Can Investors and Traders Leverage Digital Transformation During Inflation?

Digital transformation has affected the way we do business and the processes that are integral to its operation, leaving its mark on many areas and fronts, which have undoubtedly transformed the way businesses operate and add value to customers.

It’s important to note that digital transformation affects the economy in many ways for it can be correlated and used to create solutions. When saying correlated, we mean correlated to the problems in the economy. The recent drop in the S&P 500 and the rise in interest rates imposed by central banks to fight record-high inflation levels, which have been increasing since the 1980s, have caused the consumer purchasing power to decrease on many levels, starting in the U. S, Europe, and finally Asia. Meanwhile, the central bank has decided to take the monetary policy approach to fight inflation to push it back to the average “normal” level of 2 percent. However, the process might take more time than we initially thought.

Consequently, investors have been running to the shorter position that they hold in the stock market, mimicking what happened in the crisis of 2008, while simultaneously proving the sentiment that the market will keep dropping endlessly.

However, this behavior caused a massive drop in the stock market during the previous weeks. The drop could have been viewed as normal if these stocks were still overvalued in the market, at least when compared to the profit index of Warren Buffet.

Regardless of how you end up describing the situation, calling it a drop, a crisis, or even a correction phase, the naming will not change the current situation, which now features the highest inflation levels since the 8os.

To address the problem of inflation, the public and private sectors can both take turns to help solve the issue. The public sector, or the government, can solve part of the issue by implementing its monetary policy of increasing interest rates. The latter, as in the private sector, can contribute by somehow increasing salaries. This step would, however, lead to the reduction of the profit margin even though it can only be implemented in case of a profitable, growth businesses.

Speaking of business, when it comes to startups, particularly in the Fintech industry, we witnessed a wave of cutting costs characterized by laying off a huge number of employees, in an attempt to keep burden costs low while ensuring survival in the next coming years. In my opinion, the right strategy to follow entails that startups focus on other factors besides controlling costs. Hence, creating value by coming up with new revenue-sharing models that involve both sides of the table is the way to go! These models should include end-to-end users that can participate and get their share.

Take social trading, for example. Through this model, traders and investors can follow another trader or investor and copy their respective strategies after paying extra fees. This model constitutes a channel by which traders and investors alike can bring in extra income, provided that they end up choosing the right strategy. However, the benefits don’t end here because this model can also be implemented on the retail level.

Regarding the institutional level, Wealthface has optimized Robo-Advisors to offer its most recent innovation, the Robo-Advisor 2.0. This step comes after spending years enhancing the user experience to supply a new engine that helps educate the advisors on the investing industry. In addition, the platform supplies advisors with expert portfolio management tools to help them manage clients’ money and expectations.

With a fully digital onboarding process that respects the compliance and requirements of the regulators in each location, the philosophy of revenue sharing that Wealthface is bringing to the market will help not only in offering new Fintech products but also in educating people on the investment industry. The Robo-Advisor 2.0 will help those looking for extra income while helping to create jobs that reflect the real image and role of startups in any industry. As a result, Wealthface is keeping its promise in aligning with its solutions to contribute to adding value to its community.