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Information Technology And The Investment Industry

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:

  1. 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.
     
  2. 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.
     
  3. 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.
     
  4. 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.
  1. 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.
     
  2. 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]
  1. 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.
     
  2. 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]
     
  3. 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:
  1. D.H. Bender, Financial impact of information processing, Journal of Management Information Systems (1986)
References:
  1. S.S. Roach, Technology, and the services sector: The hidden competitive challenge, Technological Forecasting and Social Change (1988)
  2. KEEN, P.G. Every Manager´┐Żs Guide to Information Technology. Boston: Harvard Business School Press, 1991
  3. B. Ragu-Nathan, Information management (IM) strategy: The construct and its measurement, Journal of Strategic Information Systems (2001)
  4. B. Ragu-Nathan, Information management (IM) strategy: The construct and its measurement, Journal of Strategic Information Systems (2001)
  5. S.S. Roach, Technology, and the services sector: The hidden competitive challenge, Technological Forecasting and Social Change (1988)
  6. Bakos, Y., and Treacy, M. (1986). "Information Technology and Corporate Strategy: A Research Perspective," MIS Quarterly, 10 (2), 107-119.
  7. LAUDON, C., K, LUDON, J.P. Management information systems. New Jersey: Pearson Prentice Hall, 2006.
  8. Bakos, Y., and Treacy, M. (1986). "Information Technology and Corporate Strategy: A Research Perspective," MIS Quarterly, 10 (2), 107-119.
  9. V. Grover, An empirically derived model for the adoption of customer-based interorganizational systems


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