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In the realm of digital investments, cryptocurrencies have emerged as a prominent asset class, leveraging decentralized digital currencies secured by cryptography. From payment cryptocurrencies to utility tokens and stablecoins, the landscape of digital assets is diverse, alongside the potential of Central Bank Digital Currencies (CBDCs).
To embark on this journey, investors can explore cryptocurrency exchanges or venture into crypto hedge funds, while ensuring proper storage through custodial wallets on exchanges, hot wallets (software), or cold wallets (hardware). Navigating digital investments demands prudence, encompassing education, goal-setting, reliable platforms, portfolio diversification, staying informed, risk management, asset security, and performance monitoring.
Understanding Digital Investment Platforms
A digital investment platform is a digital solution that combines automated financial and business management functions with human touch where needed, to allow customers to save and invest in stocks, shares, and investment funds. These platforms can be customized to match the look and feel of a financial brand’s own investment platform, with the best providers tailoring the platform to match the financial institution’s service offering and workflow.
As the digital native generation ages, the demand for traditional financial services providers to have a digital offering increases. Digital investment solutions can drive down the cost of providing financial services through automation, AI, and machine learning. Key features of these platforms include:
- Onboarding
- Goal setting
- Forecasting
- Portfolio transfers
- Messaging automation
- Analytics
- Reporting
Digital investment platforms are becoming increasingly popular as they provide secure, flexible, and low-risk forms of investment, especially in the current unpredictable economic climate. These web-based platforms allow users to invest in various financial instruments, such as stocks, bonds, mutual funds, and exchange-traded funds (ETFs). Key benefits of digital investment platforms include faster time-to-market, cost-efficiency, and leveraging technological expertise.
| Market Projection | Value |
|---|---|
| Total Transaction Value by 2024 | US$2,791.00bn |
| Total Transaction Value by 2027 | US$3,342.00bn |
| Robo-Advisors Transaction Value in 2024 | US$1,802.00bn |
| US Market Transaction Value in 2024 | US$1,782,000.00m |
The Digital Investment market is expected to see significant growth in the coming years, driven by customer preferences, market trends, local circumstances, and underlying macroeconomic factors. The market size is determined through a combined top-down and bottom-up approach, using various data sources and forecasting techniques.
Also read: Robo-Advisors vs. Human Advisors: Can a Machine Beat the Market?
Choosing the Right Platform
Key Considerations
When choosing a digital investment platform, several key factors must be considered, including client expectations, brand expectations, change receptiveness, budget, and the organization’s vision for digital. These elements play a crucial role in ensuring that the selected platform aligns with the institution’s goals and meets the needs of its clients.
Selection Process
The process of acquiring a digital investment platform involves several steps:
- Identifying Potential Providers: Research and compile a list of reputable digital investment platform providers that align with the organization’s requirements.
- Requesting Demonstrations: Schedule demonstrations with the shortlisted providers to gain a comprehensive understanding of their offerings and capabilities.
- Specifying Needs: Develop a detailed specification outlining the organization’s unique needs, such as desired features, integrations, and scalability requirements.
- Shortlisting Providers: Evaluate the demonstrated solutions and narrow down the list of potential providers based on their ability to meet the specified needs.
- Selecting the Right Partner: After thorough evaluation, select the digital investment platform provider that best aligns with the organization’s objectives, budget, and long-term vision.
Desirable Provider Qualities
When evaluating potential digital investment platform providers, it is essential to consider the following qualities:
- Flexibility: The provider should offer a flexible solution that can adapt to the organization’s evolving needs and accommodate future growth.
- Partnership Potential: Seek a provider that values collaboration and is committed to fostering a long-term partnership, ensuring ongoing support and continuous improvement.
- Strong Development Roadmap: Prioritize providers with a robust development roadmap, demonstrating their commitment to innovation and staying ahead of industry trends.
Implementation and Management
Maximizing Digital Investments
Effective implementation and management of digital investments are crucial for organizations to realize their desired returns. Digital transformation is a major priority, with companies expected to invest $6.8 trillion in digital transformation between 2020-2023. However, only 9% of companies are identified as ‘digital leaders’ – those that achieved 6% more return on digital investments and stronger revenue growth.
