At Intrinio, we specialize in data feed integrations for fintech companies, providing API and WebSocket access to data like stock prices, fundamentals, options data & more. Over the years, we’ve worked with thousands of fintech companies as they build, launch and scale their platforms. Most of the time, these companies come to us for help with data when they are writing their first lines of code.
This puts us in a really unique position, we get to see what’s coming next in fintech before anyone else. Are robo-advisors still going strong, or fading? Is algorithmic trading on the rise? What’s coming next year that nobody knows about yet, who is in stealth mode? Our clients have all the answers. Over the past six months, we’ve surveyed the Intrinio community and discovered three up and coming, powerful trends that we think will define the fintech landscape in 2022.
In this blog, we’ll reveal those three trends, explain what they mean, and show you some examples of fintech companies that are blazing these trails. The fintech industry has been growing rapidly for over a decade - that’s old news. However, the past few years have been anything but ordinary, and we’ve noticed three themes that are trending among our client base at Intrinio.
The onset of the COVID-10 Pandemic in 2020 disrupted lives around the world. This resulted in over two years of work from home, sweatpants, the “great resignation”, and a whole lot of boredom. Enter the “rise of the retail trader.” You may have noticed this yourself, maybe your friends won’t shut up about Tesla, or Uncle Bob thinks he found the next big stock. In fact, retail trading more than doubled during the pandemic.
When that many novice investors flooded the market, it created a massive downstream opportunity to educate them. Sure, there’s professional investment software and Bloomberg Terminals, but those are all far too expensive and complicated for the everyday investor. The “Rise of Retail” created a huge opportunity for retail trading education platforms. In tandem with the pandemic, we witnessed the great “GameStop” debacle, which massively popularized options trading. You could call it a trend within a trend. Options are complicated through, which even further increased the need for retail education and tools. One message is resoundingly clear from Intrinio’s clients: these retail traders, who would traditionally elicit eye rolls from professional investors, are becoming increasingly sophisticated. At a rapid pace.
The gist? Retail traders are here to stay. They are hungry for education, excited about options, and they are not messing around. We’re seeing fintech companies capitalizing on this trend by building investment education software, social investing websites, options trading platforms, and more. Olive Invest, for example, is making options trading approachable for the everyday investor, their platform drowns out the noise of puts and calls, helping investors get a relatable picture of their risk, upside, and trades. Domain Money is enabling retail consumers to trade in stocks and crypto from a simple app, complete with innovations like a crypto rewards card.
Alexa, face ID, and Google Maps recommendations were game changing innovations when they launched, but they’re now ubiquitous, staples in the modern home. Society is officially comfortable with AI, and it’s become a normalized part of everyday life. As our engineers at Intrinio like to say, the machine learning and natural language processing technologies underpinning this AI revolution have finally had their “iPhone” moment. Wall Street has also officially embraced this trend, augmenting traditional human touch with automation and AI.
The market is ready for it and thankfully, the conditions are prime for engineers, quants, developers, and fintech companies to deliver. Academia has done most of the heavy lifting so that innovators and founders don't have to reinvent the wheel. Most of the necessary technologies are now open source, like TensorFlow or GPT-J, which was created by Eleuther AI after Microsoft bought an exclusive license to GPT-3.
Second, the sheer availability of data, including alternative and unstructured data sets, has created the perfect playground for AI to make an impact in financial services. Investors are so inundated with data, in fact, that it’s become nearly impossible for humans to make sense of it to begin with. We’re seeing an influx of fintech companies that are developing AI investment strategies, using AI to uncover buried signal, and extracting dimensions from big financial datasets. For example, Aiera’s AI engine scours through earnings call transcripts, company presentations, and more to track keywords and trends, saving investors massive amounts of time. Transparent Traders uses predictive AI inside of their blackbox to alert investors on the most promising day for them to make a swing trade.
You’d have to be living under a rock to have missed that blockchain has gone mainstream through crypto, NFTs, insurance, lending, payments and real estate. Those are obvious applications, but that’s not the crypto trend we’re eyeing at Intrinio. Across the thousands of fintech companies we’ve seen, crypto platforms have started to creep into view, and we’ve noticed that they’re buying and integrating traditional market data. For example, ChainLink oracles are entering real time stock price data onto the Blockchain, potentially as a way to timestamp and price trades of securities. Blockchain’s role, in this application, is that of the broker, exchange, custodian bank, clearinghouse, and market data provider, all in one.
Most of those functions are currently deeply engrained in the flow of the markets, and the regulatory environment surrounding blockchain is in major flux. So we’re looking at a very long-time frame until blockchain-oriented fintech companies start to disintermediate traditional players. But it usually pays to get in early, doesn’t it? We’re seeing fintech companies left and right partake in what we call the “crypto creep” towards traditional markets. Even platforms like FTX are starting to branch into traditional markets and display traditional market data to their end users.
Will traditional institutions hedge through investments and M&A, embrace blockchain to compete, or stick to their ways? Most are holding their cards close to their chests, but we’ll find out soon. Here’s a summary of the three major fintech trends Intrinio has its eye on in 2022 with a few companies in each category that we think are worth checking out, all of whom, are powered by Intrinio data.
If you are working on a fintech app or helping a financial institution innovate, you’re probably going to need data just like these companies. Reach out to one of our data experts today to learn more about our affordable financial services and packages.