#Finance has always been #FinTech
Every successful company in finance is really a tech company now.
On the trading side, be it a trading focused bank like Goldman Sachs or the “best hedge fund ever”, Renaissance Technologies, every successful trading company has set up processes that makes the highly intimidating task of risk-taking systematic and dependable.
Do you feel scared when you have to invest? Do you feel have to pick out a few stocks while you really have no idea which ones will do well? I do. RenTec does too, Warren Buffett does too and so does George Soros. The difference is that, they all have a system, which has worked for them. They have all setup processes that are dependable and can be automated to a large extent. Technology is at the core of the success of these firms.
Finance would be impossible without technology.
I think of finance as this massively interconnected network of brains and data and systems. The brains and formulae that we have developed over the years are great, but they are all trying to find approximate idealized solutions under a lot of assumptions to the data that our systems have brought to our attention. If we had built different systems we would have come up with different assumptions and different formulae.
In my humble opinion, the utopian future of finance-as-a-utility is a world of Deep Learning driven investment management, where the “brain” is massive. It is highly interconnected and it has a strict focus on eliminating overfitting.
Well, is anyone using Deep Learning in Trading right now? Yes, Absolutely yes. However, Deep Learning and systematic robo-advising taking over the world of investing are the “what”s and not the “why”. The “why” in FinTech is that technology and data-science has brought method to core aspects of our life like health, education, agriculture. It is simply not possible that a core aspect like investing continues to be something where we all have to literally start from scratch. Investing needs to be a science, a utility and not a competition. We need to make it happen.