By Mr. Hemant Kakkar
The financial landscape is experiencing a seismic shift driven by the convergence of three powerful technologies: cloud computing, artificial intelligence (AI), and data analytics. This powerhouse trio reshapes the capital markets industry, creating innovation and value-creation opportunities.
But do you know about the changes they’re bringing? Let’s uncover how these technologies are individually empowering the industry.
Cloud: Scaling Up with Agility and Cost Effectiveness
The conventional IT infrastructure, which is primarily on-premise, often poses scalability, cost-effectiveness, and agility challenges. However, with cloud computing, the solutions industry is witnessing a change in the scenario. Its on-demand resources and flexible pricing models have indeed changed the game.
With cloud solutions, there’s no longer the need to bear the high cost of server centres and storage, face security risks, and slow performance. Cloud computing has improved the outlook of the entire market.
For example, some Indian stock exchanges have adopted cloud solutions to handle increased trading volumes and ensure faster order processing. The purpose of this is to encourage research on Indian capital markets. Researchers can access and analyse historical orders and trade data.
Moreover, cloud solutions enable capital market players to quickly adapt to market changes and innovate without significant upfront investments.
Data Analytics: The Black Box of Insights and Intelligence
Imagine how much easier it would be to make decisions if you had access to summarised information instead of a large volume of raw data. You’d be making better decisions. That’s precisely what data analytics is doing in the market, helping you and companies make the right choice.
Capital markets generate massive amounts of data, encompassing trade flows, market trends, and customer behaviour. Data analytics tools unlock the hidden potential within this data, providing actionable insights that can inform investment decisions and improve risk management and personalised client experiences.
Various wealth management firms in India utilise data analytics to tailor investment recommendations based on individual client profiles and risk references. Such firms use analytics tools to fragment the large volume of data, analyse clients’ risk tolerance, and provide custom strategies.
AI: Optimising Efficiency and Accuracy
What if you could get professional advice on every trade/investment you made? That too instantly and based on your financial profile! That’s what AI is doing in the capital markets.
AI algorithms are capable of learning from vast datasets and making complex decisions with remarkable accuracy. This automation potential is transforming capital markets by streamlining processes, optimising trade execution, and even identifying fraudulent activities.
For instance, per the FIU College of Business, in the U.S. stock market, 70% of conventional trading is initiated with the help of AI. The use of algorithmic trading in the U.S. has increased manifold, and India is slowly catching the same pace.
Various Indian firms are leveraging AI to automate investment management. Through their robo-advisor services, they are helping people manage their wealth and make smart investments.
Additionally, AI-powered fraud detection systems are being deployed by banks and exchanges to mitigate financial risks.
The Synergy: When All Three Combine
The true magic unfolds when these technologies work in unison. Cloud infrastructure provides a scalable platform for data storage and processing, while AI algorithms analyse this data to generate valuable insights. These insights, in turn, can be used to optimise further processes and decisions powered by AI.
For instance, imagine a cloud-based platform that analyses real-time market data using AI to generate personalised trading recommendations for investors. Therefore, this synergy unlocks a world of possibilities for improved efficiency, personalised experiences, and superior decision-making.
India’s growing digital infrastructure and tech-savvy population make it a fertile ground for capital market innovation. Government initiatives like Digital India and the open API are further accelerating the adoption of these technologies.
Lastly, this is just the beginning of the journey. As the Cloud, data analytics, and AI industry evolve, the capital markets are poised for a transformative era.
(The author is Mr. Hemant Kakkar, Convenor, 13th International Convention & Chairman, ANMI-NR, and the views expressed in this article are hisown)
