The Role of Technology in the Investment Industry.

15 August, 2018 / Blogs

Technology has always been regarded as an enabler for business transformation. It is quickly becoming a disruptor of the traditional business models, hence cannot be overlooked. The investment industry is dynamic and sensitive to delivery and turnaround times for data capture, data processing, information sharing, and storage. One of the advantages that a firm in the investment industry can have is speed. Whether on getting research to the client or getting an order into the market quicker than the competition. This is where technology comes into play and provides a competitive advantage.

An investment industry can perform without Technology, however, there would be dramatic differences and inefficiencies. Technology has become a cornerstone of the investment industry. It provides the means to deliver data to investors, potential and existing clients, as well as to the public. Technology provides automated systems that facilitate complex calculations to be performed at ease, and providing consolidated information at a glance. Investment information can be varied since the variables being considered are many. Systems such as Bloomberg do such analysis and provides the team with easy to use and already computed values.

After this data has been computed, data visualization follows suit. As stated, investment data is complex to look at. Data visualization, while leveraged by augmented or virtual reality can make it a lot easier to spot trends and make sense out of a large amount of information.

 While still at this, big data and data science has quickly taken shape and is already in use in most firms. This entails analyzing data, so at to get insights from it, which can then be deployed to enhance operations, launch new products or gain competitive advantage. Such analytics can provide useful information to identify, assess and record opportunities, as well as advise on options, risk and do a cost-benefit analysis. Technology provides the means to achieve this, as well as enhance data and information management, for easier retrieval and reference.

Artificial Intelligence and Automation are also having a significant impact on the investment world that uses algorithmic decision making. These solutions work hand in hand with data analytics and visualization. AI and machine learning can leverage on big data and visualization to discover market entry and exit signals, as well as have robo-advisors. While it can be argued out that putting 100% reliance on technology does not seem realistic, a human security check can act as a safety mechanism to counter-check the suggestions provided by artificial intelligence.

A typical investment analyst today cannot work alone. He/she will be in a team, and from time to time, will have to communicate with people in other countries or offices. Technology comes into play here, to provide communication and collaboration. This makes it easy for the teams to stay on the same page while making decisions. Investment analysts should not be confined to physical space when looking at and for information.

Mobility and cyber security is another impact role that technology plays in the investment industry. Investment opportunities and information can be provided on the go. But if you are not in a position to access such information, you might be at a loss. To this end, technology provides mechanisms to enhance mobility and ensure an always-on option to access information. To achieve this, cybersecurity has to be in effect. This ensures that critical and confidential information concerning a firm remains secure. Hacking, ransomware and unauthorized access are some of the challenges that cybersecurity comes in to solve. Any firm in the investment industry wants to have private data remain private, lest it falls into the hands of competitors, thereby, losing a competitive edge.

For any client-focused firm, getting information to clients in the most convenient way is vital. Technology has changed the preferences of clients and materialized new ways to get information. At the core, what a firm needs to do is ensure that information is sent to clients quickly and in a secure and in a secure manner to dispel fears of information hijacking and tampering. Technology has enabled this, as well as taking advantage of multi-channel relationships with client and maximizing client interaction through interactive and user-friendly portals, that are rich in content. All this fosters and improves client experience as well as client service.

This list would not have been complete without talking about one of the new and fast-growing disciplines in technology; Blockchain. Blockchain is a way of creating and validating transactions from person to person, in simple terms. This technology will ideally reduce commissions, enhance security while trading, eliminate fraud, and increase the speed of transactions. Blockchain represents a unique opportunity for everyone in the investment industry to get educated on it and how it can be applied in their firm since this technology has the potential to transform the industry.

All of these technology roles in investment industry are backed by the growth and changes in the IT world. Infrastructure components such as increased computing power and security systems make it possible for these solutions to be effective and serve the purpose. However, they are not cheap, and an investment firm needs to evaluate and deploy the solution that best suits their needs and delivers a return on value.

Technology will continue to disrupt the investment industry. The best that a firm in this industry should do is adapt to changes as they come and tune their systems to reflect the changing market demands as well as client needs, lest they become obsolete.

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