Once upon a time, trading was an open outcry on a single floor with no transparency and confirmations not even on the same day. Today, thanks to technology the stock price, the market depth are available on your mobile screen along with all the information for a client to make an informed decision and have is confirmation real-time. To keep it concise, the capital markets space has undergone a revolution of mammoth proportions, guided by the latest tech advancements.
One would remember painstakingly opening a Demat account, being just as tedious, if not more, as getting a bank account opened a decade ago. Now, the entire process is digitised, with the leading full-brokerage platforms concluding their on-boarding process within a few minutes. However, what’s more, exciting is that electronic trading has allowed everyone to take a plunge in the stock sea. It has slashed the costs of intermediation and democratised access to liquidity.
However, when it comes to disruptive models and tech innovations in the space, the story doesn’t end there. It merely begins. As we usher into the New Year 2020, stockbroking is set to become exciting and attractive with some unprecedented models. Here’s counting some of the advancements that would be shifting paradigms in the brokerage space.
If you’re familiar with trading, you know how difficult it can get to determine the price of entry and exit for a stock. While you might think that you have factored in all of the relevant dynamics, missing out on just one can make your investment or trade end up in red. This game-changing factor could be anything from a decision taken in the recent board meeting of the company to some military leader’s assassination in the gulf. Well, not anymore. Thanks to Data Analytics, it is now easier to determine price action precisely despite the speed and volume of the incoming data. The better a brokerage firm analyses such underlying market trends with the use of data analytics, the higher value they would create for the investors.
Algorithms as investments advisors
A machine isn’t prone to fatigue or mistakes! With AI-powered smart assistants helping with managing different aspects of our lives, the same development has washed ashore on the BFSI front. In 2018, 37% of financial institutions invested in AI, ML and Data analytics. And 68% of them plan to invest in them soon according to a report by Coherent Market insights. Brokerage firms are leveraging cutting edge technologies to offer a customized experience to the customer and accelerate their growth in the industry. Unprecedented algorithms are greeting us, offering investment advice, and outperforming the highest industry benchmarks with their predictions. Tapping into technology has not only made stock investments fun but also easy-to-use, with customers not having to spend long hours analysing and trying to choose the ones best suited for them.
Chatbots to the rescue!
45% of users opted for chatbots because they didn’t want to interact with a person, cites the Kantar CX Retail Banking report 2019. While stock markets investment had users chasing the broker for the right information or advice, there is simply no need to do that anymore. Nowadays, chatbots are solving the queries of customers, helping them choose between different investment products, offer advice or suggest self-service options. Stock markets investments easy as a WhatsApp conversation, who would have thought!
Need For Speed: Welcoming High-Frequency Trading
High speeds and high turnover rates leveraging high-frequency financial data and electronic tools, High-Frequency Trading is a method that transacts a large number of orders within seconds. HFT analyses market conditions and executes orders based on the same by using a set of advanced algorithms. Modern financial markets including hedge funds and investment banks are the ones that are likely to use HFT. Several full-service brokerage firms are also venturing into this segment. As we progress with technology, HFT methods may move beyond equity markets to other segments such as bonds, foreign exchange and so on.
At the beginning of this year, the penetration level of the industry stood low, at only 7%. This leaves a great room for new-age broking houses to bridge the gaps and democratise India’s access to stock markets. With an average user getting smarter and more knowledgeable, true tech-led innovation will help pave the way for the same. Here’s to the changing paradigms and witnessing how the sector would shape up in 2020.
Rohit Ambosta, Chief Infomation Officer, Angel Broking Ltd.
(This story has not been edited by The Statesman staff. The views expressed here are those of the authors and do not necessarily represent or reflect company’s view.)