How Mutual Funds Trading Software is Revolutionizing the FinTech Industry

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For everyone that works in the digital space, software is a necessity that creates opportunities and helps people solve their business challenges. It has become such a force that it has its unique needs; Software as a Service to Software.

The recent coronavirus pandemic has further highlighted the need for businesses to operate remotely. Although a global disaster, the Covid-19 propelled us to rethink the future of financial services and created unlimited opportunities across various industries. From software development to financial services, security to payment gateway – the Fintech global market size continues to experience an unprecedented surge.

In this article, we dissect different opportunities in Fintech due to Covid-19 restrictions and how mutual funds have taken a new trajectory. We also touch on the legal and accessibility issues in mutual funds.

Without further ado, let’s dig deeper!

Covid 19 Restriction and Fintech Opportunities

When Covi9-19 struck almost two years ago, we thought our world would never recover. Although the undesirable event has set us back in so many ways nevertheless, it has opened our eyes to numerous fintech opportunities. The prolonged lock down in almost every country forced a change in consumer spending and behavior. One key aspect of Fintech that has witnessed rapid change in the Covid-19 era is the mutual fund.

Increased stability due to high-profile portfolio and building on pandemic resilient assets

Currently, mutual funds account for a substantial fraction of global savings, securities, and purchases worldwide. It also plays a critical role in firms and government finances. The pandemic has only escalated its growth due to restrictions that oversaw increased bank regulations.

According to mutual fund statistics, 2019 saw a 13% average return on mutual funds, more than double the past 15 years’ average annual mutual fund return. When considered from a long-term perspective, the mutual fund still surpassed inflation and out-compete other investment types. These include gold, 10-year United States Treasury bonds, and certificates of deposit (CDs).

Mutual funds’ meteoric rise and success are partly linked to the disruption brought by Covid-19 restrictions on orthodox financial institutions. Covid-19 exposed its limitations, with FinTech capitalizing on its unique advantage to push asset prices away from fundamentals and focus on pandemic-resilient assets. These mutual fund statistics show that the industry has maintained stability in the face of pandemics primarily due to its high-profile investment portfolio, including FinTech and IT businesses.

How Mutual Funds Trading Software is Revolutionizing the FinTech Industry

Covid-19 restrictions are being lifted; facemasks are being abandoned, academic institutions and workplaces are being filled. However, the new normal is yet to stay. The pandemic has shaped our world, lifestyle, and, most significantly, the global economy. The rate of adopting digital solutions is yet on the rise, with individuals benefiting from online transactions. These include video conferencing, online shopping, and mobile financial transactions.

The continual rise results from the digital investment strategy pioneered by Fintech also facilitate working from home. The outcome in no way reduces the efficiency of the employees. Rather, a remote work survey estimated that 69 % of financial services executives surveyed reported that their employees remained productive as much as before the pandemic hit.

Recruitment and training processes, daily task corporate responsibility, and overall investment had been digitized. Mutual funds and Fintech promise sustainable growth in the digital economy. And unfortunately, some countries like the Netherlands have called for another partial lockdown. These imply that we might continue to depend on e-transactions more than ever.

However, while there is undeniable competition between Fintech and traditional financial institutions, there is a possibility for the two to co-exist to provide the dividends of their collaboration to consumers.

Mutual Funds Trends

Like every other industry, FinTech has many trends that flow according to market demand and supply and the global economy. Here are some of the trends in mutual funds as predicted by experts:

  • Reduction in workforce

There will be a 10% lower workforce in mutual funds over the period from 2019 to 2025. This calls for the positioning of mutual fund companies to be more awakened to Fintech opportunities. This conscious awareness will better position them for the future, moving in the direction technology propels via market disruption.

The volatility index shows that countercyclical inflation, which puts pressure on the economy by uncontrolled high prices, will cause US gross domestic product growth to reduce from 5.7% to 5.6%. Recent growth in doubts by investors about bonds- which balances out the volatility expected with stocks. Fund investors now shift their eye to equities. Experts show position outlook on US equities for the rest of the year 2021 with market momentum on the peak and elevated Stock market valuations. Investors are advised to put their minds at rest as long as there is growth in earnings; there is no cause for alarm with FinTech market growth.

Increase in Call for Environmental, Social and Governmental fund

According to reports, the total assets of an ESG-based fund is expected to grow 10% on average annually. This growth in mutual fund distribution emanates from calls from consumers and expectations from workers.

