Lloyds (LSE:LLOY) stock has kicked into growth mode again in the past couple of weeks, rising around 13% to 109p. This means the FTSE 100 lender has surged almost 180% inside three years, with dividends on top.
Looking ahead to the next five years, though, I think one UK fintech stock will outperform Lloyds shares…
What’s wrong with Lloyds?
To be clear, I’m not overly bearish on Lloyds stock. Fuelled by the higher interest rate environment, the FTSE 100 lender has been reporting higher profits, and City analysts see this continuing over the next couple of years.
For 2026 and 2027, they currently expect earnings per share (EPS) of 10.2p and 12.2p respectively, up from 7p in 2025. And the lender has been reducing its share count in recent years through buybacks, helping boost EPS.
On top of this, we have a robust dividend forecast, with the forward-looking yield rising to 4.6% in 2027. So I can certainly see the appeal for income investors.
But one issue I have is that Lloyds is domestically focused, and the UK economy continues to toil under high inflation and weak consumer spending. I don’t think a recession can be ruled out over the next year or so.
Moreover, political instability has returned, with Andy Burnham expected to be the fifth Prime Minister inside four years. All this change and uncertainty isn’t ideal for business confidence.
Given this, I think quality companies with growing global operations could outperform Lloyds over the next five years.
A wiser pick?
The stock I have in mind is Wise (LSE:WISE), the international money transfer specialist. The company’s mission is to eliminate the high mark-up fees traditionally incurred when moving money across borders.
On Thursday (25 June), we got Wise’s FY26 results for the 12 months to 31 March. Thankfully (I’m a shareholder), the report was solid.
During the period, Wise helped 19m people and businesses move $243bn globally, up from $185.2bn the year before. Net revenue jumped 19% to $2.5bn.
The firm’s making significant progress on making transfers quicker and cheaper, with 75% of Q4 payments completed inside 20 seconds and the average cross-border take rate falling to 0.52% from 0.58%.
Lowering the take rate would worry me if Wise wasn’t growing customers (pre-tax profit actually fell 8% to $660.4m). But active customers rose 21% and customer holdings surged 40% to $39bn. Card spend grew 37% to $44bn.
Therefore, Wise is becoming much more than a cross-border money transfer company. It’s successfully scaling into a multi-product global payments network, with almost 50% of net revenue coming from non-cross-border sources last year.
What could go wrong?
This doesn’t mean there won’t be risks over the next five years, particularly rising competition. Also, there’s an ongoing investigation in Europe regarding suspected money laundering, and we have no idea what will be found (if anything).
Looking at the latest results though, I’m still bullish moving forward. Wise has reiterated guidance for medium-term revenue growth of 15%-20%, with a 15%-20% pre-tax margin.
The image above shows the scale of the long-term opportunity, with Wise so far capturing a small fraction of its overall market opportunity in the business and large enterprise segments.
Given this oceanic growth potential, I think the stock’s worth considering after falling 19% in a month.
Should you invest £5,000 in Wise Plc right now?
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Ben McPoland owns shares in Wise.
