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All industries rely on the steady (and sometimes disruptive) march of technology: And the last few of decades has seen vast changes to the way in which society and business function through innovation such as the internet, smartphones and machine learning. The investment industry is no different and has evolved in a number of significant ways over the recent past.
Investment platforms
The world has become much smaller for investors with different investment platforms providing enormous access to investment markets and strategies. This started with the move from trading floors to trading screens and the growth of online stock brokers and wrap accounts; and has developed into a marketplace whereby investors easily buy and sell all manner of stocks (local and international), bonds and managed funds. Investors can also choose freely between active and passive exposures and access personalised portfolio services through managed accounts.
Peer2Peer investing
Communications technologies have also made the process of getting money from those that have a surplus to invest and those in need of productive capital much more simpler. Whilst investing in business in the past generally was limited to the stock market, nowadays, there are a number of crowdfunding platforms that connect like-minded individuals. Crowd equity funding platforms, for example, allow companies to list their ideas and capital needs and help to manage funding that comes from willing investors.
Blockchain
The revolution that has been started by bitcoin and cryptocurrency has also started to work its way into other investment systems. This is primarily a process of decentralisation, whereby the account of who owns what is no longer in the hands of centralised registries and banking systems, but instead in the hands of the collective. This could see traditional currencies replaced one day, but might see revolutions in the way other assets are traded and account for.
Automated investing
Computing power has been harnessed to work a vast array of investment strategies quickly and efficiently. Automated investing includes both programmed strategies, whereby trading rules are systematically built and implemented in order to enter and exit positions and take advantage of mispricings; as well as machine learning strategies, whereby rules are developed as the machine trades and learns from successes and mistakes.
Deep learning and big data
The machines can also be utilised to find patterns in the enormous amount of data now available. This might data with direct ties to the investment world (e.g. company financials, economic data) or less obvious data (e.g. weather reports). Hedge funds, in particular, are big proponents of machine learning and its ability to see patterns that are hidden to human interpretation.
Just as the investment world has changed considerably in just the last 30 years, the marketplace of the mid-21st century is likely to be different still. Ongoing advances in things such as artificial intelligence and quantum computing is likely to accelerate the evolution of markets, whilst shifts towards sustainable investing and decentralisation might mean the investment world of the future could be very different from today's experience.
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