The story of the past decade in the space of finance is the rise of financial technology companies and their ability to change the way we interact with banks to investments. Now it’s revolutionizing the way many investors are participating in the stock market. There are a number of business that offer services to average everyday traders, which could include a user-friendly, artificial intelligence (AI)-based platform that manages the exchange-traded funds (ETFs) portfolio of the user, according to the investor’s goals and risk tolerance. Other revolutionizing services offered are free basic stock trading, which has become the norm among even the most traditional brokers. Also, real-time and relevant personalized financial news, and a platform where investors can buy stocks seamlessly. Some say that these fintech companies are democratizing the stock market.
In the past, the biggest investors and bankers ruled the stock market landscape, and the main reason was due to asymmetric information. This allowed the big players to make better and more informed decisions that retail investors could not. To get in on this data frenzy you usually had to pay a stock research company or a stockbroker to follow the trends and gather the data for you. Now some fintech’s offer rich data through some of the most advanced systems. These provide live and up to date trends, company data, public opinion, and more. For the longest, the stock market was always looked at through the same lens as gambling, but as these fintech’s have allowed investors to make informed decisions in real-time it’s become a lot more similar to capital markets overall, by allowing those interested in doing research the ability to manage volatility along with risk. With the entry of such solutions, the use of big data analytics, AI and machine learning technologies have simplified the process and provide investors with relevant data within seconds.
Retail investors can now also learn about the more boring aspects of the stock market in a fun-learning method via investor education platforms free of cost. This has increased the number of investors as well as making them better and more informed traders. Fintech’s have also simplified the trading process. Instead of filling out long and complicated trade forms, you can now trade millions of dollars with the tough of your finger. Also, investors get stock recommendations and tips while staying on the go. In this improved and more streamlined process, investors can invest faster with more ease and less cost.
The biggest innovation in the space is the rise of machine learning (ML), chatbots and AI to create automated advisors which can analyze large amounts of data and give personalized investment advice. This is coming right at the neck of the biggest institutions as wealth management has always been a huge part of their business model. No longer will you need to pay high fees for someone to manage your investments, but instead high a robo advisors to look over your portfolio.
Tiwari, Prabhakar. “How Fintech Is Changing the Face Of the Stock Market.” Entrepreneur, 20 Apr. 2021, www.entrepreneur.com/article/369803.