The battle and subsequent fall of Carthage in around 146BC was a drawn out affair that had had seen the city under siege. Over about two years the Carthaginians had plenty of time to reinforce the city, to forge arms and prepare for the final push they knew would come from the encamped Roman garrison outside the city walls. When that eventual final push came by the Romans it was a slow, gritty insurgency to take the city – building by building and street by street. The invaders with great skill, numbers and determination overcame the local populous and laid a scorched earth policy which left the once proud city in ruins – its inhabitants sold into slavery or killed.
The rise and fall of empires is inevitable whether slow and protracted or in a large flash of light. The end of convention, the adaptation of tradition, the testing of the status quo, is all open to the test of time. There are certain forces, whether in nature or those made by man, that are set on a trajectory to forever change things, and without being too philosophical about it all one does have to wonder whether you will be part of the empire that is falling or the triumphant one about to plant your flag in its corpse.
FinTech – The gritty Roman army? The investment world as is – The great city about to be burnt to the ground? Perhaps not, I don’t see FinTech as a destructive force necessarily, but it will weed out the weak, and it will reshape the industry it’s in. The Status quo within investment management, the philosophy, the way investment management is done, the structure that has been created is stacked like a house of cards awaiting the forces that be to push the pressure points to induce collapse.
Technology has until now been subservient to those who wish to reinforce their current practices e.g. big banks, hedge funds and the like. However fortunately, FinTech is being used in many areas to democratise information and break down the dogma of investment thinking through it assisting “the people” to gain better financial independence in their thoughts and actions. A simple example might be the invention of platforms we now take for granted – those who provide online stock broking or heck, even spread-betting apps. Even they have taken power away from stockbrokers who used to control how people got in and out of markets whilst taking a huge commission for doing so.
Robo-advice takes the investment management world a little way further by using tech to put the power into the hands of the tech savvy individual – it’s online digital on-boarding of clients is going to be the norm over the coming years within the industry. Alas roboadvice doesn’t solve the problems of the instruments it sells but it is a little baby-step in the right direction for FinTech in investment management.
Slowly but surely over the last few years and into the future, we’re seeing more and more tech becoming part of the blood of the investment practice, the more transparency out there for investors the better, the more education about risk/reward out there the better. The mentality of the younger generation’s means they want results quicker, they want to know what they’re putting their money into and they want to know why an investment manager can do a better job than they can – is the cost justified. The amount of analytics and information out there even through mediums such as social media is all there to give them more information, whether it’s good or not so good is open to interpretation. So what does the landscape even look like going into the future? What does the crystal ball say? I don’t have one – unsurprisingly – but it’s pretty obvious that the world of investment management is soon to be transformed on all sides. The world of funds of funds of funds, the world of modern portfolio theory, the world of illiquidity, opaqueness and the world of convention is going to have its walls punched through by agile companies with great tech solutions as well as real game changers such as – Artificial Intelligence, Machine Learning and even neural networks, they are the 3 horsemen of the apocalypse for the status quo.
By Neil Anthony, Director at ArcSai, a firm trading quant/algo exchange traded derivative strategies alongside proprietary artificial intelligence/ machine learning & predictive pricing. Industry experts in Artificial intelligence within investment management alongside & “robo-advisor sector”.