The modern business landscape is undergoing significant changes, and this naturally affects not only the banking industry but also the investment sector.
In recent years, the financial sphere has witnessed the implementation of numerous innovative solutions.
New technologies are actively being adopted, providing opportunities to automate processes, reduce overall costs, and offer clients a more convenient service, ultimately expanding their customer base.
In the global investment banking industry, the following trends are currently being observed:
Online Banking and Mobile Applications.
Virtual Data Rooms.
Utilization of Artificial Intelligence.
Adoption of Blockchain and Digital Technologies.
Direct Listing Technologies.
Below, we will delve into each of these innovative solutions in more detail.
Online Banking and Mobile Applications:
This solution has been simplifying the use of banking products for quite some time. Almost all banks now offer online banking or have their own mobile applications. Mobile banking has been providing access to all services online, which were previously only available at the bank branch. Presently, the banking and investment sector is being automated to facilitate convenient and fast investment without leaving one's home.
Users can:
- Manage their own accounts and monitor their financial status.
- Conduct transactions.
- Create personalized dashboards, customize them, and exchange data with their representatives.
- Access real-time market data and reports.
One of the most well-known examples is the Acorns app, currently used by over 9 million people worldwide. The Acorns platform specializes in micro-investing, making it easier for users to invest their spare change from purchases. Clients link their credit cards to the Acorns account, and after each transaction, the app rounds up the expenses to the nearest dollar and invests the difference. The app individually determines portfolio allocation based on age, investment interests, financial goals, income, and other factors.
Virtual Data Rooms
Virtual Data Rooms (VDRs) or deal rooms are a response to the increasing number of cyber-attacks and attempts by criminals to gain access to users' personal data. This poses a significant risk in the financial sector, as it may lead to unauthorized access to users' funds.
VDRs provide a secure space for information exchange during the deal-making process. They serve as online repositories for storing confidential information securely, and access to documents is restricted to authorized parties. VDRs offer the following capabilities:
Data encryption for documents.
- Application of non-removable watermarks on confidential documents.
- Management of document access rights for users.
- Tracking and auditing access to documents.
Artificial Intelligence in FinTech:
Artificial Intelligence (AI) in FinTech is a technology used to automate processes of data collection, information processing, decision-making, and enhance the efficiency of financial services. Its implementation significantly improves companies' productivity and reduces reliance on human resources.
The use of AI in FinTech brings about qualitative changes in the industry. In the banking sector, AI can be utilized in the following directions:
- Gathering information about investors' preferences, for instance, by analyzing transaction history. This allows not only formulating users' future preferences and market trends but also providing personalized recommendations and advice to investors that cater to their individual needs.
- Data analysis, such as price forecasting, predictions regarding financial portfolio formation, and risk management.
- AI automates the conclusion of agreements between investors and banks, offering swift transactions.
- AI aids in timely fraud detection and efficient credit rating formation.
Artificial Intelligence currently assists in automating numerous processes and, in some cases, even substitutes the work of experts. However, it's essential to understand that the outcome of operations largely depends on accurately defined primary parameters.
Blockchain and Digital Technologies:
Blockchain is one of the key technologies in FinTech, used for creating and managing databases through cryptography and conducting secure transactions.
Today, blockchain is widely used in the financial sector for two reasons:
It eliminates any unauthorized activity, providing the highest level of reliability and ensuring absolute transaction security.
Blockchain simplifies fund transfers by replacing intermediaries in financial transactions.
While the development of blockchain capabilities is not as rapid as artificial intelligence, it already has the potential to expedite Know Your Customer (KYC) verification processes and make financial operations more transparent, fast, and secure.
Direct Listing Technologies:
This is the latest trend we'll talk about today, and it essentially serves as an alternative to initiating an Initial Public Offering (IPO).
An IPO involves selling newly issued securities, which is a complex and expensive process requiring collaboration with investment banks and additional market assessments. On the other hand, a listing is possible when a company has already issued securities and selects an exchange for public presentation.
Unlike an IPO, a direct listing does not require intermediaries or additional assessments, making it faster and less demanding of additional funds. Consequently, a growing number of companies are turning to direct listings, and it's quite likely that the surging demand will lead to the emergence of numerous ready-to-use technological solutions.
