Connect with us

Banking

NOVICE INVESTORS LISTEN: LEAVE YOUR EMOTIONS AT THE DOOR

Published

on

Maxim Manturov, Head of Investment Research at Freedom Finance Europe

There was a sizeable rise in new investors during the pandemic as rates sank to record lows in March and April 2020, and a new breed of bargain hunters sought to make money fast. In fact, a surge in new accounts showed that younger, less experienced investors viewed this sudden downturn as the perfect opportunity to dip their toes into the stock market for the first time. Other motivations include affordable retail accounts with zero commission and new trading platforms for Millennials, all of which inspired newcomers to take the plunge.

Maxim Manturov

However, while the actual process of buying stocks is not particularly difficult, what can be challenging for novice investors is choosing to put money into companies that consistently beat the stock market. This requires a lot of background knowledge and research, meaning investors must put in extra time and effort if they wish to benefit from long-term gains. Put simply, investing is not a one-shot process.

Alongside this, younger, more self-confident investors often make riskier choices based on gut instinct, which explains why regulators are cautious about this sudden flux. While it is encouraging to see that younger generations are trying to get stuck into investing, it is important they act with caution and do the research before splashing the cash. They have time on their side to get to grips with the do’s and don’ts of the stock market, so they must ensure they leave their emotions at the door.

In light of this, below I share my top tips for investors who are looking to enter the stock market for the first time, make data-driven decisions and seize ripe financial opportunities. Ultimately, the stock market, unlike the racetrack or casino, is a generous bookie in the long run. People tend to get more money back than they put in and investors must learn that high-risk investments are not always the way to go.

 

Background research holds the key to success

First and foremost, it is beneficial to do some background research into the company. For more in-depth knowledge, Warren Buffett, one of the world’s most successful investors, advises against choosing a company whose business model is unclear. As such, before choosing to invest, regardless of the size, reputation or hype surrounding a company, you should always do your research and understand its operations. In other words, you should never simply rely on what one person is saying. As an investor who is eager to learn new things, you need to feel comfortable and become well versed in undertaking independent research.

First-time investors should also follow the diversification concept to limit the risks of specific sectors or businesses, and not commit more than 5-10% of their portfolio volume to a single company. Emotion is the single greatest impediment to investing. Investors must not allow fear or greed to influence their judgments. Instead, they should consider the larger picture and think about their decision carefully. Stock market returns can vary considerably in the short term, but historical returns for large-cap stocks can average at 10% in the long run.

 

Get to grips with fundamental and technical analysis

Becoming acquainted with fundamental and technical analysis is another key step, not only to gain a better understanding of what to invest in, but also to determine trends, support and resistance levels. For example, studying basic indicators such as the relative strength index (RSI) is crucial, as it enables investors to achieve at least a certain degree of success in the markets. It is also necessary to determine the initial investment amount, which should be enough to eliminate any negative influence on investment decisions. First, it is important to determine whether the company has a fundamental potential for growth. And then, technical analysis will start to establish if the stock is steadily rising or moving sideways.

 

Create a smart  investment strategy

Finally, you should always create an investment plan to develop your own strategy for stock market trading. This includes setting specific and realistic goals, taking the time to understand your current financial situation and developing your risk profile. You should also pay attention to financial performance and choose a company with a good balance sheet, low debt burden, high margin and sustainable average annual growth, as well as other positive financial indicators. Smart, pre-planned strategies can help first-time investors to build wealth efficiently and securely, while also moving them closer towards their end goals.

 

The current economic outlook

In general, larger, more mature firms still have significant growth potential, so I would suggest investors pay attention to tech giants and major banks, as well as the healthcare and cyclical industries that are speeding with economic growth, given the current economic outlook. IPOs, in general, will also complement portfolios extremely well. If the risk is larger, investments in IPOs have more growth potential, and with sufficiently solid fundamentals, such investments are more likely to provide a favourable outcome. Just make sure to follow the basic investment guidelines before coming to a decision.

 

Banking

Bringing Automation to Banking

Published

on

By

Ron Benegbi, Founder & CEO, Uplinq Financial Technologies

 

Automation is everywhere you look these days; from supermarkets to warehouses to automobiles. This prominent trend shows no sign of abating anytime soon. However, some sectors remain behind others when it comes to adopting automated technologies. Banking is one such segment, but there’s now evidence to suggest that this could be about to change.

 

What do we mean by automation?

There are a lot of ways to define automation, but broadly the term applies to any technological application where human input is minimized through design. Over the years, automation has evolved from a basic level, which took simple tasks and automated them, all the way to advanced automation powered by Artificial Intelligence (AI). In general, automated solutions work to increase productivity and efficiency within businesses and often result in a reduction in costs associated with human capital.

 

Ron Benegbi

Why has the banking sector been slow to adopt automation?

The banking sector has been built on a number of long-standing, tried and tested processes and protocols, which have been continually fortified and refined over time. This is one explanation as to why the sector has been so slow in adopting new, automated methods within its operations. Additionally, many major financial institutions have spent decades building their own internal legacy computer systems, which are often incompatible with modern automated solutions.

