Technology has changed our lives for the better. Things that were unimaginable just a decade ago are now everyday events. Communication has been revolutionised, with instant messaging and even video calling features available at our fingertips. Business and commerce have flourished with the upswing in technologies.
An emerging topic of interest in today’s times is ‘Fintech’ startups. These are essentially financial services startups leveraging technology in their business model. Business has undergone a cusp of change with the introduction of automation and technology. Even personal finance has become influenced by it. Think: Internet banking, online payments, real-time transfer of funds and allied transactions.
Making investments has become modernised since technology took over. Gone are the days where a customer had to queue up outside the local bank branch to operate a deposit account or make a withdrawal of funds. He/ she can now do the same activities from the comfort of their home through internet banking. Technology has brought about great convenience to people and also a higher interface level than before. To operate an online bank account, only the presence of Internet is required; hence it is usable 24/7 unlike an interaction with a relationship manager over the bank counters.
Here is how technology and investments have become dependent on each other:
Streamlining of processes: Each step of making an investment has become oriented towards technology. There is very little manual effort involved in internet banking, and other investments online. Deposit and withdrawal record keeping and access thereof, a query resolving, instant update generation is all taken care of over the telephone and internet. Investment processes are streamlined to suit the average investor who is technologically adept. The process is kept user-friendly and with a simple GUI (graphic user interface) to aid greater adaptability.
Stock market tracking: With the advent of the online demat account, investing in shares has become synonymous with digitisation and technology. The Depositories Act, 1996 introduced the conversion of physical shares into an electronic form. Holding shares in electronic form led to prevention of fraud, ease of transfer, liquidity and better tracking of personal investments for the average investor. Shares held are freely transferable, and technology has aided this quick transfer to a great extent.
Self-investing: With the dematerialisation of shares, it has now become possible for investors to self-manage their investments and overall fund allocation. Previously, retail investors were dependent on professional financial consultants to guide them about investing. There is a wealth of information regarding smart investing available in the public domain which is; again accessible to everybody through technology. Although it is advisable to get your investments professionally managed, it can be a costly affair (fees and commissions are payable to advisors for their services and expertise). With technology, the cost involved is no longer a barrier to investments. Small investors are also welcome in the market.
Think Fintech: Finance and technology have grown to become intertwined in operations. Business models are being re-engineered to include technological advancements for specific target markets. For example – mobile aggregators, online financing for SMEs, insurance comparison and selection, online accounting solutions and many more. ‘Fintech’ is the new buzzword and entrepreneurs are cashing in on it.
Investment Monitoring: Every smart investor invests in various asset classes; he diversifies his investible surplus. It was initially cumbersome to keep track of value addition in investment portfolios, and thus professional advise was a must. However, with technology and investment getting interconnected since around two decades, monitoring of investments has become easier. A fund manager or investor can seamlessly calculate real-time gains or losses, portfolio value, net asset value (NAV), periodic return and capital appreciation at the end of a period without much effort.
Compliance Standards: It is almost impossible to imagine an investment climate without technological aid in today’s times. A major benefit from the digitisation of investment has been the simplification of compliance with regulatory norms. In India, SEBI oversees the stock and bond market, and corporates have to comply with the laws to function in the overall market. It has become easier for them to observe laws by computerisation and better tracking of investor holdings. Finding system errors have also become simpler for auditors due to technological aid.
The investment climate has improved over the years with a higher trust reposed by the investor community on corporates. Investing in shares and bonds of a company is a simple process through the online demat account. The days of fraud and errors in investments are long gone, and it is the era of smart investors making smart decisions as per their individual investment goals, risk appetites, and duration available for investing. Technology has boosted the confidence of the investing community and improved overall capital creation in the economy.