Investment is fundamental to reduction of poverty as it increases economic
growth and production efficiency and creates more jobs. A sound macroeconomic
climate encourages all firms - small, medium, and big, as well as micro
enterprises - to invest effectively, create employment opportunities, diversify,
and introduce modern technologies that can help to improve the efficiency and
sustainability of other production variables.
Over the last decade, digital has become mainstream. One reason for the
productivity paradox of Information Technology investment lies in how IT
investment is being defined.
According to Weill, 1990, Weill, 1992 "IT is not a homogeneous entity;
therefore, total IT investment is too broad a construct to be useful when
analyzing its associations with firm performance. Most IT investment research
does not distinguish among the different types of IT, with respect to
performance effects. Assumption of IT homogeneity could create misleading
results on the impact of IT since different systems exist for different
management objectives."[i]
In today's markets, technology is the key to turning a trading strategy into a
trading profit, enabling new pricing models, and introducing products to the
market. The investment banking sector thrives on information flow, analysis, and
interpretation, and technological advances have the capacity to provide a
competitive edge. Technology pervades every aspect of an investment bank and
involves every transaction that is made.
Thus, this paper shall deal with the impact of IT investments and IT-business
partnership on performance, more generalizations on the application of
investment techniques. It shall also deal with the issues and challenges related
to the Information technologies upon the investment industry, financial market,
and stock market. Lastly, it shall agree with the suggestions and the opinion of
the author regarding the subject matter.
Introduction
Information technology (IT) is currently undergoing constant change because of
rapid technological advancement in all spheres and sectors of life. With the
advancement of information technology, the way that organizations view the
essential elements of their success has evolved. Information technology
Companies are now playing a key role in the decision-making process.
This trend
was conceived on the massive amounts of data that organizations must analyze
before making a decision that will help them to acquire a competitive edge,
reach a wide client base, and streamline internal operations. The performance of
information technology businesses is currently thought to be crucial for their
ability to increase their level of market competition.
The use of information technology in business and its management has several
alternatives. Incorporating information technology IT processes in software,
hardware, information systems, coding languages, and diverse data and its
management, all this makes it more user friendly as well as viable for the
company itself for a better and progressive utilization and multidimensional
growth.
Information technologies are complex technological equipment, which is
applicable in all activities of human work and the whole industry. According to
Keen[ii] information technology is applied in business management in particular
in the following areas: "managing of data of the company, application solutions
of business issues, management communication, computer support processes in the
company, integrating problem-oriented systems, computer support research and
development, computer integrated manufacturing , management information systems,
reservation systems, integrated business systems, decision support, industrial
automation, office automation, supply and administrative applications. "
Technology and its relationship with the investment industry
The investment sector is dynamic and sensitive to turnaround times for data
processing, sharing, and storage as well as delivery timeframes. Speed is one of
the benefits that an investing company might offer. Whether it be delivering
research to the customer or launching an order earlier than the competitors. At
this point, technology enters the picture and offers a competitive advantage.
Without technology, the investment sector could function, but there would be
significant inefficiencies. The investment sector now relies heavily on
technology. It offers a way to get information to the public, investors, and
both current and potential customers.
The investment industry, which relies on algorithmic decision making, is
likewise being significantly impacted by artificial intelligence and automation.
Data visualization and analytics go hand in hand with these solutions. Big data
and visualizations can be used by AI and machine learning to find market entry
and exit signals as well as to create robo-advisors.
While it may be claimed that relying solely on technology is unrealistic, a
human security check might serve as a safeguard to verify any recommendations
made by artificial intelligence.
Today's standard investment analyst cannot operate alone. Being a member of a
team, he or she will occasionally have to contact others in different nations or
offices. Here, technology is used to facilitate communication and teamwork. This
makes it simple for the teams to make decisions while remaining in agreement.
When examining and seeking information, investment analysts should not be
constrained to a physical location.
Another way that technology has an impact on the investing sector is through
mobility and cyber security. To achieve this, technology offers methods to
improve mobility and guarantee an always-on information access alternative.
Cybersecurity must be in place to accomplish this.
This guarantees that crucial
and private information about a company is kept secure. Unauthorized access, ransomware, and hacking are a few of the problems that cybersecurity aims to
resolve. Any company in the investing sector wants to keep private information
private and does not want it to become public and cost it a competitive edge.
The development and evolution of the IT industry supports all these
technological responsibilities in the financial sector. These solutions can be
used and are made viable by infrastructure elements like improved computer power
and security measures. They are not inexpensive, though, so an investment firm
must assess the options and implement the one that best meets their requirements
and generates a return on value.[iii]
Historical development of stock market - from floors to computer system
For many years, the word stock market and investment dramatized the images of
people shouting out buying and selling orders on the stock exchange floor. The
application of technology was not originally noted until the telephone achieved
significant success. This paved the stage for the later advent of computers in
the 1990s. As they say, the rest is history.
