Finance has always been quick to adopt new technologies. Staying on the cutting edge in personal and institutional finance could help you manage your money better. Tech companies and well-funded startups are gradually encroaching on the industry’s turf. Platforms like Transferwise, and Revolut are changing the way people borrow, remit, and bank.
Perhaps the most noteworthy platforms are the ones changing investments. A combination of upcoming new technologies could transform the way you pick stocks, value companies, and manage a portfolio. Based on hundreds of interviews conducted by the World Economic Forum, here are four key technology trends that are changing the way you invest:
There’s a heated debate over the viability and long-term efficacy of cryptocurrencies like Bitcoin. However, most financial professionals seem to agree that the underlying technology behind these cryptocurrencies is a game-changer. Even JP Morgan’s Jamie Dimon believes that the technology could make international bank settlements and transfers more efficient. Meanwhile, the Australian stock exchange ASX is set to replace its legacy technology for stock trades with a new one based on the blockchain’s distributed ledger. There’s clear value in a system of consensus-based financial transactions, and service providers are likely to move to this technology to make investing faster and more secure.
ValueWalk's Raul Panganiban with Maurits Pot, Founder and CEO of Dawn Global. Before this he was Partner at Kingsway Capital, a frontier market specialist with over 2 billion AUM. In the interview, we discuss his approach to investing and why investors should look into frontier and emerging markets. Q2 2021 hedge fund letters, conferences and Read More
2. Artificial Intelligence
If good stock picking skills are based on an investor’s ability to be objective, analytical, and data-driven, AI is the perfect stock-picker. A machine learning algorithm can scan through millions of pages of data on companies from across the market and figure out if the financial data presents an undervalued opportunity. IBM’s Watson-supported ETF is an early example of how this technology could help investors consistently beat market returns with a specialized and autonomous tool.
3. Big Data
Wealth management, risk assessment, lending, and insurance rely on individual data. With better data, all these instruments could be modified and improved. Online platforms are already collecting piles of data on consumers to figure out their spending, saving, and investing habits. There’s no doubt that all financial platforms will be heavily dependent on big data as the industry gets more competitive.
Cutting out the middlemen in financial transactions could save both parties a lot of money. By connecting people through a peer-to-peer network, fees are eliminated and the process is sped up. Crowdfunding and lending platforms that offer this sort of network can benefit from the data and the asset-light business models to drive immense profits. Meanwhile, investors can access better rates and untapped opportunities.
These four key technology trends will transform the way you manage your investments. Adopting these tools early could give you an edge and help you deliver better performance over the long run.