Investing is getting easier and more publicly accessible, thanks to new websites, apps, and algorithms that make us more capable than we could have been alone. But what we’re experiencing now is only the beginning.
In the past few decades, we’ve seen an explosion in investing technology, and that growth is likely continue for the coming years at an even faster rate. So what can we expect from the future of investing technology?
Paths of Investment Evolution
First, take a look at the various ways technology has evolved so far. There have been three main paths of development:
- Convenience. The first is simplification or increased availability of services that were around before, such as online trading through such systems as Scottrade or e-Trade. This area has largely been explored, but you might expect these systems to increase in convenience and sophistication.
- Diversification. Technology is also allowing for entirely new models of investment, such as crowd-sourced personal loans through services like . We’ll see more novel investment opportunities of this sort develop in the next few years.
- Expansion. There’s also been a degree of expansion, in which more investing services are made available to wider demographics, thanks to ease of access, fewer barriers to entry, and more available information.
Predictions for the Next Decade
Given these three paths of development, I think we’ll see the five following trends develop with particular strength:
- Equity crowdfunding will become popularly accessible. Equity crowdfunding is a relatively new phenomenon. A pool of investors each contributes a small amount of capital in exchange for partial ownership in a company, and eventually capitalizes on profits as the organization grows. Currently there are some major legal limitations for crowdfunding, however, including the fact that only accredited investors can use it. In the near future, these limitations will likely soften, to allow individuals to invest in equity projects as they see fit.
- Penny stocks and riskier ventures will get more attention. There have been some impressive success stories from a select few investors who have accumulated wealth from risky investing ventures such as trading penny stocks, but these risky ventures have ben regarded as somewhat shady and inaccessible to the average investor. Future technologies will likely make these easier to access, with more transparency in the processes and more information on how to engage with them safely.
- More “hedging” systems will emerge. Currently, most online apps and platforms specialize in one area, such as investing in stocks, bonds, or mutual funds. But modern tech users are accustomed to systems that aggregate different functions in one suite of services; it’s a major motivating factor for the development of smart-home technology, among other things. In the future, we can expect to see more investment software programs and apps venturing into other, more diversified areas, and offering more services to investors.
- Robo-advisors will become more niche. Currently, many services like Wealthfront offer “robo-advisors” as a means of investing in the stock market, which focus on algorithmic trading to see better, more predictable results. Most of these services are generalized for the “average” investor, but I expect we’ll see more niche platforms that focus on certain industries or short-term results in the near future. This, in turn, may make algorithmic trading more popular, which may create even fiercer levels of competition between providers.
- Investing solutions will become more personalized. This is one of the most important developments we see occurring, because it’s going to affect almost every online platform. Tomorrow’s investors are going to be more demanding of personalized, unique investment solutions in the same way their content feeds and advertisements will be perfectly catered to them. This will force new apps to come up with different investing “blends,” tips, and strategies that work differently for different kinds of investors.
It’s hard to predict the future of technology with any degree of certainty, because thus far, the greatest and most impactful technological innovations have been the ones we didn’t see coming. The novel ideas, surprising developments, and twists and turns of the coming years are what will shape our investing future. Keep an eye out for them as they emerge.