Compared to the stock market of today, technology is at the very heart of how
trading and investing are done. Technology is used to handle everything
electronically, from orders to transfers.
If you look back at the historical stance of the stock market, you will see
tremendous changes that have occurred because of the introduction of technology.
For say, the leading stock market of India, i.e., NSE and BSE are fully
electronically materialized exchange.
Advantages of information technology in the investment industry
The investment market has been able to grow from small transactions within a
small circle to global level, thanks to the internet and management information
systems. As a result of internet commercialization, investment industry is
increasingly relying on information technology, or hardware, software, and
telecommunication networks, to streamline services and improve performance to
keep up with the competition. As a result, IT has set up itself as a crucial
aspect of the investment landscape.[iv]
IT can help this industry to cut costs, improve communication, build recognition
and release more innovative and attractive deals.
Some of the advantages of IT in investment industry are:
- IT streamlines communication
Effective communication is essential for this industry's potential growth.
Employee recruitment, retention, and exploitation in today's increasingly linked
and scattered business environment calls for constant dialogue and cooperation.
The capacity of information technology to simplify communication both internally
and outside is a fundamental benefit for investment banking and other
intermediaries involved in the investment market.
- IT Facilitates Strategic Thinking
IT can improve a business's competitive advantage in the market by improving
strategic thinking and information exchange, which is one of its key benefits.
Investment companies and intermediaries are now able to gather, interpret, and
transfer information more effectively than ever, thanks to accessing and
utilizing subscription databases and social networks. Businesses now have
unmatched access to clients and consumers, allowing them to supply new and
improved transactions and investment opportunities.[v]
Information technology thus gives the investment market the tools they need to
accurately assess the market and implement the strategies required for a
competitive edge when employed as a strategic investment.
- IT Cuts Costs and Eliminates Waste
Although implementing IT may initially seem costly but over time it turns out to
be quite cost-effective because it streamlines a company's management and
operational procedures. It eliminates the paperwork from an investment
transaction which reduces the cost in an enormous manner, lowering expenses and
reducing employee time spent away from work, the deployment of online training
programs is a typical illustration of how IT may improve an organization's
internal processes.
- IT Stores and Safeguards Valuable Information
Information management, also known as information storage, preservation, and
upkeep, is another area where IT excels. Any investment company that must save
and protect sensitive information (such financial data) for extended periods of
time must use information management. IT enables the investment company to
safeguard information from unauthorized people and store, exchange, and backup
files for later use. IT therefore provides organizations with the assurance that
the data they gather and analyze may be appropriately kept and protected for use
in the future.
Information technology for successful and stable investment market
The modern phenomena of information technology have fundamentally altered both
the daily lives of people and enterprises around the globe. The microchip, which
is responsible for information technology, was made possible by semi-conductors.
From personal computers and software to production robots and communications
technology, IT solutions cover a wide range of topics. The secret to surviving
in the contemporary investment industry is to successfully use information
technology.[vi]
Information technology has spread throughout the investment, which is a key
factor of the business sector, influencing how businesses produce and promote
their goods as well as how employees interact with one another and carry out
their duties in contemporary organizations. Best practices and industry
standards are shaped by specialized software, which is continuously altering the
way investment in a business is done in practically every way.
- Production Technology
Production technology has enabled modern organizations to make enormous progress
in efficiency and effectiveness and the enhancement of human resources. Advances
in industrial automation, such as production lines and computer-controlled
equipment, can enable firms to make previously unheard-of quantities of items,
and they can also send their goods anywhere on the globe.
- Communication Technology
To survive in the continuously investing world, it is essential to take
advantage of communications and technological advancements. Modern cellular
technology has completely changed how businesspeople interact with their
customers, staff, suppliers, and critical partners involving all the aspects of
investment. The marketing industry has undergone a transformation thanks to the
Internet, which has also expanded our alternatives for communication.
Thus, the communication eased by information technology acts as a catalyst for
the growth and stability of the investment market.
Information technology and its role in the modern organization
Every investment transaction or strategy now includes information technology
(IT) as a crucial and vital component. IT is used by a variety of organizations,
including tiny enterprises with one computer and multinational corporations that
manage mainframe systems and databases. The easiest way to understand the
drivers behind information technology's pervasive use in investment industry is
to examine how it is applied and how is it affecting the global investment
market.[vii]
The era of massive file closets, rows of paper files, and document shipping is
quickly passing by. Most transactions in every sphere now keep digital copies of
their documentation on servers and storage devices. No matter where they are
located within the firm, everyone has immediate access to these documents.
Employees profit from quick access to the papers they need, and investment
businesses can keep and manage a huge amount of previous information
inexpensively.
Data storage is only advantageous if it can be put to good use. Both the
tactical implementation of the strategy and the strategic planning process at
forward-thinking investment transactions utilize this data. Intermediaries and
investors can monitor information, costs, and market levels owing to management
information systems. The data can be utilized to maximize return on investment,
track profitability over time, and pinpoint areas for development.
