Technology to fuel capital market growth

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Picture this: London in the early 1980s, brokers and traders jostling in the wee hours of the morning, shouting buy and sell orders on the stock exchange floor.

Although this trading on the floor lasted for many years, it didn’t take long for the script to turn around, thanks to the “Big Bang” of October 27, 1986. With the sudden deregulation of the markets, the trading room now wore a sorry look.

While having all these real traders in one place provided a sense of community and continuity, brokers and traders who relied on quick reflexes were now dependent on computer programs.

London’s shift from traditional face-to-face sharing to e-commerce has not only helped it outpace its European competitors, but has also cemented the city as the world’s most important financial center.

ROLE OF TECHNOLOGY IN CAPITAL MARKETS

As businesses embrace innovative financial solutions for payments and financing, technology is reshaping economies. Capital markets, too, fall within his domain, with the industry continually evolving and transforming.

Through rapid innovation, AI platforms are also enabling real-time detection of complex business patterns in various markets. Not only that, by opening the doors of the best stock suggestions to investors every day, the trading community has increased its income by providing optimal trading opportunities.

FUTURE TRENDS IN CAPITAL MARKETS

Financial markets are already using data and analytics to improve security, fraud detection, and identity verification to meet regulatory and compliance requirements. Machine learning, the evolution of data analytics, is currently being deployed in commerce, where volumes of data are mined in milliseconds.

Many companies analyze speech patterns from recorded calls at investment banks, brokerages, and even on the client side. These smart algorithms can detect new trading trends or system abuses in the fast-paced financial trading industry, where quick judgment is critical, and automating the decision-making process is the way forward.

These algorithms have evolved to understand financial goals and risk profiles to deliver tailored investment portfolios that reallocate funds, tally profits and adjust positions based on self-learning algorithms.

Digging deeper, machine learning has a myriad of use cases ranging from analyzing stock market performance to deciphering relevant information from volumes of data from textual documents such as press releases, stock market reports results or even tweets!

Additionally, large data samples require advanced storage and usher in the next generation of cloud architecture.

Blockchain or Distributed Ledger has the potential to not only store but also deliver relevant information on a new scale while being cost effective. Distributed ledgers have already had success in bond issuances in global markets, loan syndication and securitization or any process requiring a chain of evidence.

THE OTHER SIDE OF THE IMAGE

Like everything else in the world, advances in technology often have a downside. With great technological transformations come great risks such as cybersecurity, product technical issues, etc. The stock market crash of 1987 was partly due to the immaturity of new technologies.

Closer to home, as recently as June 2021, a severe data breach at a leading e-commerce platform in India caused customer data to be put up for sale on a data-sharing platform.

While these incidents may be rare, exercise caution and take measures such as upgrading security, initializing password systems, 24/7 monitoring, and additionally, network separation will help keep such instances at bay.

Remember that technological innovations take time, but the development of communication technologies promises to make capital markets more efficient through faster and more efficient means of exchanging information.

DRIVE THE FUTURE

Indian capital markets technology is today at a crossroads, with markets growing and technology defining the future of the industry. Due to fierce competition not only from around the world, but especially at home, traditional and new businesses must continuously evolve and scale up their technology to stay relevant and grow the capital markets ecosystem in the years to come.

Data and IT are important accelerators for technology-driven capital market reforms and the way forward is to use technology and apply it in innovative ways to develop markets.

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