Alternative Investments

Financial Trends That Are Sparking Innovation In The Industry

By Chalmers Brown, CTO of Due

When it comes to finance trends, most of the attention gets focused on current interest rates and how that should influence the ratio of stocks and bonds in the average person’s investment portfolio. And any mention of modern, up-and-coming investment trends has a tendency to start with discussions about short-lived fads and end in talks about cryptocurrency.

But financial innovation has exploded far beyond block chains. With modern consumers demanding higher functionality and greater variety of options in their businesses and finances, pioneers in the field have risen to the occasion to meet this demand.  

1. The need for alternative investments to be more accessible

The alternative investment world used to be very confusing and hard to get into. Gold, cryptocurrency, startups, and hedge funds are rarely standard options you can select in your solo 401(k) or SEP IRA. Inventive companies have solved this problem by making it easier to include these investments in your retirement accounts. 

For example, interested in owning and renting real estate but don’t have the cash to buy properties? Companies such as Rocket Dollar allow you to use your IRA to easily invest in alternatives like real estate. The average investor could have been scared in the past to get into alternative investments, but with the emergence of these platforms, anyone can sign up and have access to the investments they may not have had access to otherwise.

2. Finance opportunities could grow significantly in the MetaVerse

In books like “Ready Player One,” Ernest Cline creates a world called the Oasis where people create an avatar of the character they want to be in a virtual world. Watching the Steven Spielberg film adaptation years ago, you could have thought this would never happen in real life. However, years later we are moving to that world. 

Jeff Wong, EY’s Global Head of Innovation recently stated, “the next step for our world after the trauma of the COVID-19 pandemic — bridging the physical and virtual worlds to be there without really being there, and without clunky virtual reality headsets or impersonal avatars.” 

Companies will need to identify what financial/investment opportunities there are in this world and where it can fit into the growth of their customer base and services. 

3. Old school financial structures are being disrupted by easy-to-use technology platforms

In the past, to put money in retirement you would need to have a financial advisor put some master plan in place and meet with all your employees with tons of paperwork. However, technology advances enable retirement platforms like Guideline to streamline the process with tools that integrate with payroll solutions such as Gusto

This provides multiple benefits. Firstly, employees have greater and more instant control over the investments in their retirement accounts. Secondly, employers are no longer responsible for enacting changes requested by their employees, which eases a huge amount of administrative burden.

Easy-to-use platforms essentially make it possible for people to eliminate the middle man when it comes to their finances. Easily investing in and tracking the value of anything from cryptocurrency to contracts for difference requires no phone call to a broker to accomplish.

4. Financial institutions and services are accelerating movement to the cloud

The Cloud makes it easier to enhance projects with technology such as blockchain, AI, cryptocurrency, and mobile innovations. The financial industry was migrating to the cloud before Covid-19 struck, but this pandemic was a huge catalyst to rapid progression of transitioning to the cloud.  

This trend toward cloud-based applications and data storage has brought with it further innovation in taking online security to the next level. According to leading online identity security experts such as Okta, modern cloud systems are often more secure than the majority of business firewalls. 

What was once a major cause for concern regarding moving to the cloud has now become a big motivator. Online information portals can provide secure protection through high-level encryption; this is a major departure from traditional in-house portals that are only as good as the IT protections of the company you are sharing information with.  

5. Diversity and inclusion is becoming prioritized in company culture 

The need for diversity in the financial industry has resulted in partnerships, platforms and other resources that help companies enhance their recruiting. For example, companies like Penserra partnered with organizations like CEO Action for Diversity and Inclusion to be able to help diversity efforts as they grow their company. 

Penserra founder George Madrigal explains how important making steps towards an improvement in diversity is vital to the financial industry and how leaders build companies. “I am of Latino descent, so diversity has always been a natural part of my decision-making process. In addition as CEO, I am looking to hire the best people possible for any given position. It turns out that some of my strongest hires have been recent college graduates who just happened to be gender diverse or ethnically diverse,” Madrigal said. 

This opportunity has sparked innovative partnerships like the above and improvements in technology in recruiting platforms. Employers can not only foster relationships with diverse up-and-coming individuals but fill in the gaps in their roster to create the most well-rounded team they can.

Innovation through demand

Technology has advanced in so many ways to meet consumer demands in a variety of industries. The financial realm is certainly no exception. Continuing to track innovations and available options can give anyone the flexibility and confidence to adapt their investment and business strategies to suit their needs. 

This article was submitted by an external contributor and may not represent the views and opinions of Benzinga.

© 2022 Benzinga does not provide investment advice. All rights reserved.

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