Today’s consumer looks for ease, transparency and convenience in every service they seek, so why should financial services be any different. Advances in technology have made trading and investing in the financial markets accessible to everyone. And, it is tech that makes processes transapent and trustworthy. The future belongs to investment firms that are able to provide innovative tech solutions.
One of the key benefits that technological advancements have brought is making a wide variety of investment instruments and opportunities much more accessible than ever before.
Technological advancements have brought in financial solutions that not only free up the investor’s time, but also offer much greater predictability, control and reliability than ever before.
1. Research and Analysis
Till about a decade ago, investors had to go through stacks of physical reports and spend hours with their financial advisors, to make an informed investment decision. Today, online platforms and advanced reporting techniques have not only made research easier, they have given much more control in the hands of the investor.
Investors can now use software to assess their financial goals, risk appetite and check against real time quotes and developments in the financial markets. On the other hand, financial services providers are constantly working to offer a more personalised experience to each client. Data-driven investment recommendations are balanced with customized solutions that build more trust among clients.
Access to data also helps investors understand where they are putting their hard-earned money, as well as allowing them to keep track of how their investments are performing.
2. Transaction Speed and Lower Fees
With the advent of the online mode of investing, not only have transaction speeds become significantly better, transaction fees have reduced as well. Technology has allowed multiple transactions to be processed simultaneously, while opening up the global financial markets to investors. In addition, the speed of order execution has improved exponentially, reducing slippage and missed opportunities.
3. Trading Platforms
Brokerages have moved online too, offering cutting edge platforms that are user-friendly and make portfolio management extremely easy. Until recently, investing used to be a more complicated process making access to the financial markets difficult and cumbersome for many. Technology has helped make investments simpler to understand and much more accessible, as compared to a couple of decades ago. Technology has made financial inclusion a very achievable goal.
4. Systematic Investing
Systematic investing is a style of investment based on models or algorithms. It is also called Model-Based or Quantitative Investing, given that investment through this method is based on quantitative analysis. Technology has made systematic investing possible, which, in turn, has provided the means to overcome one of the biggest hurdles to successful investment – human emotions.
Most of the top hedge fund and alternative investment fund managers have shifted to quantitative management techniques to better manage fund performance. It inculcates discipline and bases investment decisions on data analysis. Systematic investing has helped with more efficient risk management, deep analysis of complex global markets and identifying of opportunities that might not have been possible through manual analysis.
A key example of how technology has been used to the advantage of investors is how various types of investment funds, led by hedge funds, are managed to ensure stable performance. Some of the best performing funds use a unique mix of tech-based strategies to ensure positive returns for investors.
For instance, SOFX (a proprietary tool developed by a top-ranking hedge fund) is a market analytic and signaling system that conducts statistical and quantitative analysis to assess risk and generate buy/sell signals. On the other hand, the Dynamic Option Strategy (DOS), which some of top hedge funds make use of, allows a fund to take advantage of the efficiency and accessibility of the global markets by writing options and placing stop orders to protect against downside risk. Systematic Trend Following is yet another tool that identifies trends that offer short to medium term trading opportunities with minimal risk.
The use of cutting edge technology solutions has helped fund managers consistently identify opportunities and risks, to the advantage of the Fund and, subsequently, the investors.