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Sample Research Paper on the use of Technology in Finance

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Sample Research Paper on the use of Technology in Finance

The use of Technology in Finance


As one of the most promising proclaimed innovations in the last ten years, technology has created numerous opportunities in business in terms of transactions, entertainment, purchasing, and trading just to mention a few (Kleijnen, Wetzels,&Ruyter, 2004). The financial service industries, being among the leading sectors that use technology, they have experienced evolution over time, spearheaded by technological inventions and the advancement in technology which saw it advance from the advent of the early mainframe computers and adding machines to current modern computers (Pryor, 2011). There are several new andrapidly emerging trends in the financial sector today as a result of the technological potential and application in the financial service industry which have thus ushered in a completely new paradigm (Pryor, 2011).

The financial sector has also witnessed quite a number of extensive changes in all aspects of their operations including sectorial structure, competitive environment, products and services, and market segmentation (Goldfinger, n.d.). The business implications for technological integration in the finance industry will be impossible to ignore. Clients within the financial industry have been demanding for improved risk management, faster information flow, and increased transparency which has seen the financial industry apply the vast power of technology within their reach towards an increasingly integrated, complex, and sophisticated array of tasks (Pryor, 2011). This has enabled the financial investors to view instantaneous views of their portfolios and exposures at any point in time without difficulties.

The ever growing relianceof finance on technology has seen the financial industry come up with models constructed by an entirely new breed of financial practitioners with a blend of enhanced understanding of both critical processes in business and the technology that facilitates the processes (Pryor, 2011). The significance of technology in the finance industry is increasingly growing as the financial sector now depends on technology for deploying future-oriented and sophisticated analytics that would aid clients in making more informed investment decisions (Pryor, 2011).

Innovation in the technology of cloud computing and its introduction to the finance industry has seen the industry experience a variety of client benefits from strengthened client services to automation and capacity on demand, real-time data infrastructure, and accelerated time to market. The sophistication in the technology provided in cloud environment has also facilitated innovation in products and services, including advisory and compliance services, data and custom analytics, and risk and control just to mention a few. The privacy in cloud environment has also ensured that financial data is secured (Pryor, 2011).

Pryor (2011) argues that technology has always been a key partner behind the scenes in the finance service industry, as the necessary innovative incremental advances have been provided by technology which have thus led to the expansion and upgrade of the finance industry services. For instance, transactional capabilities and data management have been aided by the improvement in processing speed and capacity for storage which have thus translated to reduction in costs for the industry. However, the finance industry is still under pressure, despite the leverage provided by technology, of meeting their clients’ demands which have advanced beyond the level of expectation of only cheaper and faster services to demand for increased efficiency and security (Pryor, 2011). This implies that the finance industry would have to embrace and incorporate more technology into their operations in order to live up to the expectations of the market participants.

Critical evaluation

When we think of technology and finance, there two major technologies that have contributed greatly to the finance industry as compared to the rest. These technologies include technologies that facilitate processing of transactions, and those that focus on the technology of the financial instruments. Technologies dealing with processing of transactions facilitated the quest for lowering costs and increasing transactions by aiding the automation process in banking. Increase in the transaction volume resulted to strain on the performance and reliability of financial system requirements. This pushed for innovation in the technology of financial instruments as the core nodes of financial systems such as systems of market trading, settlement systems, and payment networks all depend on the state-of-the-art technologies for processing transactions (Goldfinger, n.d.).

The technology of financial instruments combined the pure economic theory and software development. The theory provided for quantification of uncertain and future cash flows which translated to development and rapid growth of informal and organized markets for financial derivatives (Goldfinger, n.d.).Technology in the financial instruments has contributed to the dematerialization of financial markets and transactions diversifying the primary goal of financial markets from trading of physical goods to risk management and information exchange (Goldfinger, n.d.). The primary functions of technology in finance can be summarized into trading, reporting, convenience, bookkeeping and budgeting, global financing, provision of information through social media, ease of communication, increased storage capacity, retrieval of data, data analysis, automation and programming of transactions, reduced work load by use of spreadsheet software, ease of access to financial information, just to mention a few.

Information technology has enhanced financial trading with some computers even going as far as trading on behalf of the users (Novinson, n.d.). Technology has brought about programming which has enabled the finance industry to program systems capable of entering buying and selling orders whenever there are changes in the bond and stock prices to a certain level, and the system would then automatically close the order whenever the stop-loss or target price is achieved (Novinson, n.d.).Whenever a given trader has a system that does not support entering of individual orders separately but allows for profitable trading, computer based trading would become very handy. Information technology has facilitated ease of access to information for stock traders which has aided their decision thereby allowing them to make more informed decisions and also allowed for entry of immediately executable orders (Novinson, n.d.).

Technology has facilitated the process of bookkeeping in the finance industry which has been very helpful. Computer technology has eased financial operations by calculating and displaying principal and interest of loans, providing for secure online data transfer, estimating returns on investment whenever a company takes a loan for expansion of its capital, and keeping a record of all transactions which has made the task of bookkeeping easier (Novinson, n.d.).Information technology has also fastened the process of clearing of financial data replacing the use of checking accounts and checks with information technology whereby transactions can be cleared instantly. For instance, a client facilitating their purchase using a credit or debit card would be faster. Technology has also allowed financial institutions such as banks to carry on with their transactions during holidays and weekends even without the presence of bank staff (Novinson, n.d.).

