Technology is transforming economies as businesses and industries move towards adopting advanced solutions such as digital payments, online banking, and cashless transactions. Digital technology in capital markets is changing the market operations.
In fact, the technological progress in capital markets is offering the opportunities to boost flexibility, scale efficiencies and reduce complexity in how the markets operate. The impact of disruptive technology on capital markets is as significant as fire was to the cavemen.
Well, the new technology-aided solutions are only adding to the human capacities in the capital market scenario. Today, machine learning and artificial intelligence are part of financial institutions among other aspects like investment trading. The technology here is not a replacement for the human brain, but is a tool to make it even smarter.
- Let’s look at a few ways how deploying different trading technologies in capital markets is making investors smarter:
- There are companies that are providing their clients with ongoing assessment of compliance risk by combining machine learning technology with high-speed and big data processing power. It happens as an AI platform allows for identifying complex trading patterns on a massive scale across multiple markets – in real-time.
- Financial professionals now have the provision to go through financial data, access notes, market insights and trending companies, all in real-time, due to speech recognition and natural language processing technology. It saves traders time as they do not have to go through every single note or conversation.
- Investors also have top stock recommendations for every day at the click of a button. The pattern recognition technology and a price forecasting engine process diverse sets of data to come up with a stock-ranking rating.
- Technology is further democratizing trading. Investors no longer have to rely on experts as data science produces trading strategies that resolve investment challenges. Some firms even offer end-to-end machine learning, data science, and AI and software development for business— including the trading sector.
- The companies are also setting up a trading ecosystem by bringing together AI and the trading community where they can increase earnings by scanning markets to locate optimal trading opportunities.
- Some companies have deployed Robo adviser platforms which place dozens of investment algorithms to a million trading scenarios overnight to increase the alpha probability. The next day, only those strategies are shared with the traders that have a success rate of 60% and above.
In a nutshell, it is time that leaders in the industry embrace these new-age technologies which are further going to transform the capital markets ecosystem in the upcoming years. Data and analytics are among key enablers for technology-driven changes in the capital markets. At the same time, the advancements in machine learning and artificial intelligence enables predicting abnormal market risks, events and detecting market abuse. Therefore, the way forward is to leverage technology and apply it in creative ways to develop the markets. (Prabhakar Tiwari is Chief Growth Officer at Angel Broking. Views are his own)