Blog article
See all stories »

Will neobanks be going after automated trading?

In order to meet clients' changing needs in the digital era, neobanks fill the void left by conventional financial institutions. They are revolutionizing the financial technology industry and may eventually surpass conventional banking systems.

In the minds of the uninitiated, neobanks might be mistaken for online banks. In that both provide access to banking functions through mobile devices, comparisons between the two are not unreasonable. However, this is where the parallels stop.

Mobile digital banks were in a precarious situation in 2020 as consumer spending dropped owing to the pandemic; they did not earn the customary account fees (unlike incumbents), since most provide no-fee accounts. They also couldn't survive off of the tiny margins offered by card transactions. Some firms aggressively seek to diversify their income streams by providing ancillary services, such as insurance, trading, and, more recently, asset management.

Wealth management was formerly reserved for the wealthy and the affluent. The banking industry's shift toward digitalization has made it easier for more people to have access to specialized wealth management services provided by algorithms instead of human experts. In this article, we’ll discuss whether or not neobanks are going to embrace automated trading. 

Why neobanks are going to adopt automated trading?

Neobanks furnish their customers with a plethora of innovations and automated trading can be one of them. When it comes to automated trading adoptions, neobanks can be one of the pioneer companies. This is because, they are different from traditional banks, which makes things more complicated. When we talk about the embracing of automated trading by neobanks, there are 3 main advantages and 3 reasons, why they are going to furnish their customers with process automation. These are:

  • Efficiency

  • Profitability

  • Cutting human emotions or improved rationality

Neobanks in order to increase the efficiency of their service, can furnish their customers with automated trading. Because neobanks can also be used as brokers when it comes to trading in financial markets, the use of automated trading can be quite efficient and beneficial for those who are new in the industry. Nowadays, a big number of investors in the crypto industry use software like Bitcode Method, in order to make their trading process more efficient. Adopting trading automation can be quite beneficial for neobanks as well, because of the ongoing increasing demand. The speed at which a computer can do tasks is much greater than that of a person. Because of this, when given orders, automated computer systems can quickly and accurately produce them to fulfill the precise trade-related requirements.

Each novice trader should keep in mind that frequent entry and exit from trading may, in fact, make a huge impact. All of the necessary orders, such as take profit and stop loss, are produced mechanically whenever a trading position is opened. Every market operates at a breakneck pace, making it simple for inexperienced traders to incur losses. In this kind of trade, the problem is appropriately avoided.

One additional reason why neobanks might adopt automated trading is that it helps investors to cut their emotions. Traders may better control their emotions and focus on business with this method. If you can keep your emotions in check when doing business, you may count on a higher profit.

In addition, once a deal is confirmed, no one involved may change their mind since the order is performed automatically. It's a win-win for those who tend to spend too much and those who are hesitant to make investments.

High-intensity emotions have a negative impact on traders' judgment and performance. In this case, the system handles trading and significantly decreases overtrading, provided the rules were developed with a level head.

Why neobanks won’t go after automated trading?

Even though there are many reasons why neobanks should embrace automated trading, there are also some reasons, which show why neobanks aren’t going to integrate automated trading. The top 3 reasons are:

  • Inconsistency

  • Mechanical failures

  • Over-optimization

In order to function, many programs adhere to predefined algorithms. Because of this, determining whether or not a robot can reliably create profits will be challenging. There are several sources where you may purchase expert automaton files. The majority of these robots fall short of the market average. 

Automated trading sounds easy on paper: just install some software, specify some rules, and sit back and watch it make trades for you. Automatic trading is a sophisticated form of trading, however, it is not foolproof. A trade order may or may not be stored on a server, depending on the trading platform. This implies that if the order is placed but the Internet connection is lost, the order may not be sent to the market.

Over-optimization, often known as "curve-fitting," results in a trading strategy that fails to perform as expected in real-world market conditions. For instance, by making little adjustments, a strategy might provide remarkable outcomes when applied to the same set of historical data that was used to validate the strategy's initial assumptions.


Comments: (0)

Now hiring