonomous agents capable of executing tasks, from payments to compliance to treasury, under human-set constraints.

• Payments: Stripe, Visa, and Mastercard have all launched agent-enabled payment frameworks, allowing LLM-powered agents to issue virtual cards, manage invoices, or execute purchases within programmable budgets.
• Commerce: Shopify now allows merchants to sell directly within ChatGPT, and PayPal powers instant checkout through conversational interfaces.
• Banking & Compliance: Bank of America Corp, Wells Fargo & Co, DBS Group Holdings, and others are rolling out autonomous personal-finance assistants, while enterprises deploy GenAI copilots across compliance, reporting, and operations.

Even at Atonra, we are integrating such tools internally, especially within our Fundy platform (e.g., automated strategy construction and rebalancing for bespoke strategies).

Tokenization, an infrastructure upgrade

The second major theme is the continued rise of tokenized financial infrastructure. Tokenized shares, tokenized funds, and on-chain settlement networks are moving from pilot programs into real adoption. As we highlighted in prior publications, tokenization enables programmability, composability, and near-instant settlement, laying the foundation for new forms of financial intermediation, including the integration of DeFi rails.

This is a multi-year transition, but front-runners like Robinhood are gaining valuable know-how and expertise. 2026 should deliver visible progress as more institutions will experiment with tokenized instruments and the regulatory framework evolves.

Where We Stand, And What’s Ahead

The Trump administration’s deregulatory agenda continues to reshape the financial landscape. The rollback of the Consumer Financial Protection Bureau (CFPB) supervision, the reopening of fintech charter pathways, and the overhaul of bank capital requirements all create a more permissive operating environment for lenders, fintech platforms, and digital-asset intermediaries. This regulatory stance is unlikely to reverse in 2026, providing a constructive backdrop for most of our U.S. investment universe.

The broader political configuration also creates an unusually supportive environment for risk assets. America’s 250^th anniversary on 4 July, the Federal Reserve leadership transition (with Powell’s successor likely announced early in the year), and the November midterm elections all align incentives toward policy accommodation. For fintech, the implications are direct: neobrokers and digital lenders are among the most rate-sensitive segments of the equity market. A dovish Fed lowers funding costs, stimulates credit demand, and supports the multiple expansion that growth stocks require. The “political put” we describe in our upcoming macro note therefore applies with particular force to our strategy’s core holdings.

Adding software exposure

We remain attentive to developments in financial software. Despite fears that LLMs could “replace software,” we maintain that AI enhances software; it does not eliminate it. Banks still require a core banking system, insurers a claims engine, lenders an underwriting platform, and corporates a treasury and reporting system. These cannot be built “in a few clicks” through an LLM.

We have repeatedly emphasized the verticalization of software, i.e., domain-specific systems that deliver compliance, scalability, and mission-critical reliability. Should valuations reach depressed levels, this could become a key conviction in 2026 as we are currently reviewing the opportunities within this segment.

Lending cyclicality

Fintech remains a cyclical segment, particularly in lending, where macro conditions and policy dynamics play an outsized role. Lower interest rates are typically viewed as supportive: they ease funding constraints, expand lenders’ net interest margins, and generally stimulate credit formation. Policy initiatives such as the One Big Beautiful Bill were expected to reinforce this trend by boosting student-loan volumes and encouraging refinancing activity.

However, the picture is likely to be more nuanced. Youth unemployment has risen as younger cohorts face increasing competition from AI-enabled labor, dampening near-term credit demand and raising delinquency risks in certain pockets of consumer lending. These opposing forces (rate-driven tailwinds on one side, labor-market pressures on the other) create a more complex backdrop for 2026. Issuers like SoFi, which focus predominantly on prime borrowers and operate with stronger underwriting standards, should continue to gain market share, while exposure to subprime borrowers could create balance sheet surprises for certain alternative lenders.

Regional opportunities

Beyond the “deregulatory” boost from the Trump administration, local regulations continue to create both barriers to entry and diversification opportunities.

Many emerging markets offer structural fintech tailwinds (higher growth, weaker financial infrastructure resulting in low financial inclusion, etc.), although investors should avoid seeking geographical beta blindly. Understanding regional drivers is essential.

A good example comes from China, where pro-consumption stimulus is positive for household credit demand. But new regulations capping interest rates for alternative lenders require caution. Investors may need several quarters of data to assess the impact of these new regulations on business models.

What Would Invalidate This View

Here are monitoring points rather than base-case scenarios, but they define the boundaries of our conviction:

• Regulatory reversal: While unlikely in 2026, a shift in CFPB leadership, renewed crypto enforcement, or a re-tightening of bank capital requirements would undermine today’s supportive operating environment.
• AI displacing software: If AI were to replace (rather than enhance) mission-critical financial software, it would weaken our conviction in vertical software. We see this as a tail risk given compliance and auditability requirements.
• Consumer credit deterioration: A sharper-than-expected weakening in household credit, particularly if youth unemployment rises further, would pressure lending-exposed issuers and subprime lenders.
• Prolonged crypto downturn: A sustained crypto winter would weigh on our 20% blockchain allocation despite the structural support from tokenization and institutional adoption.
• Persistent inflation: If inflation forces the Fed to tighten policy despite political incentives for accommodation, rate-sensitive exposures (neobrokers, lenders, banks, and growth software) would face headwinds.

Our Takeaway

The structural forces reshaping financial services (AI monetization, tokenization, deregulation, and retail engagement) remain firmly in motion. Our strategy is built for this environment: focused on disruptors gaining market share, diversified across the most dynamic fintech verticals, and positioned in companies that are only now entering their monetization phase.

The 2026 political configuration reinforces our view. Rate-sensitive fintech names stand to benefit directly from the policy support embedded in our macro outlook. After three consecutive years of outperformance, one lesson is clear: the future of finance belongs to agile, technology-driven players. We intend to remain invested where that future is being built.