According to Statista, between 2010 and 2018, the market capitalization of the financial services industry worldwide grew from 2.5 trillion to 3.3 trillion U.S. dollars, which represents an increase of 1.3 times. In the same period, the market cap of the fintech sector increased six-fold from 60 billion to 360 billion U.S. dollars. This significant growth highlights the current upward trajectory of fintech globally.
There has even been a greater leap forward in recent years. With the transformation in the finance industry, it also disrupts finance trading by expanding financial inclusion and cutting down on operational costs.
Most importantly, it helps individuals and corporations to increase wealth and shorten the learning curve by diversifying their portfolio via emerging technologies, which can be called as wealthtech that combines wealth and technology with the goal of providing digital solutions to enhance wealth management and investment. Here are some strategies of wealthtech:
Big-data analytics strategy
The silver bullet of big-data analytics strategy relies on high predictive accuracy , which efficiently mitigates risk to provide for higher returns for investors and traders.
Predictive analytics is a form of computerized Artificial Intelligence (AI) analysis that uses current and historical data, machine learning algorithms and real-time performance information to make predictions about future outcomes. Artificial Intelligence has the exceptional ability to adapt and learn and execute actions following automated decisions. With more high quality data, the analysis performed by AI technology will help power the next phase of decision-making and profitability.
Financial institutions and professional traders are utilizing big-data analytics to gain insights into financial market sentiments, trading patterns, growth trends and make informed investment decisions to gain predictable wealth.
“With a scientific individual collection ecosystem that can collect first-hand data from the end users directly, advanced big-data analytics can attain an objective of 98% accuracy, ” says GRSTAR CEO Tom Morrison. GRSTAR is a big-data analytics company, providing intelligent investment decision-making tools in the tech-powered business landscape.
“In addition, predictive analytics can also disrupt the wealth management industry by broadening users’ investment portfolio, which precisely predict future outcomes with a high accuracy in the fields of Finance, Blockchain, Gaming, Real Estate and Emerging Technologies,” added Morrison.
High frequency trading strategy
High-frequency trading is an extension of algorithmic trading, which is a set of instructions executed by machine automatically. It manages small-sized trade orders to be sent to the market at high speeds, often in milliseconds or microseconds, which can help traders capitalize on infinitesimal price discrepancies that might exist only for a minuscule period.
Outperforming naked eyes, high-frequency trading can exploit the potential market conditions and detect the profit opportunities in an ultra-short time duration. One example is arbitrage trading in digital assets, stocks, commodities and foreign exchange, which utilizes the price discrepancies spotted at the lightning-fast speed in different exchanges.
“Speed is now the defining characteristic of the market,” highlighted by a blog from Bloomberg. By increasing the trading frequencies and spotting the profit trends instantly, high-frequency trading enables both individuals and corporations to gain wealth faster and easier.
Social trading strategy
Social trading is a form of investing that allows investors and traders to observe the trading behavior of their peers and expert traders, following their investment strategies by using copy trading or mirror trading. It requires little knowledge about financial markets, and has been described as a low-cost, sophisticated alternative to grow wealth.
Social trading enables retail investors to gain insights from crowd wisdom, as well as allow investment experts, using social trading platforms to sell and share their expertise. It allows traders to follow the most experienced strategies through web and mobile communications, tearing down barriers to the financial markets by making it easy for anyone to trade at will to increase their wealth.
According to an article by Finance Magnates, “[T]raders who use social trading experience 311% higher profits than traders who don’t.” Investors can gain recognition as successful traders through social trading, which helps one another to trade with efficiency and gain higher returns.
“Wealthtech is utilized to help individuals and companies gain wealth more efficiently through big-data analytics, artificial intelligence, social trading and other emerging technologies, which has transformed how investors and traders approach wealth management,” concludes GRSTAR’s Morrison. Considering the changes that wealthtech has introduced to the financial sector and other sectors up to this point, we can certainly look forward to new and exciting innovations in the future.