To accelerate digital transformation, companies should:
- Maximize the impact of digital spend
- Align on investment strategy
- Remove barriers to scale
- Establish strong governance procedures and metrics
Digital leaders effectively have a clearly defined digital strategy and accountability, prioritize high cash return digital initiatives, dedicate funds to accelerate new digital products/services, and invest in emerging technologies.
Measuring Returns and Governance
More companies are measuring returns on digital investments (RODI), with 41% measuring RODI in 2022 compared to 23% in 2020. However, only 16% of respondents strongly agree they have a clearly defined digital strategy, which is essential for securing funding for digital projects. A select group of ‘digital performance leaders’ (8% of respondents) are achieving higher RODI (10.8% vs 5% for others) and faster digital transformation progress by taking a centralized governance approach, formalizing digital investment measurement, and focusing on culture change.
Managing Digital Assets
Digital asset management (DAM) is essential for businesses to effectively manage their digital assets, including images, videos, logos, documents, etc.. The first step is to audit your current digital assets to understand the scope and identify any unused assets. Businesses should create a strategic plan for managing digital assets, including organizing assets, assigning roles, developing workflows, implementing security, and exploring new technologies.
Looking Ahead
Measuring ROI and Evaluating Platforms
Measuring the return on investment (ROI) of a digital investment platform is crucial for assessing its effectiveness. This can be done by evaluating customer acquisition and retention rates, analyzing customer feedback, and gathering staff feedback. Monitoring these metrics can provide valuable insights into the platform’s performance and help identify areas for improvement.
As the digital investment landscape continues to evolve, several platforms are poised to make significant strides in 2024. The article highlights five platforms to watch out for: AJ Bell, eToro, Fidelity International, Freetrade, and Interactive Investor.
| Platform | Key Features |
|---|---|
| AJ Bell | Offers stocks, funds, trusts, and ETFs with low management fees starting at 0.25%. Recently launched DODL with a 0.15% platform fee. |
| eToro | Multi-asset investment platform offering stocks, ETFs, forex, cryptocurrencies, tools, and educational resources. Unique social trading experience. |
| Fidelity International | Provides personalized investment advice to help individuals reach their financial goals. |
| Freetrade | Commission-free platform for stocks, ETFs, and investment trusts. User-friendly mobile app and educational resources. |
| Interactive Investor | Claims its flat fee structure could save users up to £45k over 30 years compared to more expensive platforms. |
Emerging Trends and Opportunities
The digital transformation journey is set to accelerate across various sectors, driven by advancements in technologies such as the Internet of Things (IoT), artificial intelligence (AI), cloud computing, and 5G. The number of IoT-connected devices is expected to rise to 43 billion by 2023, creating massive opportunities for industries to boost production and operations. AI and machine learning are poised to revolutionize manufacturing, with AI-powered technologies projected to increase productivity by 40% by 2035.
Businesses will increasingly turn to cloud-based “Everything as a Service” (XaaS) solutions rather than building and managing on-premises systems. The acceleration of 5G will drive rapid advances in smart cities, smart vehicles, smart manufacturing, and IoT-intensive technologies. AI will also help bridge the IT skills gap by automating certain tasks and allowing developers to focus on strategic challenges.
FAQs
What are digital investments?
Digital investments involve leveraging digital platforms and technologies to facilitate the trading of financial assets, such as stocks and bonds.
What does navigating the digital frontier entail?
Navigating the digital frontier involves a thorough exploration of the transformative roles of data analytics, big data, and data science, and their significant impacts on international business and financial services.
How can one invest in the digital market?
Investing in the digital market involves several key steps:
-Define and understand your target audience.
-Set clear, achievable goals.
-Select appropriate channels for your strategy.
-Create content that is genuinely helpful.
-Optimize your content for search engines (SEO).
-Implement paid advertising strategies.
-Utilize email marketing to reach and engage customers.
What is a digital investment account?
A digital investment account is a platform that integrates automated financial and business management functions with human intervention as necessary. This allows users to save and invest money in various financial instruments like stocks, shares, and investment funds, maximizing their financial potential.
