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This Fintech stock has grown 1,000% in one year! And it could go even further


Fintech stocks are currently some of the best performing investments on the market. Newcomer UpstartIts (NASDAQ: UPST) share price has risen 1,000% since this time last year. And today at $ 336, it’s up 60% from just last month.

I think it is the source of the rise of artificial intelligence (AI) nding platform. It calls for increasing access to credit while reducing the risk to financial institutions. This seems inconsistent, because the tradition of increased growth has brought with it increasing risks.

But it has already approved .6 13.6 billion, with 71% of them fully automated, without the need for human approval. Of course, this could be another overhyped fintech stock. Or it could change money forever.

The enduring FICO model

In the United States, I An analysis firm that generates credit scores for individuals and businesses. It accesses credit reports from three major credit reference agencies – Expert, Equifax And Trans Union, Which it uses to determine a FICO score. About 95% of the largest financial institutions in the United States use the FICO score, so it is the most used score for consumer decision making.

IC Historical income, payment history, credit usage, and account age are some of the traditional theoretical criteria used to determine a FICO score. But for decades, the system has been accused of injustice on a personal level.

And as an innovative fintech stock, Upstart believes that the FICO model is too limited to accurately measure risk. It believes that banks are losing money by nding high-risk customers on the basis of unreliable arrangements. But they are also missing out on low-risk customers.

Upstart completed a survey in 2019 showing that 80% of Americans have never defaulted on a credit product, while only %% had a ‘FICO score’ for accessing ‘prime credit’. This allows Americans to have better access to consumer credit products. Surprisingly, banks may miss out on high profits from nding to about one-third of the U.S. population.

The revolution of upstart

Upstart is applying its AI model to the multi-trillion dollar credit industry. AI does not just use conventional credit scoring variables. This also takes into account “Obsolete variables” Such as employment history, educational background, banking transactions and cost of living. And because of the AI ​​nature, the technology stock algorithm is constantly being updated with information on loan repayments and defaults.

Upstart claims that it has AI “Allows 26% more orrow subscribers than conventional models”. And in an internal 2017 study, its model approval has been 75% less defaulted at the same approval rate as the enduring FICO-approved credit nnding. I think if the company consistently demonstrates this level of success in the real world, the sky may be the limit.

Fintech stock risk

One major risk is that AI may learn to discriminate against legally protected groups. While CEO Dave Giroud is confident about his fairness, the prospect is likely to remain as a sticking point. And as AI becomes more widespread, controls are becoming more stringent. In fact, 17 states have introduced new AI laws so far this year.

And some perspectives are important. Upstart revenue in 2020 was 3 233.4 million. That’s less than one-fifth of rival FICO’s $ 1.3bn. But I still think Fintech stock is a good addition to my portfolio. It’s a big chance that it could be the next big thing.

Is this little known company the next ‘Monster’ IPO?

At the moment, this ‘Bought by shouting’ The stock is trading at a steep discount from its IPO price, but looks set to skyrocket in the coming years.

Because this North American company is the clear leader in his case which is assumed Valued at 1 261 billion by 2025.

The Motley Flower UK team of analysts has just released a comprehensive report that shows you why we believe it has so much potential.

But I warn you, You need to act fast, Given how fast this ‘Monster IPO’ is going.

Click here to see if you can get a copy of this report for yourself today


Charles Archer has no position in any of the shares mentioned. Motley Fool UK is owned and recommended by Upstart Holdings, Inc. The Motley Fool UK is recommended by experts. The opinions expressed in the companies mentioned in this article may differ from those of the authors and therefore the official recommendations we make on our subscription services such as Share Advisors, Hidden Winners and Pro. Here at The Motley Flower we believe that considering a variety of insights makes us a better investor.





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