How technology can boost your next investment
September 2017 | PROFESSIONAL INSIGHT | FINANCE & INVESTMENT
Financier Worldwide Magazine
September 2017 Issue
Whether you are investing in stocks, property, precious metals or other markets, there will always some risk involved. While there is no hidden formula for ensuring your investment is guaranteed, there have been many advancements in technology in recent years which assist wealth managers, brokers and investment bankers in making the best, low-risk, decisions for their clients.
One of the biggest developments in recent years has been the application of data in the financial markets. Electronic data systems gained prominence in the finance sector back in the 1960s when machines like the Quotron began to deliver electronic stock market quotations directly to users. Suddenly brokers, traders and investors alike could monitor prices quickly and efficiently – moving on from ticker-tape machines and phone calls.
Over the years, this technology evolved into high frequency Big Data analysis, which has now become the norm in finance. It helps investors to find efficiencies in places they either did not think of nor could gain access to, giving them the opportunity to go from a hunch to a more calculated decision.
It is no secret that technology can help investors make money (the financial sector is evidence of that) but how exactly can technology turn data into dollars and what other sectors is it now influencing?
Property is one of the most potentially profitable areas to invest in for any individual or corporation’s portfolio and new technology, which is now unfolding in this area, will allow for even higher profits to be made with greater precision.
By utilising Big Data and artificial intelligence (AI), property investors are now able to more effectively spot trends, such as where property is most in demand, most needed and most likely to increase in value. In effect, they are taking uncertainty out of the investment decision.
Data systems allow investors and developers to have a clear understanding of the market in minute detail. They will be able to identify specifics, such as where people are moving, recognise which office spaces and utilities are being used and how prices are shifting. This influx of information in the market will subsequently provide greater security around the ‘buy side’ of a transaction.
Peer-to-peer platforms are also now allowing individual investors to make the most of their money, with companies helping people to invest in new and existing property loans. These platforms make it easier to get a loan and secure finance for an investor who is at risk of losing out on a deal. This advance in technology will help investors with illiquid assets make the most of their investment, by providing both clarity and speed to the decision-making process.
Arts and antiques
A more recent technological advancement in the arts world is the use of virtual reality to aid the selling of paintings. While this has been trialled more widely in the selling of real estate, its application to the world of arts and antiquities is still a relatively new one.
Sotherby’s London based auction house created a 360-degree VR film for their surrealist sale in March 2017, allowing prospective buyers to step into the surrealist pieces before deciding to buy. Four separate VR programmes showcased the four-key works, including Salvador Dalí’s Moment de Transition, which was estimated to be worth £6.8m. Galleries and museums are already adapting to the digital era, and it seems art auctioneers are following suit.
This option gives art connoisseurs more scope in their portfolio by allowing them to see pieces which are overseas in close detail, reducing the chances of a good deal being missed. Another platform is also having an impact by allowing investors to make better decisions around the value of a piece of art. By taking into account the artist’s career, the year the piece was created and an analysis of art auction results, it helps to predict the risk and return on investment.
Stocks and bonds
Within the financial world, the biggest technological advancement has been the development of robo-advisers, which has given investors the opportunity to consult detailed data and information before making decisions at the touch of a button. Platforms have developed in this remit, focusing on providing their customers with around the clock access to their investments, full clarity and transparency without having to consult a wealth of advisers during working hours.
While robo-advisers have helped advance an individual’s investment decisions, blockchain has made recent leaps for large scale investment bodies, with Forbes calling it “Wall Street’s most game changing technology since the internet”. The technology, which has become famed for its relation to bitcoin, provides a secure and transparent way to digitally track the ownership of assets before, during and after transactions and its numerous benefits have the potential to transform the trading floor and lead to intense, high-risk trading becoming safe, secure and ultimately faster. One of the greatest benefits to come from blockchain is the network effect it creates – the more that participate in its use, the greater the value of the network, so the quicker it is enforced and the faster the returns.
While some of the technology discussed is in its early stages, its potential on the investment market is huge. As we enter the dawn of AI and machine learning, investment technology will only get more intuitive and more effective. Whether it is through blockchain or Big Data, investors are becoming more empowered to take better control of their assets and make more informed decisions. Investment will always entail an element of risk, but by using the right technology, the risk becomes a more calculated one.
Gavriel Merkado is the founder of REalyse.
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