By Mahesh Desai, Convenor and Executive Committee Member of ANMI WIRC
Next-gen online brokers have complied with SEBI policies and made inroads in trading technology. The Indian investor is inundated with features such as zero brokerage, biometric logins, charts, reports, widgets, and trading at high speed – all without the help of a middleman.
The Indian stock market is rapidly transforming with the adoption of new technologies. Blockchain, cloud computing, RPA, advanced analytics, and smart contracts are also being used to revolutionize the stock market industry by improving transparency, reducing costs, increasing efficiency, and automating repetitive tasks.
"AI is set to enhance profitability and automate processes in the capital markets"
Seamless Operations
Technology has transformed the stock market in several ways. Online trading apps have revolutionized the trading experience by providing a platform for investors to buy and sell stocks from anywhere, anytime. AI has proved to be a game-changer in the domain of the stock market. It helps investors make informed decisions by analyzing vast amounts of data and providing insights into market trends. Technology has enabled faster transactions, making it possible to complete trades in real-time, and allowing investors to make informed decisions based on current market trends. Enhanced security features, such as two-factor authentication, have been enabled by technology to protect investors’ accounts from unauthorised access. Blockchain technology has the potential to revolutionise the stock market by enabling secure, transparent, and tamper-proof transactions. Technology has made it possible for anyone to invest in the stock market, regardless of their location.
Faster transactions
Advanced technology tools have enabled faster transactions, making it possible to complete trades in real-time. Automated trading systems, also known as mechanical trading systems, algorithmic trading, or system trading, allow traders to establish specific rules for both trade entries and exits that can be automatically executed via a computer. Various platforms report that 70% to 80% or more of shares traded on U.S. stock exchanges come from automatic trading systems. In India, UPI payments have made it easier to create seamless transactions and manage multiple accounts through a single mobile application. The Central Depository Services Limited (CDSL) offers an internet-based facility called EASIEST that permits clearing members of beneficial owners to submit off-market, on-market, inter-depository, and early pay-in debit instructions from their demat account.
Robo advisors to change the investment landscape
Robo-advisors are computerised investment platforms that use algorithms to create and care for their clients’ investment portfolios. Robo-advisors are gaining momentum in India but are slower to adopt than in other countries. KPMG predicts a compound annual growth rate of about 45% between 2020 and 2025. Many Indian investors still prefer human financial advisors due to their cultural preference for face-to-face interactions. Regulatory uncertainty has also slowed growth. However, younger, tech-savvy investors will likely change this trend. Robo-advisors provide low-cost, convenient, and transparent access to investment management. As younger investors enter the market and regulators provide clear guidelines, robo-advisors will become an essential part of the investment landscape in India and worldwide.
Technology to make investment secure
In terms of the stock market security of investments, technology has enabled the development of sophisticated tools and techniques to ensure the safety of investments. For instance, blockchain technology has been used to create tamper-proof and transparent records of transactions, which can help prevent fraud and increase transparency. Artificial intelligence and machine learning algorithms can be used to detect fraudulent activities and suspicious transactions, thereby enhancing the security of investments. Additionally, cloud technology can be used to store sensitive data securely, and encryption techniques can be used to protect data from unauthorised access. Overall, technology has played a crucial role in enhancing the security of investments in the stock market.
Customer onboarding to get hyper-personalised
The customer onboarding process in the Indian capital market has undergone a digital transformation in recent years. Fintechs have taken center stage as key enablers of technology infrastructure to simplify the onboarding process and complement the digital banking agenda of financial institutions.
Digital onboarding streamlines a collection of actions, including introducing new customers to the products, keeping customers informed of product developments, and leading them through all phases of membership, setup, and registration. This entire approach, which used to be an in-person process, has now been digitised and can be completed entirely online, using any device and from anywhere, thanks to specialised, comprehensive technological and security controls.
The technology used in the customer onboarding process includes instant account opening, the rise of niche trading platforms, hyper-personalised nudging, instant settlements, and real-time resolution of client queries. The process is designed to be a personalised experience, executed to engage and offer support to customers at all times.
Trends to watch out for 2024
Refinitiv’s report highlights the impact of AI, big data, and analytics on trading desks, emphasising automation and best execution. Forbes suggests preparing for power grid instability, reducing technical debt, incorporating AI and ML, and ensuring ethical AI usage. Analytics Insight predicts 5G, quantum computing, edge computing, blockchain, and AI as top tech trends in the stock market for 2024.
