Innovation In the Financial Industry

Innovation In the Financial Industry

We can all agree that when it comes to the financial industry, innovation is a hot topic these days.

Businesses in the financial sector have transformed their operations due to the many innovations hitting the industry in recent years. What used to be a rigid and rule-oriented industry is now filled with technological integration and new ideas.

The financial services industry has become highly competitive, and innovators have emerged as a new breed of professionals.

In today’s article, we will look at some unique financial innovations in 2022. 

Alternatives To Traditional Stock Exchanges

Over the last few years, industry professionals and scholars have stated that the stock market lacks a degree of innovation. The stock exchanges founded over 200 years ago continue to dominate the market. Such FANG stocks are still amongst the most traded across all stock exchanges, including the NYSE and Nasdaq. However, there are alternatives to traditional stock exchanges that are innovative.

One of the best examples is alternative trading systems (ATS), which are trading marketplaces that allow traders to buy and sell stocks and shares from one another. While ATS’ use the same trading mechanics and technology as stock exchanges, they are more loosely regulated. They also have unique advantages. For example, many institutional investors will use an ATS to access liquidity and gain the opportunity to enter into private investments. Any trade conducted via an ATS is also not listed publicly on any order books, which some investors may find attractive. 

Mobile Trading

Mobile trading is another influential innovation that has transformed the financial industry. Mobile trading is just one part of the global fintech industry, which analysts project will grow at a compound annual rate of nearly 30% between 2022 and 2027. Today, people can trade everything from stocks to cryptocurrencies and contract for difference (CFD) via mobile trading apps, giving them more flexibility and control over their investments.

Mobile trading platforms are powerful investment tools, and many, such as trading platforms, offer various functions like complex stock analysis, in-depth research on the top risers and fallers in the market, and charting tools. A key advantage over using mobile trading apps in 2022 rather than web counterparts is the inclusion of push notifications on mobile apps. On mobile trading apps, investors and traders can receive alerts when the assets they’re interested in reaching a certain price level. That means they never have to worry about missing key market moments. 

The Integration Of Blockchain

One of the biggest buzzwords over the last two years has been blockchain, as decentralized technology has changed the face of several industries. Blockchain technology has demonstrated that it has powerful uses in the financial industry, especially when it comes to blockchain-based money transfers. First, there are reduced fees when customers make blockchain payments, and second, fewer scams are involved.

The technology can also be used to track transactions, and people don’t have to deal with the restrictions of traditional banks, like minimum balance requirements. It’s for these reasons and more that a 2018 article by stated that blockchain matters to small businesses. 

The history of banking and the financial services industry is fascinating. Many academics trace the roots of the modern banking system to Renaissance and medieval Italy. However, it wasn’t until the 20th century and the introduction of computing and telecommunications innovations that society saw changes in how banks and financial institutions operate. As more innovations are introduced, such as blockchain and mobile trading, we continue to see disruptions in the industry.