Startups impact on the finance industry

Are you concerned about start up companies’ impact on the finance industry?

You should be. Automation has been on the agenda for a long time, in several industries. And it seems the financial industry is no different. In a New York Times article, Daniel Nadler who heads up a startup called Kensho, says that “within a decade … between a third and a half of the current employees in finance will lose their jobs to Kensho and other automation software. It began with the lower-paid clerks, many of whom became unnecessary when stock tickers and trading tickets went electronic. It has moved on to research and analysis, as software like Kensho has become capable of parsing enormous data sets far more quickly and reliably than humans ever could. The next ‘‘tranche,’’ as Nadler puts it, will come from the employees who deal with clients: Soon, sophisticated interfaces will mean that clients no longer feel they need or even want to work through a human being.

Is that true? I find it hard to believe that the human element of expertise and assessment will be done away with entirely, but there is most probably room for some trimming.

Then of course there’s the direct threat from the bigger players in the technology sector, not just the startups.

FT reported their ideas here in 2014 – Tech giants pose threat to Fund Houses.

and World Finance here – Technology companies consider the possibilities of asset management.