Fintech has already dramatically changed how many people access and make use of financial services. With the latest electronic technology, people can now apply for business loans, create budgets, and transfer funds more easily than ever.
Thus, it’s likely no surprise that fintech is also changing the way people invest their money. While we’ve yet to see how these products will impact investing in the long run, recent developments make it clear that fintech’s influence hasn’t skipped the world of stocks, real estate, and other investment opportunities
Here are just some of the ways this tech revolution has already changed investing, as well as how it may change it in the not-too-distant future.
Opening Doors to Investing
Many people who would like to try their hand at the stock market hesitate to do so. One common reason for their reluctance is broker fees. With a traditional brokerage, customers must pay a fee for every trade. This may not make a difference to high-net-worth individuals or those who have access to substantial capital, but for people who aren’t investing large sums of money (or who want to day trade relatively inexpensive stocks), it can be prohibitive.
That’s why services like Robinhood are growing in popularity. Unlike most brokerages, Robinhood doesn’t charge any fees when a user makes a trade. The company is able to do away with these fees because it doesn’t operate brick-and-mortar locations. The money saved allows Robinhood to offer an inexpensive option to people interested in learning how to invest in the stock market.
On top of that, Robinhood’s technology offers users a more convenient investing experience than they may have had access to in the past. Customers simply pull up the app on a mobile device and buy or sell stocks with just a few clicks.
Granted, there are potential downsides to apps like Robinhood. Investing in the stock market is already risky, and making it easier for people with limited experience or knowledge could have financial repercussions for them. It’s also worth noting that, as of now, these products typically don’t offer access to financial advisors, whereas traditional brokerages often do.
That said, there’s no denying that Robinhood and other investment apps have opened a door for people who had always wanted to buy and sell stocks but haven’t because of impediments like broker fees or inconvenient services. We don’t yet know what the overall impact will be on the market, but no one can pretend it doesn’t exist.
Using Augmented and Virtual Reality to Make Financial Decisions
Financial advisors, stock brokers, and related professionals spend a lot of time analyzing massive amounts of data to make sound financial decisions. The easier it is to visualize that data, the more efficiently they can work.
Thanks to tech innovations like virtual reality (VR) and augmented reality (AR), that process soon may be easier than ever. With AR (which allows users to superimpose virtual elements over the real world via a mobile device or headset) and VR, financial advisors can transform their surroundings into dynamic workstations, allowing them to call up important data with remarkable ease and speed. This not only allows them to work more quickly, but it also helps them make smarter decisions.
Obviously, this benefits people working in the finance industry, but it also benefits their clients. When financial advisors have the tools they need to work to their full potential, they’ll serve their customers’ needs much more reliably.
Artificial Intelligence Assessing Investment Opportunities
Again, determining whether an investment opportunity is a safe bet requires analyzing large amounts of data. This is why many believe artificial intelligence (AI) will soon play a much bigger role in the industry.
AI can analyze data far more quickly than a human can. More importantly, it can essentially analyze data 24/7. There’s also reason to believe it will be free from biases that result in human error, though it is worth noting that human bias could be built into the AI’s code.
Already, AI Powered Equity ETF is demonstrating the potential of this technology. Launched in late 2017, this ETF uses AI to choose stocks. Although not enough time has elapsed to accurately assess its strengths, on average, it has beaten the market consistently.
Again, we don’t yet know of all the ways in which fintech will change the world of investing. What we do know, however, is that the change isn’t mere speculation—it’s already happening. Whether you work in the financial services industry, or you’re simply a small-time investor, it’s worth paying attention to these developments in the coming months and years.