Hello everyone. I welcome all of you to the forth article in the series. So in last articles we discussed what FINTECH is, why it is important and how it has changed the use of money. Today let’s discuss how FINTECH has disrupted financial markets.
What are Financial Markets?
Financial markets can be classified as Stock Market, Debt Market, Commodities, Derivatives and Forex Market. FINTECH has already entered into these markets through many ways. Artificial Intelligence (AI), Big Data, Robot Advisory and blockchain are already playing a big role in the above mentioned financial markets.
Use of Artificial Intelligence (AI) and Big Data
As an example, in stock markets and debt markets, Artificial Intelligence is being used to process huge amount of data in a very short span of time. This result in predictions to be more accurate and faster and investment management has become more data driven. So the investors have better chance in making good returns by investing.
As you may already aware, investing in stock market, debt market, FOREX market etc. is mainly based on trend analysis and predicting the market movement based on those trends. This involves analyzing data over a period of time and understanding how external factors such as economic factors, political factors etc. make an impact on specific markets. There is a limit of information and data can be processed with the use of traditional methods.
This is where AI and big data has come into play. These technologies have the ability to process and analyze huge amounts of data in matter of seconds. More data being analyzed, more accurate the result is. This makes the predictions more accurate and allows investors to invest with greater confidence.
Let’s look at asset management and wealth management sectors. Robot Advisory is becoming a huge disruption in the asset management and wealth management sectors. Use of Robot Advisory for asset management has made asset management more customers specific, cost effective and accurate.
Let me give you an example on how this works. An individual want a financial institution to manage his assets. This individual has a target asset base to achieve by the end of ten years. He is able to invest a certain amount every month and it will change based on his income. With the help of Robot advisory and AI, the financial institution can change and optimize the client’s asset investments in various sectors such as stock market, debt market, FOREX, derivatives etc. almost every day to achieve his target return. It is impossible for human wealth planners to achieve this without the use of technology because this involved processing huge amounts of data within very short time period.
In addition to that Robots don’t need time breaks, they do not ask for a pay raise and they do not get in to emotional biasness towards certain asset classes or markets. Therefore this technology will be cost effective, highly accurate and convenient.
The biggest question is ARE YOU READY FOR THIS?
Especially when it comes to wealth management, the system we have trusted for a long time would be finding a well established corporate firm with high reputation, meet a specialized wealth manager, explain your expectations to him and disclose your asset details, get in to an agreement and you shake hands with the wealth manager. This process has a FACE and a HUMAN TOUCH all throughout.
Will you as an individual feel comfortable to take the human aspect out of this formula and hand over your precious wealth to a robot that you never met and never will be?
Stay tuned. Let’s talk about how FINTECH has changed lending and borrowing in the next article.