How Fintech Is Changing the Face Of the Stock Market

Several fintech businesses offer services to normal investors which could include a user-friendly, artificial intelligence-based platform

By
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

The fintech phenomenon has largely been a story of the last decade, making it one of the newest spheres for technological leaps in the world. As an emerging segment for tech-based startups, fintechs have brought forth incredible innovation in the sector to the limelight. From banking to investments, it has revolutionized the financial sector and now it is playing an important role in changing the way investors participate in stock markets.

Several fintech businesses offer services to normal investors, 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. Among other services, some apps offer free basic stock trading, real-time, relevant, personalized financial news, and a platform where investors can buy stocks seamlessly. It is safe to say fintech has democratized the stock market.

Historically, big investors and bankers have ruled the stock markets, and the main factor behind it has been accessing information, which has helped them make informed decisions. Some services offer rich data through some of the most advanced systems. These provide live data on the latest trends, company data, news feeds, public opinions and more, but it is unfortunately not available to all. 

For a long time, investing in the stock market has been compared to gambling, but on the contrary, investing in the capital markets is about managing volatility along with risk. It is not entirely dependent upon chance. For somebody new to the stock market, where information is king, fintech has altered the status quo, wherein market insights and rich data are now accessible to all due to the scaling of technology.

It can be democratizing

Earlier, retail investors had to either subscribe to a stock research company or pay a stockbroker for following the latest trends or get the required data, which fintechs have disrupted for good. Fintechs allow retail investors to pick algorithm-based services that can make smarter market predictions, and strategize decision-making to maximize their return on investments.

It is changing the stock market by bringing data analytics to the masses with innovative solutions such as rule-based investment engines that can analyze more than a billion data points at once. Just a few years ago, investors had to spend months analyzing data to make a sound investment decision. 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. Investors, at the same time, can learn about the nitty-gritty of the stock market in a fun-learning method via investor education platforms free of cost. Earlier, algorithmic trading and advanced charts were also available to a handful of investors. Now, with the API-based approach of fintech brokers, the accessibility of such advanced services has improved.

Its role in simplifying the process

Fintechs have simplified the investment process, and brokerage companies now offer services such as buying and selling shares without having to fill complicated trading forms. Investors can simply state the scrip, pay for the number of shares they want to buy, and the fintech platforms make the transaction possible with a few touches and swipes. 

Furthermore, an investor gets stock recommendations and tips while staying on the go. App-based trading has now empowered them to tap emerging opportunities or exit from relevant ones while being on the go. The new fintech-based approach has integrated everything into one simple interface. In this streamlined process, users can invest faster and with more ease and cost-efficiency.

Role of artificial intelligence 

Fintechs deploy machine learning (ML), chatbots and AI to create automated advisors which can analyze large amounts of data and give personalized investment advice. The users can quickly receive an answer to their questions like how much to invest, how to diversify the investment, and what is the ideal portfolio for a particular investor. The investment becomes lucrative as the tech helps with asset allocation and re-balancing services alongside others. Today, fintech-based brokers are using AI and ML for their across-the-board processes including customer onboarding, wherein any person can start trading in less than five minutes.

As these new technological approaches offer the freedom of data, intelligent investors will get to play a fair game on a level playing field. The developers and programmers are likely to advance the existing tech tools, thereby building scope for even better access to data and the stock market at large.