The convenience enjoyed in the finance industry attributed to technology is unlimited. For instance, information technology has simplified personal finance enabling banks to provide withdrawals, savings and checking data in standardized formats. Personal finance software has incorporated special features including reports and charts that keep the users informed about their financial status and transactions. The customers are also able to download and store records of their financial transaction at will whenever wherever (Novinson, n.d.).

Financial institutions also stand to benefit a lot from information technology, more so with the advent of social media which has allowed financial organizations to obtain first-hand information and feedback from their customers. Financial institutions have also encouraged brand loyalty through encouraging of online communities. Taking for instance, some websites such as Tradeking allow for online discussions among stock traders on their picks and also offer advice to newcomers (Mullin, n.d.).Information technology that is driven socially has enabled financial companies to reach the younger population which constitutes most of their potential future clients(Mullin, n.d.).

Operation of finance has been empowered to a global level through information technology facilitating global financing. Mullin (n.d.) argues that financial markets could be viewed as global information markets at first organization facilitated by a network of computers. It is all due to information technology that the financial markets have acquired information as and when it’s needed, and also reacted to global developments (Mullin, n.d.). For instance, all businesses in need of financially responsible customers, lenders, and insurance companies have had continuous access to credit ratings, and scores all due to availability of the internet.

Technology has also transitioned the way and mode of communication in the finance industry. Communication in the financial institutions such as credit unions and banks and their customers has been enabled through information technology through email, facing out traditional mailers. Stock traders are able to communicate with brokers from home offices to Wall Street and also receive latest updates on stock market (Rodriguez, n.d.).Technology has proved to be very useful in the financial industry when it comes to the process of data analysis. Development in IT software has enabled the finance professional to work out complex permutations and equations as well as data analysis. Evidence could be witnessed on the MySQL database which can be used for separating data of any individual earning between thirty and forty thousand dollars from a database containing clients in thousands (Rodriguez, n.d.). This has enabled the finance professionals to save a lot of time by analyzing large sets of data within the shortest span of time.

Storage and retrieval of data has also become easier, reliable and more efficient for the financial industries as compared to the past due to technological innovation. Information technology has advanced in the capacity for digital storage by reducing the physical size and space occupied but increasing the capacity instead. Storage devices such as hard-drives have ensured the successful storage of data and backing up of data has also become easier which translates to the safety of the information stored (Rodriguez, n.d.).  Rodriguez argues that fast and easy retrieval of data in the financial institutions forms one of the most ignored benefits of technology to finance. Application software such as Open Office, Excel, Oracle, MySQL, and Word have enabled easy creation of ledgers and spreadsheets. Retrieval of information and libraries of statistics is also almost always instant at the push of a single button which saves a lot of time as compared to physically searching for files from the stored records of going to a library (Rodriguez, n.d.).

The way medium- and large-sized financial institutions as well as individuals key in their financial data has been influenced by spreadsheet software. The financial institutions run their daily financial tasks such as compiling and presentation of financial data in an organized manner by use of graphs and charts, calculation of complex transactions, and drawing of budgets, which are all facilitated by spreadsheet software (Rodriguez, n.d.). Access to financial information has also been facilitated by developments in information technology and the internet. Customers are empowered to make more informed financial decisions through access to information on investment prospects. Financial information has also been availed in bulk on the internet such as changes in tax, currency exchange rates, rate of inflation just to mention a few (Mathews, n.d.).

Automation and programmed transaction in the finance industry are also benefits accrued to them from technology. Financial institutions have used technology to automate most of their tasks that used to be carried out earlier on in the past by human personnel. Like for instance, sending of messages from the bank to its customers to alert them of various scenarios such as insufficient balance or even misuse of a credit card have been achieved by use of pre-recorded messages that are programmed to be automatically sent to the customer with relevance to their scenario (Rodriguez, n.d.). Programming of transactions has also been made possible by use of computerized financial software, which carries out programmed accounting transactions and business (Mathews, n.d.). Programmed transactions have assisted the financial industry in saving on time, accuracy, and efficiency as complex transactions can now be performed with ease as opposed to when the transactions are facilitated manually.


The uses of technology in finance are limitless cutting across the transactions per se to communication and other operations within the finance industry. Technology has helped financial institutions assess the potential of the financial market, forecast for the future, obtain immediate response and reactions from their clients, improve on their level of data security, storage, and information flow and circulation. Financial institutions are now in a better position to prevent and manage financial risks. Technology has been useful in ensuring flexibility in the finance industry which has thus aided cut on costs, evolving to offer predictive capabilities among other vital functions.

The success of financial institutions such as banks would be impossible without technology. This implies that technology is the backbone to success in the finance industry, transitioning the way of operation and execution of quite a number of financial operations and tasks. Information technology has also seen the innovation of various application software such as quick books, spreadsheets, just to mention a few, which have eased the work load of financial institution while at the same time improving on the quality and efficiency of service delivery. The realization of importance and uses of technology in the financial industry has seen the finance industry invest a lot in technology in order to live up to the expectations of their customers.


Goldfinger, C. (n.d.). European electronic banking review. 

Kleijnen, M., Wetzels, M., & de Ruyter, K. (2004). Consumer acceptance of wireless finance. Journal of Financial Services Marketing8(3), 206-217.

Mathews, J. (n.d.). Uses of Computers in Finance.

Mullin, S. (n.d.). Importance of Information Technology in Finance. l

Novinson, E. (n.d.). Importance of Information Technology in Finance. 

Pryor, W. (2011). Technology with a purpose: the next generation today. The evolving role of technology in financial services 6(1), 1-12

Rodriguez, G. (n.d.). How is Information Technology used in the Finance Business?

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