Fintech vs. Traditional Finance: Showdown of Nu, SoFi, and Chubb

Key Points

• Multiple financial companies may draw investor attention, including both up-and-coming fintech stars and long-established players.
• Two of the biggest names in the fintech space include Nu Holdings and SoFi Technologies.
• Here, we compare these two companies as well as legacy insurance provider Chubb in an effort to take stock of some of the trendiest financial firms.

Fintech firms as a group may no longer occupy the space at the top of investors' lists of most-hyped stocks anymore, but that's not to say that individual stand-outs in this industry can't continue to command massive interest. Notably, there still seems to be plenty of room for companies jostling for positions as the market matures. This means that there is potential for particularly hot names to generate impressive returns over a short period.

Two companies in the fintech realm stand above many others for their uncommonly large gains in the last year. Latin American digital bank NuBank, formally known as Nu Holdings Ltd. NYSE: NU, has climbed an impressive 42% in the year leading to February 7, 2025. SoFi Technologies Inc. NASDAQ: SOFI, the direct bank and financial platform provider, has risen even further, returning nearly 85% over the same period.

Below, we examine these two stocks against one another and a more established leader in the financials sector, Chubb Ltd. NYSE: CB, for investors weighing these companies as potential targets.

Nu Holdings: Major Growth and Shifting Domicile

Nu has been one of the major success stories of the fintech space in recent years. The neobank company managed to break into the established banking space of its native Brazil, enticing customers with its easy-to-use, all-encompassing digital financial services platform.

This has led to massive customer base growth and a steady history of high double-digit revenue gains—in the latest quarter to be reported, Nu announced 56% year-over-year revenue growth. At this point, about 100 million Brazilians use Nu, or roughly half of the adults living in the country.

Investor interest in Nu really surges, though, in the possibility of its continued expansion into new markets. Nu already has made quick inroads in Mexico and other parts of Latin America. As 2025 gets underway, the company has announced its intention to move its legal domicile to the U.K. as it endeavors to expand into the U.S. market.

Despite its rapid stock price gains in the last several quarters, five out of 10 analysts continue to rate Nu a Buy, and shares of NU could rise by nearly 14% above current levels to a consensus price target of $15.63. Investors will no doubt be watching the company closely to see if it can maintain its rapid growth going forward.

SoFi Technologies: Compelling Model and Performance, But Overvalued?

SoFi offers a one-stop financial services platform combining loan refinancing, traditional bank accounts, payment services, and more into a single solution. The company reported fourth-quarter earnings in late January, including record adjusted net revenue growth of 24% and $1.3 billion in student loan originations, a 71% year-over-year improvement.

SoFi has a compelling business model and a history of drawing and keeping customers. Lately, it has outperformed analyst predictions for top- and bottom-line performance. So, there is plenty to recommend this company to investors who are eager to find a fintech leader.

SoFi faces stiff competition, while Nu Holdings above has a more niche space in its market because of the relative dearth of fintech firms with a stable foothold in Latin America. SoFi's significant share price gains in the last year may also give investors pause as they wonder whether this trajectory can be maintained. To be sure, neither Nu nor SoFi offers a particularly compelling value proposition; Nu's forward P/E ratio is 32.7, while SoFi's is even higher at 52.9.

Despite the compelling case for SoFi's business model, the recent rally may be part of the reason analysts are backing off from this firm. Just five out of 15 analysts rate SOFI shares a Buy, and the consensus price target of $12.50 actually represents 16.2% downside potential relative to the share price on February 7, 2025.

Chubb: Dividend, Strong Performance Despite Disasters

In contrast to the two firms above, insurance leader Chubb has only rallied by 10.6% in the last year, underperforming the broader market. Unlike Nu and SoFi above, Chubb is an established firm with a long history of strong performance. This is reflected in its solid dividend—the company offers a fairly modest dividend yield of 1.35% but an easily sustainable dividend payout ratio of 16.0% and an 11-year record of steady dividend payment increases.

Insurance companies—Chubb included—faced massive losses due to California wildfires and other natural disasters across the country in recent months. Nonetheless, Chubb managed to generate a post-tax income increase of nearly 19% year-over-year to $2.6 billion for the latest quarter.

While it's perhaps not as glamorous as a trendy fintech, Chubb's stability, its impressive dividend history, and its success in navigating a difficult moment for the insurance industry may all entice investors.