Post-Pandemic Financial Landscape
The Covid-19 pandemic has generated a devastating combination of societal and business disruption. Amidst these changes, the financial sector has displayed remarkable resilience in the face of the crisis. We’ve seen no reports of mass failure or customer dissatisfaction. Rather, customers have embraced the necessary shift to digital and virtual technologies without batting an eyelid.
We’ve found that the movement towards a remote work culture has been widely successful, with minimal impact on productivity. The financial sector has, on the whole, passed the test on business continuity as banks, wealth managers, insurers and investors continue to prove their processes are robust in the face of adversity.
The extended lockdown period has been met with the adoption of technology to meet constantly changing needs as the pandemic unfolds. Maintaining this level of agility over the long-term will require more strategic planning, technological development and stronger customer relations.
Beyond resilience, financial services firms have extended their products and services to innovative artificial intelligence applications and software to seamlessly integrate the virtual financial scene with the real world, in real time. And the possibilities are boundless.
Investment management with technology
Within the evolving financial services sector, the investment management industry is dealing with its own disruptive period. Whilst the industry has been evolving at a steady pace over the past two decades, the pandemic has been a catalyst for immediate change. The change? Technology.
If the outbreak of Covid-19 was inevitable and whilst there is no ‘good’ time for a pandemic to strike; in some ways, it couldn’t have come at a better time. Over the past 10 years, in particular, industries across all sectors have automated processes, dabbled in mixed reality, and at the very least, established an online presence.
The new technological players on the block, namely artificial intelligence (AI), machine learning (ML) and augmented and virtual reality (AR/VR) have transformed the practice of investing. What was once a money-making strategy based on ‘who you know’ not what you know, and only accessible by the affluent few; has become a democratised, inclusive practice that serves a broad customer base.
Investment management was once an exclusive service reserved for the high-earners who didn’t quite understand the market as well as professional wealth managers. Today, the demand for digitised, convenient financial services has increased. The result has been the generation of opportunities for all to participate in exciting investments – available at the tap of a button on a smartphone.
Now, instead of buying single expensive funds to build a portfolio, companies can leverage their scale to provide diversified and innovative portfolios at a fraction of the price. In addition to this, investors can access their investment portfolios via an app on a smartphone to view a breakdown of fees and benchmark their performance. With apps like ARQ, investors can now connect their investments seamlessly, and gain actionable performance insights generated from vast quantities of data.
Such apps effectively eliminate investment managers who act as middle-men between you and your investment. You don’t need to have expert knowledge on the financial markets either, since the technology does all the calculations and gives investors clear and actionable insights. These developments would have seemed impossible just a few years ago.
Going digital has not been a seamless transition for everyone. Some companies offering robo-advice alone, and significantly lack brand recognition have struggled to gain a solid customer base in this new age. Whilst established companies with the resources to provide human interaction have seen more success than purely digitised newbies.
The growing adoption of ESG (Environmental, Social and Governance) policies have contributed to the whirlwind of the financial sectors changes. Digital-oriented and robo advisors cannot remain static. As well as continual technological development, they too have to keep abreast of evolving investor needs and demands.
How AI helps us manage investments more effectively
Of all these game changing technologies, it is undeniably artificial intelligence (AI) that has the most transformative capacity to transform the investment management process. AI essentially refers to the use of computers to simulate intelligent behaviour that is comparable and often superior to human intelligence.
AI powered technologies are increasingly improving our daily lives. Whether it’s through robots performing medical procedures, AI powered chatbots online, or self-driving cars. The same can be said for investing too.
Thus far, we’re seeing automated systems contributing to the investment process. Particularly their ability to track, monitor and relay market information in real time as the market continuously changes.
Investment firms are employing AI to make faster, more profitable and smarter investment decisions. Since investing is a numbers game, smart number crunchers tend to be better at it. AI as a high capacity data processor stands a better chance against humans at revolutionising investing and investment management.
Machine learning (ML), is an exciting part of this financial revolution. It uses data to learn, adapt and improve the investment decision making process – without needing to be explicitly programed to. In short, ML allows users to formulate different algorithms and then expose them to large volumes of data – for example, historic market prices and transactional data – the ML program can then be trained to identify mispricings and market inefficiencies.
The combination of AI and ML into a user-friendly smartphone app, has perhaps, been the most revolutionary way to manage our investments. The analysis of large quantities of complex data is near impossible for human intelligence – much less the novice investor. As the industry continues to generate mass amounts of data, including security prices, financial statements, economic indicators, as well as social media and sensor networks, the need for comprehensive ‘intelligent investment’ apps and software has never been more apparent. This data, along with performance indicators and actionable tips and insights via AI will continue to change the investment scene.
In a nutshell, no longer do we need to be blind to our investment performances or stay in the dark as we leave the management to investment management firms. AI has produced an opportunity for investors to make smart investments as well as manage them more effectively.
