Fintech is now a reality in almost everybody’s lives, from experts in the finance industry to your average bank client. What effect has this technology had on investment management? Fintech in investment management is an essential tool with many benefits, but it also comes with several challenges.

What Is Financial Technology (Fintech)?

The term ‘fintech’ is used to describe technology that is used to deliver financial services, from consumer banking apps to high-level software used by investment managers. It is designed to help individuals, companies, business owners and consumers to gain easy access to financial operations and services. It is also intended to make these financial services better, more accurate, faster and ultimately more efficient.

How Does Investment Management Fintech Work?

Fintech is now widely employed in investment management. Fintech investment tools combine AI, machine learning, big data and blockchain to help investment managers make better decisions and offer better advice to their clients. They enhance accuracy and security, and help to automate certain functions that investment managers would previously have had to do themselves, or that would have been impossible. The most important thing is data – lots of it – and the ability to store and analyze it, so as to optimize future investment decisions.

The Benefits of Fintech Investment Management

Fintech provides several essential benefits to the investment industry, including the following:

  • Democratization of investment platforms: There was once a time when high-level investment management software was available only to the top bankers, brokers and financial planners. Fintech has changed that fundamentally. Quality investment technology products are now available to millions, often free of charge.
  • Capital optimization: Investment management software optimizes investments, expenditures, and income. It thus enables wiser spending and saving. Saving frees up more capital for investment.
  • Customizable features: Investment software features responsive algorithms and highly customizable functions that enable investors and investment managers to tailor their approach for each client. 

Challenges in Fintech Investment Management Platforms

There are, however, some challenges that still need to be overcome in investment fintech:

  • Smart algorithms are highly dependent on the quality of the setup: It is all very well to talk of the benefits of big data and smart algorithms, but these mean nothing if they are not used in a well-designed infrastructure. Algorithms are only as good as the information fed into them, so if a poorly built big data setup feeds faulty or irrelevant information to an algorithm, the results will be poor.
  • Compliance can make or break a fintech app: Fintech is governed by international financial regulations. If the tech is not developed with a deep understanding of regulations in different markets, it is sure to suffer as a result.

Momentum Wealth of Aligned Capital Partners Inc. is a boutique wealth management and investment management firm based in Georgetown, ON. We are here to help our clients with their unique investment objectives and approaches. We provide excellent wealth management strategies for individuals and families, using the latest fintech in investment management, and all the tools and expertise at our disposal. Contact us to find out more about our services and what they can do for you.