When combined, these two issues have caused a significant lag in the banking sector with regards to the adoption of automated technologies. This lag has created a market opportunity that a number of fintech providers have been able to exploit in recent years. Offering a more responsive and tech-first user experience, many fintech providers are leveraging the power of automation to better meet the banking needs of their customers. However, there is still time for the banking sector to start bridging this gap.

 

Does automation have a place in the banking sector?

The opportunity for automation to play a role within banking can be transformational.

To achieve this, it’s important that legacy organizations begin to learn from their more tech-savvy, smaller counterparts. If used effectively, automated financial solutions can greatly improve the experience of banking customers, both on a personal and business level. So, what exactly does this change look like, and how far away are we from seeing it become a reality?

A good place to start is the small business credit lending process, where not much has changed since the 1980’s. Over that period, the world has greatly transformed, but the methods used to assess credit worthiness have remained somewhat static. For the most part, banks assess data related to businesses’ accounting and banking records and from credit scores. For many businesses, especially the newer and less established ones, this antiquated approach is having a detrimental effect. In fact, it’s often cited as a contributor to the huge funding gap between SMBs and their larger counterparts.

 

How can automation benefit the banking sector?

By adopting more automated technologies, lenders in the banking sector can begin to assess more comprehensive information when making credit decisions. Notably, new methods exist, which enable additional data sets to be evaluated, in order to build a more accurate financial depiction of a business’ overall position. This data can come from sources like external market attributes, economic indicators, demographic data and exogenous shocks.

By leveraging additional data sets through new methods of financial automation, banks are now in a position to respond more effectively to small businesses, including those in emerging and evolving markets where there is a lack of conventional sources of information.

With more ways to access funding, facilitated by alternative data and automated processes, small business owners can improve their operational efficiencies and accelerate their growth efforts. In doing so, legacy oriented financial institutions can now better equip themselves in protecting against new, nimbler tech-based disruptors.

 

Continue Reading

Banking

MYTH BUSTING THE ROLE OF OPEN SOURCE IN FINANCIAL SERVICES

Published

on

Nigel Abbott, Regional Director North EMEA, GitHub

 

There is no denying the financial services (FS) industry is under pressure to innovate. Not only have customer and consumer expectations for digital experiences surged in recent years, but the emergence of nimble and ambitious fintechs have disrupted the market. Yet, despite striving for innovation being table stakes across the industry, FS organisations inevitably face familiar hurdles that slow their progress, including concerns surrounding security, compliance, and the ability to act fast.

Open source is increasingly seen as a route to drive innovation and create new value. The FS sector’s utilisation of open source and the transformative role it can play is accelerating – on paper, at least. According to the recent Fintech Open Source Foundation’s (FINOS) 2021 State of Open Source in Financial Services survey, as many as 80 percent of FS leaders said that innovation, reduced time-to-market and total cost of ownership are factors for FS businesses to consume open source.

Nigel Abbott, Regional Director North EMEA -GitHub

But the reality is these positive adoption figures don’t tell the whole story. The survey also revealed that 75 percent of FS technology leaders said their businesses are either not “open source first”, or that they did not know if they were. Tellingly, less than one in ten (eight per cent) said that their business has put in place policies to encourage open source contribution.

The statistics point towards disparity between uptake of open source and the ability to use it to its full potential. But why?

For me, it comes down to some common myths about the role of open source that need demystifying:

 

Myth #1: There are limits to the innovation that open source can deliver

This could not be further from the truth. All enterprises, including FS companies, rely on open source software to build the best software for their customers, improve infrastructure, and unlock the potential of their engineering teams. Nationwide, for example, has completely redesigned its DevOps processes to respond faster to market changes and keep pace with customer expectations to remain relevant. The impact is transformative when they actively embrace it and participate fully in the open source community, creating a win-win situation for end-users. 

 

Myth #2: Data can be shared without consent 

Quite the opposite. Open source does not require FS businesses to share all their secrets and give away their competitive advantage. Instead, taking an “innersource” approach allows financial institutions to take the skills of developers who are accustomed to using open source tools and brings these inside the company firewall, providing a secure internal platform for working collaboratively on projects.

 

Myth #3: Open source is not secure

The most common misconception is that higher security risks are associated with code being openly available to anyone who uses it. But the open concept is, in fact, one of the biggest security strengths of open source. This is because of the collaborative nature of how code is built. The open source community has a shared responsibility for developing and maintaining secure code, and there is a vast global pool of developers identifying and fixing security issues. Supported by the right tools and processes, open source makes it easier for developers to code securely throughout the entire software development lifecycle, reducing the amount of time and financial investment in delivering secure products. Research from Red Hat found that security is regarded as a top benefit for enterprises using open source.