Investment portfolios are on the exponential increase because of FinTech economics. This allows automated investment services. Passive funds are projected to account for 55% of U.S. mutual fund industry assets under management by 2025, up from 39% in 2019. In comparison, both active and passive fund expense ratio declines by a third by 2025.

The majority of managers of mutual funds had already integrated digital investment before the pandemic hit its peak. A remote work survey from PwC shows that 69% of financial executives stated that their employees remained productive despite switching to working from home. Even when the Covid-19 effects vanish totally, there’s no assurance of 100% return to the office, as many mutual fund managers will be looking to cut costs by outsourcing and automation. Thus, an anticipated 10% reduction in the number of mutual fund employees between 2019 and 2025.

What Famous Economist Says about Mutual Funds

The mutual fund is a financial aspect that has generated massive raves and reviews from thought leaders in various aspects of the economics of both past and present ages.

Changes are inevitable, and the ability to flow with the tide separates successful businesses from those that struggle. In his remark, Peter Finnerty, the U.S. Mutual Fund Leader, observed that the disruption occurring in the industry, the economy, and society as a whole brings both challenges and opportunities. He further tagged this as a call to action.

Buttressing Peter’s opinion, Bernadette Gers, the U.S. Asset and Wealth, stated regarding mutual fund investment that:

“More than ever, the future is uncertain. But the mutual fund industry should look at this uncertainty as an opportunity to remake itself, providing new value to the investors and sustainability for society.”

And to further corroborate the thoughts on mutual funds’ disruptive power, Rachael Brandley, U.S. Asset and Wealth Assurance Leader, noted that where the economy goes from here, no one can say for sure.

“Part of being a future-fit fund manager includes being prepared for the continued disruptions in the market.” She concluded.

MF thrives on taking risks

The ability to take calculated risk is one of the most underrated skills in investment. While mutual funds issues seldom occur compared to other volatile markets like cryptocurrency and the stock market, it remains a risky venture.

In John Templeton words:

“The best time to buy mutual funds is when people are in doubt- when the market price becomes cheapest. This is followed by a point of maximum risk when people are most excited to invest. This is when to opt out as an intelligent investor- you will make your maximum profit at that point in time.”

Regardless of the risks, with the right mutual fund trading software in your arsenal, you can rest assured of a decent return on investment.

Mutual Funds Legal Issues and Location-specific Accessibility Challenges

Mutual Funds are legal entities formed as a corporation and structured with a separate legal existence having a board of directors, officers, and shareholders. Mutual funds must register states corporate law, to be able to issue different classes of shares.

The Investment Company Act of 1940, regulated by the Securities and Exchange Commission (SEC), controls investment companies’ organizations. It also policies their activities and sets standards for the company. SEC equally performs the role of legislating on mutual fund issues that define the purposes and requirements for investment products offered for trading publicly.

Over the years, the act had gone through many reviews due to the changing and complex nature of the financial market. Moreover, details of regulations compliance companies offering product securities as an investment should follow the set standards. These include the operational policy of mutual fund companies, auditing, distribution, and changes in investment policies. In addition, the Act protects the retirement savings of individuals – retirees who pool resources together for investment.

Despite the fact that a mutual fund is a well-defined institution, it’s possible to experience legal and accessibility problems in certain regions. However, you will find different accessibility issues and their solutions here. For location-specific mutual fund legal issues, feel free to consult your local MF litigator.

Mutual Fund Trading Software Development with Boston UniSoft

Fund managers have to be more versatile, improve on transparency on issues that investors may face in mutual funding. This calls for deployment of automatic 21st-century technology compliance mutual fund software solution with the highlighted features:

  • The ideal software must offer an interface that enables tracking, analysis, and reporting across multiple portfolios.

  • A multi-user interface should be enabled to integrate trade placing with data management in one click by an automated one flow system.

  • A user-friendly end-to-end functionality that can easily offer multi- assets and multi-currency support systems for funds management.

Does it sound too good to be true to you?

You don’t need to stuff up your brain with worries about how to integrate these features.

At Boston- UniSoft, we incorporate all these into your fund management system. You can rest assured that our expertise will bring out only the best in your fund management portfolios.

Ready to get started? Let’s schedule a meeting to discuss a befitting solution for your mutual funds trading software needs.

This article does not necessarily reflect the opinions of the editors or the management of EconoTimes