Fintech is becoming more ubiquitous in current financial media. Though financial technology has been a common term in the trading world for many years, “fintech” is a kind of disruptive technology that is changing our trading world. Fintech focused awards, conferences and events like the London Fintech Week are being held in many financial centers to highlight how to exploit this trend.
To succeed, modern traders should know how fintech innovation might influence the near and long-term futures of various industries.
First, fintech is going to increase collaboration and sophistication in various industries. Investors will be required to use more complex tools. Initially, industries used simple software or tools to meet specific needs. However, there are all types of startups filling increasing niches for everyone. For instance, last year retail investors were not investing effort and time to manage a delta-gamma-neutral options book.
Fintech companies will continue to integrate with the banks. Rather than compete, banks are working with fintech companies. To meet millennials needs and to remain competitive, banking incumbents are discovering new ways to line up with technology partners.
Fintech is also expected to increase artificial intelligence, robo-advising and virtual reality in industries. In future, expect more industries to embrace discretionary wealth management tools like robo-advisors and online advice. Algorithm and automation in trade is increasing, displacing human managers.
Fintech is also expected to see the rise of meaningful data and facilitate data-driven technologies in industries. Data in the financial sectors has often been confined to proprietary platforms or withdrawn completely from the varied financial market ecosystem. However, there will be a move to analytics platforms that will make datasets smart. Finance specific apps have developed and adopted in industries in order to have insights into data feeds, enabling investors to become more knowledgeable and make appropriate investments.
With the help of fintech, industries will create and harness new sources of data for investment. Generally, there will be shift from big data to important data. What is needed in an industry is unique data that can provide movement signals in a sector, market or name. Portfolio managers are required to make trading decisions that are built on trends and data.
There will be rise of alternative products in various industries, thanks to fintech. Public awareness of substitute finance options such as equity crowdfunding and peer-to-peer lending will increase. Alternative lenders will partner with larger traditional lenders. There will also be other alternative offerings that will disrupt the traditional establishments such as mortgages and insurance. Robinhood, Betterment, Motif, Crowdinvent and ClosingBell are example of firms that have attacked the financial sector by harnessing tech to undercut fee structures.
In addition, fintech is expected to drive automation in various industries. There will be various kinds of automation: from trade management programs , to speed of execution, to scanning software and even wholly automated black box trading systems. Therefore, the fintech will be about ease-of-use. Many new investors will join markets, driven by technology created to increase information transparency and imaginative interfaces.