When we say investment, Wall Street is one of the first things that come to mind. The men in their fancy suits and their secret-carrying briefcases have always been the representatives of investment – and winning at it.
Well, not quite anymore.
As fintech solutions have been making ground-breaking developments in the investment banking industry, the concept of investing, whether it’s investing for retirement or investing in a promising start-up business, has also been up for a change.
Today, investments are not only for high-rollers and big money, or a job that only private bankers and broker companies can handle. Now, there are many trading platforms, financial data providers, mobile banking services, banking as a service (baas) or fintech solutions that go far beyond investment banking and enable investors to transact easily.
In addition, today’s investors and the future’s wealth holders are not the stereotypical white-collared middle-aged men, but millennials and Gen Z’s who are always up for more. So, what will the future of investment bring upon us with its newest customer portfolio and the technologies that bring a whole new perspective? Read on to find out.
Technologies That Will Change the Future of Investing
It would be a surprise if fintech solutions weren’t applied in investments. After all, why wait on making things easier, more convenient, and less risky?
Data in – Tips out
We can all recall from movies: a rich man acts on an investment tip that he has just got. However, in real life, you would have to be very lucky to get such a tip (without committing a crime).
That said, as data helps with collecting information on almost everything, utilizing financial data to gain insight, strategize and act on investments, is a much safer, more affordable and convenient way to manage investments. Therefore, investment models will incorporate faster, more data-driven ways to analyze and manage companies, teams, sectors, and trends. Thus, financial data providers seem to be on the rise.
AI’s Are the New Finance Advisors
There are many ways how AI is changing the whole investment game. First of all, they are the most important and efficient deployment to be able to utilize the very valuable data that we retrieve. This provides more risk-free, profitable, and cost-efficient investments.
In addition, private bankers are hesitant in working with customers that don’t have much money (millions) to invest, when, on the other hand, AI-powered robo-advisors used in trading platforms, reduce their threshold to a few thousand dollars, and money-saving applications reduce it even more.
Plus, these scalable and low-cost robo-investing trading platforms lower the fees on traditional wealth advisors in investment banking, while they use algorithms to accurately predict and make trades against a portfolio’s goals, and less human power.
Does this mean that human advisors are doomed to be out of the picture? Definitely not! As with almost all fintechs in the financial industry, the collaboration of humans and machines will solve investor needs.
Mobile Investment Applications
Before 2000, the only way for the average person to invest in a stock market would be through investment banking or a very expensive broker with a huge fee. Later on, with the development of the internet, mobile banking and e-brokers have come to the stage offering investment assistance for a smaller cost. However, that went south when the investors were eventually left alone to manage their own portfolios, and face failure.
Now, applications can automate how people invest their money. With services like Betterment, Wealthfront and Nvstr, people set a fixed amount of money to deposit directly into their accounts on trading platforms which instantly invests the money in preset asset allocations matching their investing preferences and financial goals.
As these apps are low-cost and require negligible initial investments to begin investing, many millennials fund investment accounts like this or have begun to move money into the markets via these investing applications.
Blockchains for Security
The financial industry and trading platforms require high-level security. Blockchain-based projects provide means for the development of digital securities and have shown there’s tremendous demand for an accessible market.
The era of bitcoins may have been touch and go; however, digital currencies will play a big role in tomorrow’s economy. More and more companies will warm up to the idea of accepting tokens as a mode of payment.
New Wealth Holders – Millennials and Generation Z
You have to know your clients closer to better serve them, and as we mentioned at the beginning of this article, the investor persona has undergone a big shift that requires a change in wealth management.
First of all, the younger generation, both millennials and generation Z, are born into technology and have the ability to uncover information with a click. Therefore, they appreciate and expect transparency and access to pertinent information much more than the prior generations.
And they know what they’re doing. According to a recent Deloitte survey where millennials have been stated as prudent and literate, while long-term finances are a top cause of their stress, more than half of millennials, and nearly half of Gen Zs, are saving money and could cope if they unexpectedly received a large bill.
In another research conducted by Morgan Stanley, it is stated that 86% of millennials would like to incorporate environmental and social factors into their investment portfolios. Therefore, sustainable investing can be the next big thing.
To Sum Up
There is a digital transformation in the overall financial industry, and investment management will have its share. It is vital to adapt to these changes in order to offer the next client persona the best of services and to be able to exist in the future.
If you need help in implementing the necessary fintech solutions and carrying your service and products to the future, we are here to help. Foreks Digital Solutions has many references from reputable companies and banks and offers its services with in-depth technical & financial know-how, perfectly fitting tailor-made solutions and quality-driven continuous development.