How fintech revolutionised the broking industry

India is now the third-last fintech ecosystem globally. The continued innovation in fintech is altering how different industries operate. New-age platforms of the 21st century have taken the place of traditional banking, lending, trading, and investing methods. Indeed, fintech solutions have instilled multi-fold changes in the stock broking industry.

Today, a customer’s journey who wants to enter the capital market is completely different compared to a decade ago. From discovering the stock market to investing and continuing to learn about it, technology has helped bridge gaps across customers’ investment and trading journeys.  

Discovering the nuances of trading and investments 

In the 1990s and even throughout the 2000s, investing in the stock market was intimidating and was considered a risky avenue. Investing in stocks and indulging in daily trading were limited to affluent people in urban areas, as trading was done through brokers who charged hefty fees. Others could only learn about the stock market either through word-of-mouth or news, which limited their knowledge to take advantage of this investment avenue. 

However, over the last decade, technology has made participation in the stock market easier. With social media and smartphones, it is easy for youngsters to discover stock investments through Instagram, Facebook, Twitter, and YouTube.

Digital stock broking platforms are leveraging algorithms to deliver relevant content with targeted marketing to reach out to younger audiences and get them started to invest in the market.    

Making sound investment decisions 

Before technology took over, even if a young user decided to start investing, a glaring challenge was decision-making. Which stocks should one invest in? What kind of strategy did they need to adopt?

It involved tons of research, a deep understanding of the stock market, often reading annual reports and staying up to date with market trends. Even then, the information about industries, sectors, and companies was limited and not easily available to everyone.

In fact, seasoned investors had to stay in constant touch with their financial advisors, making trading and investment tedious. Since only a few could understand and be on top of the market trends, not many were confident in investing in the capital market. 

However, technology has democratised stock market investment. Today, tech-enabled broking platforms provide data analysis of different companies, industries, and sectors. Anyone can look at the performance of a particular stock and its real-time value with just a few clicks on a smartphone.

Some trading platforms also use new-age technologies like AI and ML to provide personalised recommendations to users, helping investors make buying and selling decisions. 

Fintech paves the way

Once you decide to invest, the next challenge is to transact. People who could afford brokers could invest easily. There wasn't much access to capital markets for people from small towns. Either the trader had to be present on the market floor to make trades or had to get in touch with a broker over the phone to invest.

The whole process of buying and selling was complicated. However, fintech platforms that gave access to mobile trading have made investing simpler and easier. 

Broking houses adopting fintech has led to a rise in web and app trading platforms. At the same time, increased internet connectivity and access to smartphones have made these apps accessible to almost everyone. People residing in Tier II, III, and beyond cities have easy access to capital markets and can conduct trades with just a few clicks.

Tech-enabled discount broking apps have made transactions cheaper and easier for everyone with an internet connection. It is no wonder that this ease of making investments has increased investor participation. 

Managing portfolios became easier 

Earlier, keeping a record of all transactions and investments was done by maintaining records in diaries and files. Most investors used to limit their investments in stocks due to the hassle of keeping track of transactions, managing it, and ensuring a timely exit in case of a dipping stock value. However, gone are the days when people had to manage their trades manually. 

Now, people can quickly access their complete portfolio with a single click through stock broking apps. It also allows traders to monitor real-time market performance. There are low-code platforms where you can automate investing or trading if you know little coding. As a result, investors can make informed trades and manage their portfolios well for better returns. 

Learning and experimenting with tech-enabled platforms 

Beginners can easily get overwhelmed with tons of information about the capital markets. More so, when information was limited, and they had to get in touch with their brokers each time they had a query. But tech-enabled platforms are gradually doing away with those initial hiccups new investors face. 

Today, information about sound investing strategies and how to build a strong portfolio is open to almost everyone. Online education knowledge centres by broking houses are helping novice investors learn about different asset classes, their pros and cons, and prospective outcomes.

Some fintech platforms also allow investors to test and try their investment strategies before making the final trading decision, equipping them with apt portfolio diversification strategies for maximum returns.

Conclusion

The emergence of fintech platforms has altered the broking landscape. In the last decade, a fintech evolution has made stock trading a practical and appealing choice for young people wishing to invest a portion of their income in capital markets.

With increasing fintech adoption in the broking industry, we will continue to witness an uptick in retail participation, especially from those residing beyond the urban belt of the country. 

Prateek Mehta is the Chief Business Officer of Angel One Ltd.