Is there anything that Google can’t do? They are a powerhouse to be reckoned with, and rumour is, next on the list is venturing into the investment management space. But how realistic is it to think that a tech giant could be successful in the financial industry? Google are remaining quiet on the subject, but there are a few signs that have peaked our interest.
First of all is the acquisition of an artificial intelligence start-up called DeepMind in 2014 for £400m. Further rumours have been circulating that Google plans to team up with Blackrock to work out how artificial intelligence can be used in the investment management solutions space. The partnership, if true, would bring together two powerhouses in their respective industries, and an exciting platform for innovation.
The other massive advantage Google has is the access they have to a huge amount of very valuable data. Their CEO was quoted as saying in 2010, “We know where you are. We know where you’ve been. We can more or less know what you’re thinking about”. They understand the lives of a huge number of consumers on an intimate level – so who better to manage offer investment management?
Furthermore, the giant also has Google Trends which is used to analyse the vast amount of data it owns. This could be incredibly useful in terms of being the data feed for software for investment management. There are so many possibilities and use cases that we would need a far longer article to explain all of them but a simple example would be that they recognise increases in certain google searches being indicative of future market activity such as a share price fluctuation.
Then there is Google Ventures and Google Capital that have the competency to make investment decisions. All of these indicators point in the same direction – that Google could be a dominant force in the investment management industry. But let’s say we got it wrong, and Google are not interested in this diversification – it won’t be long before one of the other tech giants recognizes the synergies and takes a leap of faith. When that happens, investment management software and services providers will undoubtedly be concerned for their own ongoing profitability. How can they possibly find a way to compete? How can the incumbent providers rise to the challenge and defend against this threat? We unfortunately do not have all of the answers to that question, but the one thing that is clear is that companies will need to ensure they have access to the best data sources they can get hold of, and work hard on how they analyse and interpret that data for investment management purposes.