With every break-through in technology, there's potential for growth in the financial world. New technology is also changing our relationship with money and its transformative impact is having a liberating effect on equity analysts.
Over the past 20 years, technological advances like computer processing software, have transformed the way equity research is conducted. Until then, research analysts had access to limited tools, manually entering content into aggregator platforms and would often gather disruptive or inaccurate information altogether.
As a result, larger banks began investing large sums into developing internal solutions intended to bridge this gap, amplifying their advantage in the market. At the same time, second-tier firms and other independent operations sourced out third-party vendors to launch affordable tools designed to streamline the authoring and distribution process.
Alec Jaslow, an entrepreneur and seasoned investor from New York, explores how the evolvement of new technology has impacted equity research from the mid-1990s to today.
The growth in equity research and business development
While these new and emerging technologies had positive effects for analysts everywhere, it was the smaller operations that benefited from the new technologies the most. For the first time ever, these providers could compete with the large corporations, as new technology could more easily showcase their expertise while broadening their readership and expanding market coverage.
In response, says Alec Jaslow, a new marketplace began to unfold. So long were the days of tedious, time-consuming research. Instead, analysts could now produce more research and do it more accurately, therefore freeing up time to focus on higher-value activities. Some of these activities include spending time on survey’s and or interviewing industry experts to address the critical factors of each equity they cover.
Using data-powered tools to enhance research
We've seen several technology trends that have driven the next transformation of the industry — for example, creating compliance and risk management in research production, which was a direct response to the technology stock bubble burst that led to the April 2003 $1.4 billion Global Analyst Research Settlement.
Another technological trend is data and the use of data-powered tools and it's one that analysts are utilizing in order to gain an edge. Today, the availability of data is skyrocketing, and its accessibility has begun to change the way investors study and observe how the market moves, notes Alec Jaslow.
Artificial intelligence (AI) and machine-learning tools are now giving analysts enormous amounts of presorted and pre-processed data in which they can quickly transform into quality reports for investors.
In addition, sophisticated investors are concurrently combining artificial intelligence, machine-learning, and voice user interface (VUI) to gather insights from multiple analysts’ reports on the same stock and plug it into trading engines that determine where, when, and how to place their orders.
Asking "Alexa" to pull up an analyst report is just one example of the impact that innovation can have on a person’s time and ability to plan. In this scenario, technology continues to highlight analysts’ quality insights and enhance transparency for qualified investors.
Alec Jaslow says the future is bright for equity research
As technology improves, so will equity research. We can thank technology for streamlining how equity analysts have produced and distributed research over the past 20 years. And even when regulations are set in place, technology responds, reshaping the financial industry’s structure for the better.
The benefit of new technologies in the financial world will only continue to evolve, and when they do, we'll be ready for what's in store, says Alec Jaslow.
