Digital Money: How The Internet Changed the World of Finance

The internet has been arguably the most revolutionary invention of the modern era. I use invention loosely here, as it was really the World Wide Web that was invented, from which the internet as we know it today spawned. The internet has also been disruptive however in a certain way, as it has resulted in absolutely huge paradigm shifts. These shifts have occurred most notable in the world of entertainment, with the changes to the way people listen to music and watch films and shows being huge; the world of consumerism, with the way people shop and sell items transforming in a way that has been very beneficial to the industry of economics; and the world of communication, in which we as humans socialize in a way that would be unrecognizable to somebody born a century ago. However, one sector of industry the internet has really, truly transformed, is that of finance.

 

Information as Money – Before the Internet

 

The wide availability of information online is undoubtedly the biggest cause of the benefits that have come with investing in the past two decades, especially for low-stock investors. Prior to the invention of the web, the investor’s best bet was to get his info from the nearest library, specifically info which refers to financial literature. This would include the ways in which research companies operate when it comes to stocks.

The second-best option for the man of the pre-internet world was to directly contact a research company themselves for the newest financial report, and this would certainly be costly. This was because the postage of financial reports, which are huge in size, would be very expensive. It would also prove costly in time, as the soon-to-be investor would have to wait for the report, which to reiterate would be massive in size, to be printed and sent by the relation department before it could be posted to him as an individual.

 

Information as Money – Today

 

Now, however, a soon to be investor can simply look at a company report, thousands of which are readily available online on the Securities and Exchange Commission (SEC) website. They are usually posted there almost immediately after they are provided by the individual company. After our investor has done this, he can quickly scan them for specific financial statements, as well as topics and keywords if he doesn’t ascertain what it is he is looking for in a specific sense.

In addition to this, the company itself will also host investor relation pages on their websites, where the same reports can be found and analyzed. On top of this, information from presentations tailored specifically to potential investors can also be found, which can arguably be even more beneficial to investors, though some have argued they can be slightly misleading as the company has an obvious incentive to attract investment.

Because of this, there are also many independent websites that compile financial information that is arguably more reliable and often easier to understand for those that are new to finance. It used to be the case that brokers and financial intermediaries have a huge advantage over individual investors as they had the resources to obtain larger amounts of data, but with all those free-to-use websites this advantage has been reduced massively.

There is another surprising way the internet has changed the world of finance, and it’s something we all use every day…

 

Online Banking

 

Probably the most notable change the internet has brought to the everyday man when it comes to financing is the introduction of mobile banking. Through this new method of banking, we can much more easily store and transfer money to friends, family, and business colleagues. In recent years this has been taken a step even further as security levels have been made air-tight despite the ease of online banking. This is even the case for those that allow for the transfer of different currencies from one bank to another. There are many apps today that allow you to do this with a ridiculous amount of ease. Transferwise is out a top pick for this category, with almost every Transferwise review being extremely positive.

Another benefit of mobile banking is the mobility it provides, which allows everyone to transfer money regardless of where they are, provided they are somewhere that has internet, which is pretty much everywhere these days. You could be at a bar with friends and still quickly pay your utility bills or buy some clothes or order takeout. While this isn’t clear on the surface, this keeps the wheels of the economy well oiled and helps keep the world of finance in a place that is secure and forever improving logistically.