What are the equity research trends in the digital age? Like all other sectors, equity research is encountering disruption and transformation – mostly for the better. The rise of digital technology has impacted every part of the financial industry, including equity research. Recent developments and innovations have made data and analysis more accessible and affordable than ever before. Thanks in part to the many FinTech startups that focus on improving technology, tools and innovations, this increased accessibility levels the playing field for independent and boutique firms and ensures that organizations of all sizes have access to quality and in some cases,real-time data. What impact do technology and the changing landscape have on equity research, today and in the future? A look at how data is acquired, shared and analyzed holds some clues.
Technology is Revolutionizing Equity Research, Here’s How:
A continuous wave of technology and innovation is bringing wide-sweeping changes to the industry. Where once large players dominated the marketplace, changes have created a more level playing field. Startups in the FinTech industry have had a dramatic impact on the landscape and the way the equity research is crafted and distributed. Here are just a few of the sweeping changes being made to the industry, thanks to technology:
Market Data Exclusivity Ends
Unparalleled access to data has traditionally been the privilege ofasset-rich financial firms; data from vendors like Bloomberg and Reuters was historically only available to those who could afford it. Plus there is a lot of backroom tips, which reduced thanks to regulations. This information gap may be a thing of the past as more new commercial models and vendors enter the FinTech space. From the ability to serve the needs of data customers with theflexibility to providing pay-as-you-go solutions and less strict policies surrounding long-term subscriptions and cancellations, technology is making data more available than ever before to concerns of all sizes, not just big players.
Information Democratization
Once, you needed to know the right people and the right places to get the data you needed to perform tasks or make decisions. With a more level playing field and better access to information than ever before, data is now more readily available regardless of whom you know or interact with. Information democratization removes the need to be in the right place at the appropriate time or to know the right people; instead, the data is there when you need it.
Big Data is More Useful than Ever
The ability to not only acquire and access information but to thoroughly analyze it further levels the playing field. For asset managers, thecapacity to access and sometimes share analyst’s hypotheses has become more accessible than ever before. Asset managers no longer have to result to emailing documents back and forth; the availability of new tools designed to analyze and share data makes it easier than ever for boutique and smaller firms to benefit from big data.
Machine Learning, Automation, and Artificial Intelligence
The use of cloud services, machine learning, and automation increases accuracy and drastically cuts the time and money needed to analyze data accurately. Just a few of the benefits of embracing this technology include:
Asset managers no longer have to result to emailing documents back and forth; the availability of new tools designed to analyze and share data makes it easier than ever for boutique and smaller firms to benefit from big data.
- Lower costs and more scalability: By investing in and using cloud technology, SaaS, and even analytic software, massive data sets can be analyzed in less time and for less money than using in-house analysts.
- Increased Accuracy: Using machine learning and models, one can arrive at decisions more swiftly, and even small nuances and changes in patterns will be apparent. From the input of data to the swift analysis of even narrow subsets, automation improves accuracy and enhances the quality of the results received.
- A level playing field: Software can help smaller players compete with big, established brands and make way for more innovation and tools
Robots and AI
When robotics and artificial intelligence is mentioned, the most common image is that of robots taking over production or manufacturing jobs, but robots are beginning to have an impact on the fintech space as well. The latest generation of robots can work as stock pickers, using advanced analytics to make decisions without the burden of human emotion or stress getting in the way. Lower costs for investors, without any change in the quality of the work performed, could lead more firms to adopt software and robotic models, replacing their human counterparts for good.
Improved Connectivity
The ability to stay connected with the real-time buzz and news from the market floors provides more than a competitive edge – and you no longer need to be physically present to know exactly what is trending and happening in real time.
From tools that data mine Twitter comments on stocks to startups that exist purely to spot that proverbial canary in the coal mine, instant connectivity is changing the way we connect with news and real-time trends. Tools and technology expand your reach and allow you to gather information far outside you own personal network; the information collected is not only more current, but it is alsogenerally deeper and richer, too. Better connectivity leads to better information gathering and the ability to respond swiftly when you need to.
New FinTech companies are transforming both the finance industry and the investment research industry. Whether you are already feeling the impact of improved, more global and affordable access to tools and data or planning to make the most of these developments, following the latest trends can help you get ahead and stay ahead in a competitive marketplace.