 

Myth #4: The open source community lacks finance sector contributors

This is untrue. Financial enterprises of all shapes and sizes are prominent participants in the open-source community and lead by example, sharing meaningful code contributions. Challenger banks and institutions such as Goldman Sachs contribute to open source initiatives via FINOS. By opening their code and ideas, FS companies can share lessons and support the whole community – helping them deliver better services and more value to their customers. And crucially, they are advancing a community that they can systematically tap into and benefit from.

Open source is already delivering innovation in the FS sector. But the bottom line is that there is so much extra value it can bring. Unlocking the full potential of open source to effect change does not just require buying DevOps tools. Open source requires organisation-wide understanding and support, a culture of collaboration and a progressive DevOps and governance process to thrive. Only then can it deliver its true value and accelerate innovation.

 

Continue Reading

Magazine

Trending

Technology2 days ago

AI-Powered Fraud Prevention for Digital Transactions

By Martin Rehak, CEO of Resistant AI Fraud is on the rise, thanks to the rapid escalation of digital channels...

Top 103 days ago

The future of retail trading

Joe Jowett, CEO of StrikeX   The 2020s look set to be the decade of the retail trader. As the...

Business3 days ago

Dissecting the expansion of online checkouts

Daniel Kornitzer, Chief Business Development Officer   Card payments have long existed as the preferred payment method for online consumers....

Business3 days ago

How bug bounty programs can help financial institutions be more secure

Rodolphe Harand, Managing Director at YesWeHack   Financial services have been one of the most heavily targeted industries by cybercriminals...

Business3 days ago

Resolving the unintended friction of Web 3.0

Marten Nelson, CEO, M10 Networks   Media is buzzing about Web 3.0 and the metaverse. Companies and investors are scrambling to get...

Wealth Management3 days ago

Predictions for Alternative Data in 2022

Neil Chapman, CEO of Exabel   2021 saw various firsts for alternative data. The $1.6bn flotation of SimilarWeb evidenced the...

News3 days ago

Why Zero Trust and securing the supply chain is key to post-pandemic recovery

Jim Hietala, Vice President, Business Development and Security at The Open Group   Banking and finance have grown to provide...

Finance3 days ago

Five predictions set impact the finance teams in 2022

By Rob Israch, GM Europe at Tipalti   The CFO now has a very different set of responsibilities in comparison...

Finance3 days ago

Three ways to reduce uncertainty in financial services marketing

By Patrick Costello, Senior Product Strategy Director, Optimizely    According to Bain & Company, uncertainty is one of the key factors affecting marketing...

Banking3 days ago

Bringing Automation to Banking

Ron Benegbi, Founder & CEO, Uplinq Financial Technologies   Automation is everywhere you look these days; from supermarkets to warehouses...

Finance3 days ago

Why financial services is stepping into a new era

by James Mingard, Head of Retail & Finance at Maintel   When comparing industries, financial services has arguably fallen behind when...

Business4 days ago

FINANCIAL MARKETS IN 2022: INFLATION, ENERGY PRICES, AND THE CONTRASTING PERFORMANCE OF STOCKS

Bob Jenkins, Head of Research, Refinitiv Lipper   Anyone hoping for a reprieve from the chaos and uncertainty of the...

Business6 days ago

FINTECH TRENDS TO LOOK OUT FOR IN 2022 WHICH WILL CHANGE THE WAY WE DEAL WITH FINANCE!

Embedded Finance is estimated to be a $3.6 trillion market opportunity (Matt Harris, Bain Capital Ventures) Embedded Finance means it’s...

Business6 days ago

THE GREEN REVOLUTION IN INVESTING

It can’t be denied how quickly environmental sustainability has become a focus among everyday consumers, whether they’ve become noticeable through...

Business6 days ago

INVESTMENT IN INNOVATION: 2022 TRENDS AND OPPORTUNITIES

Author: Michael Kodari, Founder and CEO of Kodari Securities (KOSEC)   Moving into 2022, while COVID is still front of...

Business6 days ago

HOW TO CONSOLIDATE INVESTMENT REPORTING OPERATIONS AFTER A MERGER OR ACQUISITION

By Andrew Sehulster and Abbey Shasore   The reason why senior management make an acquisition is to compete better or...

Business6 days ago

FUNDING R&D IS STILL A PRIORITY FOR COMPANIES DESPITE THE PANDEMIC

By Emma Lewis, Myriad Associates   HMRC regularly releases statistics that look at the numbers of R&D Tax Credit claims...

Business7 days ago

Mitigating the insurance risks of climate change through geospatial data visualisation

Richard Toomey, Senior Manager, Commercial Insurance at LexisNexis Risk Solutions UK and Ireland   In the lead up to the...

Top 107 days ago

From compliance to the metaverse: Investment trends to look out for during the year ahead

By Rami Cassis, Founder and CEO of Parabellum Investments   In the investment world, the old saying, knowledge is power,...

News7 days ago

NutreeLife triples production with finance from Siemens Financial Services

Plant-based snack manufacturer NutreeLife has massively increased its production capacity with the help of a hire purchase solution from Siemens...

Trending