Fintech innovation continues to transform the way we invest our money. From introducing blockchain-based applications that provide investors with a myriad of wealth management decisions to AI-infused tech aids that aim to help us navigate the market, the financial digital shift has transformed how we make choices with our money.
The question is, just how much of an influence does financial technology have on our investment decisions. Could we be looking at a future of behavioural finance? As we witness the birth of robotic advisors, a number of sectors ranging from corporate to property investing have begun to adapt to a big-data-led tomorrow.
In fact, the global Robo-Advisory market is predicted to expand from $18.7 billion in 2021 to $28.1 billion by the end of 2022, with a CAGR growth rate of 50%.
As we step into the future of investing, let’s have a closer look at what we can expect from behavioural finance technology across a wide range of sectors.
Can Fintech Influence How We Manage Our Finances?
Defined by Investopedia, “financial technology (Fintech) is used to describe new tech that seeks to improve and automate the delivery and use of financial services.”
In a smartphone-centred age, fintech platforms have never been so popular amongst a digital native population. Aiding concepts such as digital investing, online banking and cryptocurrency, fintech platforms continue to aid individuals who are looking to efficiently manage their finances.
“We’ve reached an intersection of an amazing confluence of technologies that have the power to significantly remove the friction and make personal finance and investing easier,” claims Tim Hockey, CEO and President of TD Ameritrade. “Combining things like artificial intelligence (AI), machine learning, and voice user interface (VUI), for example, we can create new solutions that remove a lot of unnecessary pain points.”
In fact, over 50% of all candidates surveyed in a recent Ameritrade study confirmed that technology plays at least some part in their financial management strategy.
The Birth Of Robotic Advisors
It’s no secret that fintech platforms have evolved in the last decade. As we step into a future of AI and big-data-led decision-making, the birth of robotic advisors has been nothing short of revolutionary for a number of financial sectors.
Also known as an ‘intelligent financial manager’ these analytically based wealth management advisors are quickly replacing human decision-making when it comes to investing in the modern markets.
Not only can machine learning crunch through enormous strings of data in just seconds, but robotic programming can avoid falling victim to human biases while offering security and flexibility during the investment process.
Robotic advisors can reduce risk aversion and sunk cost bias as they simply take the financial decision process out of human hands. Using a combination of behavioural analytics, market insights and predictive forecasting, these fintech platforms can make quick investment recommendations based on a calculated best outcome.
In fact, 58% of investors claim that behavioural-based recommendations, that are calculated based on their previous spending habits are useful when making their next financial move and a further 30%, believe that Robo-advisors have helped them navigate a choppy market.
Robo-advisory platforms have continued to evolve over the years. As we step into the future of 4.0, we can expect these fintech aids to fully automate our investments, and quickly predict investment trends using self-learning algorithms.
The question is, which sectors have benefited most from a spike in behavioural finance adoption?
Wealth Management
Wealth management platforms continue to offer their digital native clients long-term financial planning and predicting options utilising the powers of Robo-advisors.
In response, excerpts have predicted that Robo-advisors will be responsible for $4.6 trillion in asset management by the end of 2022, as trending technology-infused wealth management strategies continue to take off.
As millennials dominate the adoption of fintech technology, robotic advisors continue to streamline wealth management. Providing clients with 24/7 access to their investment portfolio with a simple click of a button, Robo-advisors are both flexible, convenient and secure and give users a competitive advantage in the market.
Property Investment
As one of the most profitable sectors to invest in, the property market continued to be dominated by financial technology.
Utilising the powers of big data and AI analytics, property investors can use financial tech to spot trends effectively, predict the potential for a profit and remove uncertainty from the investing process.
Using behavioural analytics, investors can identify specific trends such as where people are moving to, how prices are shifting and which properties are tipped to see a value increase. Financial tech can also aid investors when applying for and managing property loans, while also providing significant security during the ‘buy side’ of a property transaction.
The Stock Market
Last but not least, Robo-advisors are quickly transforming how we approach the stock market. As Robo-advisors become more popular, individuals can use AI-infused technology to consult detailed market insights at the click of a button and help make investment decisions based on predictive analytics.
Fintech platforms are also reducing the implications of high-risk trades as blockchain advancement continues to make leaps for larger investment firms. Providing security and transparency during asset transfers, stock investing has become more efficient, gathering quicker returns for large-scale investments.
As we step into a future of financial technology, and advancements in machine learning, the risks of investing are beginning to fall. As we take more control over our assets using non-biased, secure systems, money management is sure to see a calculated future.