On Thursday evening (29/09/2016), FinTechs, investment specialists, and futurists met in the main conference room of KPMG Luxembourg’s Kirchberg headquarters. What brought them together was the topic of social trading: traditional investing activities happening in a digital, fast-paced, analytics-heavy world populated by young people. This was the third instalment of KPMG’s Digital Fund series, the first two events revolving respectively around blockchain and robo-advisory, and the last event, slated for 8 December, to concern eDistribution.
Speaking at the event were representatives from three noteworthy disruptors: eToro, a transparent platform where traders can mimic the actions of other users, for example star investors who have built their reputations on the platform itself; SESAMm, a company generating stock information based on natural language processing, i.e. making sense of the terabytes of unstructured data on existing social media platforms; and Almax Analytics, which uses artificial intelligence to wade through and understand news, making connections within a volume of information far too enormous for a human brain to handle.
The latter two companies are furthermore members of the KPMG Hub for Entrepreneurship, or “Khube”, a centre focused on tightening the FinTech ecosystem in Luxembourg for start-ups and other finance companies.
The recurring theme of the conference was perhaps best said by the Khube’s own Junjie Peng. Mr Peng explained how the social world, characterised by transparency and interconnection, is finally colliding with the world of trading, which has long been characterised as a tough-to-enter mystical realm reserved for experts. He called this “the democratisation of financial services.”
Changes are not just occurring in terms of platform and interaction, but also in the technological ability to gather information. Sylvain Forté, CEO of SESAMm, outlined how his company processes sentiments expressed by users: “In August 2015 we saw great anxiety in global and trading social networks,” said Mr Forté, “and what had happened in the market at that time was the financial crisis in China. We were able to identify it not from financial news and numbers but really from the fact that people were worried.”
Almax Analytics has a similar mission, but analyses news and facts instead of user emotions. CEO Balázs Klemm spoke about a case of a healthcare stock in the US with only one provider, a company in Brazil. When the news came out that the UK was going to stop allowing the Brazilian company to market their products in the UK, nobody reacted. But when the US company put out a press release the next day containing that same information, the stock fell fifty percent within minutes. “The human traders would have instantaneously understood the implications, but the news just didn’t reach them,” said Mr Klemm, whose product would be capable of making such a connection.
With Facebook-like platforms and new means of generating information, trading is firmly going social. This is old news for eToro VP Product Tal Ben-Simon, keynote speaker, who remarked that “the financial industry is about to be disrupted. It's a basic assumption for us at eToro as we are evolving our innovative social trading network into the next generation of wealth management.”
The final conference for this year in KPMG Luxembourg’s Digital Fund series will take place on 8 December 2016 and tackle the topic of eDistribution.
Phone: +352 22 51 51 2903
© 2020 KPMG Luxembourg, Société coopérative, a Luxembourg entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.