Daily transactions which are tracked by managers enables them to respond quickly
to lower-than-anticipated figures by increasing productivity or lowering the
competition.[viii]
- Artificial Intelligence (AI)- beckons the new era of Investment.
AI is one of the hot topics when it comes to technology. It's something that has
created waves not only in the stock market but everywhere it has been used for.
Previously the stock market was merely limited to human intelligence and
decision-making capabilities.
But with the influx of AI, the horizons have
widened plenty fold. AI tends to produce reasonable estimates and research than
a human being, which tends to boost the capacity for investment decision-making.
It is beneficial to avoid emotional bias and make wise financial selections. AI
has significantly altered the stock market throughout time, especially when you
consider factors like mental speed. To acquire a competitive edge, several of
the biggest investing platforms and advisors are turning to AI.
- How is a consumer/ investor care system facilitated by IT?
The investment industry is using technology to enhance the way they plan and
handle client relationships. Customer Relationship Management systems record
every encounter a business/ intermediary has with a customer/ investor to
provide a wider choice. When a consumer/ investor phones a call Centre with a
problem, the customer support agent will be able to quickly resolve the issue by
seeing the service or the transaction the investor is involved in, viewing all
the necessary details and either resolving it or transferring the issue to the
intermediary company itself.
If the investor or the consumer calls again, the entire encounter is recorded in
the system and is available for recall. The experience for the consumer of that
service is better and more focused, while the investment company gains increased
productivity.[ix]
- Use of algorithm in Stock Market
The algorithm has the tendency to partially share its basis with the AI, but
that is where the blame lies. The algorithm is essential to contemporary stock
trading, much like AI. Because of this, several algorithmic trading and
investing components have been created over time. In order to help investors
make better and more informed decisions, algorithms evaluate stock market
activity and spot potential liquid possibilities. To do this, the computer is
given a predetermined set of instructions, and it subsequently places the orders
on the client's and investors' behalf. It helps to reduce the chance of human
error while constantly making quick and accurate selections.
Investment in information technology
Based on common interpretations of investment and information technology, it is
possible to state that IT investments are expenditures incurred by the business
for software, hardware, and information systems that will benefit the business
in the future, boost its competitiveness in the market, and ultimately satisfy
its owners and other stakeholders. Technology investments from outside sources
are also made to leverage market possibilities and attract new clients.[1]
IT
investments may be viewed internally as investments supporting cost reduction to
enhance internal processes (communication, production). Based on their
relationship to the development of the company is mainly on development
investments that contribute to the company's ability to produce and sell
products and services.
Conclusive remarks: technology a boon or a bane for stock market
When compared to the situations in the prior decades and the past, technology
has advanced by leaps and bounds. The lives around us have changed in a
genuinely amazing way. And the odds are rather obvious when it comes to the
stock market. The necessity to gather mountains of paperwork and rely on manual
involvement to apply for stocks has been replaced by automated processes.
Technology has benefited the stock market in several ways, including the ability
to invest on-the-go with smartphones, use Robo advisors for the best investment
advice, use algorithms to execute trades that would have been nearly impossible
to execute manually, and use big data to assist with research and the handling
of large amounts of data.
On the other side, we may also contend that as technology develops, there will
be a lot less human interaction, which may have an impact on the investment
aspects. The smartphone and personal finance apps may be affected because of
news stories about hacking and privacy issues, putting your data and financial
security at risk. In some situations, individualized service or tailored advice
is necessary, thus robot advisers may not be adequate. This demonstrates the
stock market's alternate use of technology.
Technology has more advantages than disadvantages. It has altered how the stock
market is operated and seen globally. And this technical development will
continue to advance.
End-Notes:
- D.H. Bender, Financial impact of information processing, Journal of
Management Information Systems (1986)
References:
- S.S. Roach, Technology, and the services sector: The hidden competitive challenge, Technological Forecasting and Social Change (1988)
- KEEN, P.G. Every Manager�s Guide to Information Technology. Boston: Harvard Business School Press, 1991
- B. Ragu-Nathan, Information management (IM) strategy: The construct and its measurement, Journal of Strategic Information Systems (2001)
- B. Ragu-Nathan, Information management (IM) strategy: The construct and its measurement, Journal of Strategic Information Systems (2001)
- S.S. Roach, Technology, and the services sector: The hidden competitive challenge, Technological Forecasting and Social Change (1988)
- Bakos, Y., and Treacy, M. (1986). "Information Technology and Corporate Strategy: A Research Perspective," MIS Quarterly, 10 (2), 107-119.
- LAUDON, C., K, LUDON, J.P. Management information systems. New Jersey: Pearson Prentice Hall, 2006.
- Bakos, Y., and Treacy, M. (1986). "Information Technology and Corporate Strategy: A Research Perspective," MIS Quarterly, 10 (2), 107-119.
- V. Grover, An empirically derived model for the adoption of customer-based interorganizational systems
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