An updated edition of the Sept. 2, 2025 article.
Fintech is rapidly transforming the global financial landscape by embedding financial services into everyday experiences, enabling programmable money and leveraging artificial intelligence(AI) to personalize interactions and strengthen risk management. The result is a more open, efficient ecosystem marked by lower costs, broader access and innovative business models that challenge traditional institutions.
A defining shift is the rise of embedded finance, which seamlessly integrates payments, lending, insurance and investments into non-financial platforms — reducing distribution costs and enhancing customer loyalty. Similarly, open banking and open finance empower customers with control over their data, fostering faster onboarding, customized products and competition driven by user experience rather than scale. Meanwhile, programmable money powered by stablecoins and real-time payment rails is revolutionizing treasury, payroll and cross-border transfers through instant settlement and API-first workflows.
AI has become the financial industry’s new operating system. Beyond analytics, AI now drives decision-making in underwriting, cybersecurity and compliance, thereby delivering hyper-personalized experiences while improving efficiency and resilience. As fraud risks grow and regulatory expectations tighten, industrialized AI is proving to be indispensable.
Looking ahead, stablecoins, decentralized finance (DeFi) protocols and AI-powered services are transitioning from experimentation to regulated adoption. The future financial system will be open, data-permissioned, AI-native and instant in settlement. Long-term winners will be fintechs and incumbents that master interoperability, programmable finance and trusted customer relationships. So, stocks like Upstart Holdings, Inc. UPST, Affirm Holdings, Inc. AFRM and Nu Holdings Ltd. NU are grabbing investor attention.
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Upstart, an AI-driven fintech disruptor, pioneered the application of AI to lending, enabling a system that is more efficient and accurate for both borrowers and lenders. Unlike traditional lenders that rely on FICO scores, the company uses machine learning (ML) to evaluate non-traditional data points, like education and employment history, allowing it to approve loans for a broader range of borrowers and, at the same time, maintain strong credit performance.
Upstart does not originate loans itself but acts as an intermediary, earning revenues through referral fees from lending partners, loan servicing fees and income from loan sales and securitization. Beyond personal loans, the company has expanded into auto lending and is exploring opportunities in small business loans and mortgages. This will create diverse revenue streams, boosting its long-term potential.
The company’s direct-to-consumer lending platform, Upstart.com, enables individuals to apply for loans directly, funded by partner institutions or institutional investors. Its competitive edge lies in its AI-driven approach, which speeds up loan approvals and provides access to credit for underserved borrowers. By leveraging automation and data analytics, the company aims to disrupt traditional lending and make borrowing more inclusive and efficient.
The Zacks Consensus Estimate for UPST’s 2025 sales and EPS implies year-over-year growth of 51.4% and 930%, respectively. The firm carries a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Affirm Holdings operates as a leading fintech player in the Buy Now, Pay Later (BNPL) and embedded finance space. The company enables consumers to split purchases into installments at the point of sale, offering a transparent alternative to credit cards with no hidden fees or compounding interest. Through data-driven underwriting and real-time credit assessment, it manages risk dynamically, while partnerships with major retailers like Amazon and Shopify have helped it gain significant market reach.
In the broader fintech landscape, Affirm Holdings exemplifies the shift toward embedded finance, where financial services are integrated directly into non-financial platforms. Competing with firms like Klarna and Afterpay, the company differentiates itself by focusing on larger-ticket purchases and flexible repayment options, supported by a robust capital model that relies on securitization and institutional funding.
While increasing competition in BNPL and tightening regulation could affect AFRM’s margins, managing funding costs and maintaining strong unit economics remain vital for sustainable growth. Despite these headwinds, the company’s technology-driven model and focus on transparency position it as a key innovator redefining consumer credit within the evolving fintech ecosystem.
The Zacks Consensus Estimate for AFRM’s fiscal 2026 sales and EPS implies year-over-year growth of 23.9% and 473.3%, respectively. The company carries a Zacks Rank of 3.
Nu Holdings is reshaping traditional finance in Latin America by targeting underserved and digitally native consumers with a broad suite of app-based services across lending, banking and investing. As of June 30, 2025, the company amassed a staggering 123 million customers, a clear signal that its influence on the region’s financial future is deepening rapidly.
Leveraging a digital-first, highly scalable model, Nu Holdings has reduced operational costs while boosting efficiency and accessibility. This strategy not only disrupts legacy banking structures but also promotes financial inclusion in markets long underserved by traditional players. Its flagship platform, NuBank, has become one of the most trusted and recognized financial brands in Latin America. Ongoing digital adoption across the region is expected to further accelerate its growth trajectory.
NU’s diversified revenue streams, lending, interchange fees and marketplace services, offer both resilience and scalability. Credit cards and personal loans remain strong contributors, supporting the platform’s monetization and customer engagement efforts.
In a space where many Fintechs prioritize rapid growth over profitability, Nu Holdings stands out for balancing scale with financial discipline. With continued innovation, disciplined execution and a growing footprint across emerging economies, this Zacks Rank #2 (Buy) firm is not just expanding its reach, it’s establishing itself as a long-term leader in the global digital finance revolution.
The Zacks Consensus Estimate for NU’s 2025 sales and EPS implies year-over-year growth of 32.2% and 24.4%, respectively.
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Nu Holdings Ltd. (NU): Free Stock Analysis Report Upstart Holdings, Inc. (UPST): Free Stock Analysis Report Affirm Holdings, Inc. (AFRM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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