Exploring Nasdaq's Prediction for 2018 FinTech Trends

We’re past the midway mark for 2018. It has been an interesting year for America and for technology. At the beginning of the year, Nasdaq released its predictions for this year’s FinTech trends. I think it’s worth seeing how they've held up.

Nasdaq has been around since 1971 when they launched the world’s first electronic stock exchange, and they’re doing their best to hold innovation as one of their core tenets. According to them “recent advances in technologies such as blockchain, cloud computing, machine intelligence, behavioral science, and other areas provide us with the opportunity to literally rewrite tomorrow and drive our industry forward in entirely new ways.”

They identify four key trends and seven advanced technologies that will start to converge.

Four Key Trends

 When evaluating a new product or market, trends are an important factor. The four key trends Nasdaq foresees are as follows.

  • First, is the development of the marketplace economy, an evolution in the purchase and sale of non-financial assets using market mechanisms that allow for real-time negotiation on price.
  • Second, is investment banks demonstrating an interest in partnering with firms to develop new technologies that can drive their businesses into the future.
  • Third, is the big data explosion which combined with advances in machine learning creates a myriad of opportunities in market surveillance, data analytics and in the capital markets themselves.
  • Finally, the investment management is becoming increasingly competitive, specifically in regard to technology-powered pursuits.

If one thing is apparent, innovation is the golden thread between it all. Finance is quickly becoming synonymous with FinTech as finance and technology becomes inextricable.

Seven Key Technologies

  • Cloud technology is maturing and adoption is accelerating. People are recognizing that several types of workload work more efficiently in the cloud.  It’s not right for everyone, and the scale and speed of adoption will differ for different industries, but hybrid cloud experiences will be widely adopted by organizations.
  • Machine intelligence is helping firms find an edge in an increasingly tough landscape. Machines are getting better at interpreting data and creating structure from unstructured data (80% of the world’s data is unstructured, according to Gartner Group). Machine intelligence is also enabling real-time broad-spectrum surveillance.
  • Behavioral Science is increasing sophistication by increasing insights from human factors and cognitive analysis. This can bolster machine learning as well as improve workflow and user interfaces.
  • Blockchain is rapidly moving towards commercial applications, with proof of concepts becoming pilots and soon live products. Lots of activity as well in the crypto space.
  • Pari-mutuel technology can be applied to create new products. Bilateral trading works when you have a liquid market, but it's not always possible to find a counterparty. Pari-mutuel (pool-based) models enable more products – as long as there is still differing sentiment. This also allows more customized positions.
  • Cybersecurity is becoming more and more necessary as cyberattacks increase. Cybersecurity is evolving and becoming an issue and focus for not just firms but individuals. Reminder: Here are some cybersecurity tips I put together last year.
  • Quantum Computing – while exciting – has no clear timeframe of adoption. It's an emerging technology but has the potential to radically transform the trading landscape by increasing the rate at which we perform optimizations and calculations.

If you’re interested in seeing the whole report you can download it here.


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