Technology: The Great Democratiser of Financial Knowledge

written by Matthew Levy, CFA

Historically, financial knowledge was difficult to obtain in any real sense for the typical investor, accessible mainly to industry professionals, elite investors, and financial institutions. The market dynamics, investment strategies, and comprehensive financial literacy were often deemed too complex for the average person, reserved for those who pursued it as a career, or had significant capital at stake. Many were left in the dark, relying heavily on brokers and financial advisors for information and investment advice. However, in the digital age, technology has emerged as a game-changer.

The barriers that once limited access to financial knowledge are being dismantled more every day. Today, thanks to technological advancements, finance is being democratised, allowing more individuals than ever before to gain insights, make informed decisions, and take control of their financial futures.

The Rise of Fintech Applications

Fintech represents the convergence of finance and technology, aiming to disrupt traditional financial methods in delivering financial services. Over the past decade, fintech has introduced many tools and applications to make money management, investing, and financial planning more accessible. Diversiview is one such application that provides corporate-level portfolio optimisation for investors.

One notable advancement has been the emergence of personal finance apps. These applications offer users insights into their spending patterns, savings goals, and even investment opportunities, all from the convenience of a smartphone. With real-time data and user-friendly interfaces, individuals can actively monitor and adjust their financial habits, fostering better money management practices.

Similarly, robo-advisors have changed investment advisory services. By leveraging algorithms and data analytics, they provide investment guidance tailored to an individual's risk tolerance and financial goals. Gone are the days when one needed significant wealth to afford a personal financial advisor. Today, for a fraction of traditional advisory costs, robo-advisors enable everyone, from novices to seasoned investors, to build and manage diversified portfolios.

Online Financial Education Platforms

In today's digital age, acquiring knowledge isn't confined to traditional classrooms or expensive seminars. A wave of online educational platforms has democratised access to information, including topics like financial literacy and investing. These platforms have played a role in bridging the knowledge gap, ensuring that more individuals have the necessary tools to make informed financial decisions.

Platforms like Coursera , for instance, collaborate with top universities and organisations worldwide to offer courses on various subjects. Their vast catalogue provides comprehensive courses on financial markets, personal finance, and even advanced topics like algorithmic trading. Similarly, Udemy boasts an extensive range of courses taught by industry professionals. From understanding the basics of stock trading to diving into cryptocurrency investments, the platform offers knowledge at various levels of complexity.

Khan Academy , a pioneer in free online education, has a dedicated section on personal finance and capital markets. Through interactive videos and exercises, they teach complex financial concepts in a manner that's easy for beginners.

The digital revolution has made financial education more accessible than ever. Now, anyone with an internet connection can empower themselves with the knowledge once reserved for a select few, leveling the playing field.

The Role of Social Media & Online Communities

The digital era has also reshaped how individuals share and consume financial knowledge. Social media platforms and online communities have become powerful hubs for financial discussions, advice, and insights.

For instance, X (formerly Twitter) has given rise to countless financial analysts, traders, and experts sharing real-time opinions, news, and analyses. Similarly, Reddit boasts communities like r/investing and r/personalfinance where users exchange investment strategies, seek advice, and discuss market trends. Meanwhile, YouTube has emerged as a resource for financial tutorials, analyses, and explainer videos, with many channels dedicated solely to breaking down intricate financial topics.

Furthermore, the rise of influencers and thought leaders in the financial space has brought a personalised touch to finance and investing, making it more relatable and digestible for the average individual. These platforms demystify complex financial concepts daily, further promoting a culture of informed financial decision-making.

Increased Transparency & Real-time Data

One of the most transformative impacts of technology on finance is the democratisation of data access. Historically, real-time market data, financial analytics, and current news were privileges reserved mainly for market insiders. Today, not so much.

Thanks to technological advancements, the average investor can now access real-time market data at their fingertips. Platforms like Yahoo Finance , Google Finance, and numerous trading apps have made it simple for individuals to track stock prices, monitor market trends, and get a snapshot of the global financial climate, all in real time. These platforms often come with interactive charts, historical data, and forecasting tools, providing investors with comprehensive resources to make informed decisions.

Furthermore, financial news apps and websites keep investors updated with the latest financial events. These tools ensure that users have current knowledge, from corporate earnings reports to central bank decisions. This immediate access to financial news and analytics lets individual investors thrive and fosters a more transparent and informed investment landscape.?

Challenges & Risks of Digital Financial Democratization

The digital revolution hasn't come without challenges. Chief among them is the sheer amount of information that individuals now face. The volume of financial data, news, and opinions available online can lead to information overload, making it difficult for investors to determine which pieces of information are valuable or relevant to their financial situation.

Moreover, financial content brings with it the risk of misinformation. Not every source is reliable, and the line between fact and opinion can sometimes blur, especially on social media platforms. The rise of 'financial influencers' can further complicate things, as many are not experts, even if they claim to be. Now more than ever, individuals must critically evaluate sources, cross-reference information, and seek reputable, unbiased financial advice.

The Empowerment of DIY Investing

With the influx of technology, a new wave of DIY (Do-It-Yourself) investors has emerged. No longer relying heavily on brokers or intermediaries, many individuals are now confidently managing their portfolios using digital platforms and tools. From simplified trading apps to intricate analytics tools, the entry barrier in the investing world has significantly lowered. This accessibility, coupled with a wealth of online educational resources, has led to a surge in confidence among retail investors. They can now make informed decisions, execute trades in real time, and track their investment growth with just a few clicks.

Conclusion

The digital age has undeniably revolutionised financial knowledge. From exclusive boardrooms and closed-door meetings, financial literacy has now gone to the open domain, accessible to anyone with an internet connection. As we progress in this age of democratised information, individuals have tremendous opportunities to take charge of their financial futures. Yet, with great power comes great responsibility; everyone must wield this newfound knowledge cautiously and within their ability, ensuring a prosperous and informed financial journey. You should still contact a financial expert if you are unsure about any matters relating to your finances.

We'd love to hear your thoughts! Share your experiences with fintech, your favorite financial education platforms, or any other insights in the comments. Connect with us to learn more about Diversiview and other LENSELL applications.