Welcome to the future: Advancing the Financial Technology industry
Robots and artificial intelligence (A.I.), bitcoin and cryptocurrency, vast social media platforms turning the written word into acronyms and hashtags—welcome to the future, where technology is seemingly advancing at the speed of light.
Mohamed Al Guindy, an Assistant Professor of Finance at the Sprott School of Business will be our guide—in the future. He’s been here for a while and he’s excited to show you around. His research program at Sprott is very exciting and leading-edge in the Financial Technology (Fintech) space—one of the fastest growing and hottest areas of Finance.
Al Guindy has a passion for what he does. He describes his work as exciting and fun and thrives in the academic environment that fosters his love of learning and the exploration of new ideas. This passion was sparked while doing his PhD in Finance when he recognized the value of his expertise in Electrical Engineering; specifically, how his ability to design information systems and integrate artificial intelligence could be highly effective to help propel the world of Finance into the next century. In fact, he built a social media lab where he designed his own powerful computer applications with A.I. systems that are capable of processing and managing the huge datasets he generates to fuel his research.
As part of the Fintech revolution, he recognized that social media, namely Twitter, was becoming more popular as a medium for corporations and investors alike to communicate financial information. The interest increased even more in April 2013, when the U.S. Securities and Exchange Commission allowed firms to use social media as an official channel to communicate with investors. Al Guindy was in the right place at the right time, with the right intellectual tools to navigate this new arena his research, funded by a SSHRC Explore research grant, looks at the impact of Tweeting on financial markets.
His findings have been highly contributory, signifying the value of Twitter in this context. He’s shown that it not only improves the efficiency of information disclosure and helps lower costs of capital, but it also provides smaller, less profiled companies—ones that have the “greatest information disadvantage,” with a voice in the market. His findings have drawn a lot of attention with features in many online financial publications including Yahoo! Finance and the American Association of Individual Investors, as well as featured on the Harvard Law School forum on corporate governance and financial regulation.
“For every action, there is an equal and opposite reaction.” ~ Newton’s 3rd Law of Motion
Al Guindy has a passion for space and the universe and how it all works. And, he’s taking this passion into his current research. It was during his PhD when he had access to Queen’s University’s Observatory where he would explore the outer reaches of space through their high-resolution telescopes. While fascinated by the stars, Al Guindy had an epiphany. He saw a parallel:
“Stars, planets, and galaxies are held in their place due to the gravitation fields from all other objects in space to create a complex structural lattice we call the universe. The universe, while stable, is also dynamic—new stars, planets, and clusters form all the time. Of these objects in space, some are more central relative to others. What if we could model companies as a network of entities in the same way we can model objects in space, connected by equal forces working on one another, establishing an equilibrium.”
And the Social Internetwork was born. Working under a substantive SSHRC research grant, Al Guindy is aiming to create a working universe, or network of companies whose associations with one another are established and created through Twitter conversations that, in essence, generate peer groups. It works like this: the millions of financial tweets, from over 3000 publicly-traded companies, are processed and filtered to establish a peer group for each firm, then these peer groups are mapped-out to create a multidimensional lattice or min-universe. From this, one can see how the economic shocks to one firm propagates to, and effects its peers. More importantly, shocks to firms that are most central to the economy can be seen to ripple outwards to those firms on the fringes of the economy. “The beautiful thing is that these connections are not established by the companies themselves, but instead by the sum of all social media participants. It’s good wisdom of the crowd.”
With this, governments, policy makers, and central bankers will know how to diffuse capital where it will have the greatest influence on the entire economy, at times of financial crises for example—making the Social Internetwork a powerful tool.
“Crypto is money 2.0, a huge huge, huge deal.” ~ Mohsin Jameel, British Fintech Entrepreneur
Maintaining a leading-edge course of action in his research, Al Guindy is also delving into the new world of cryptocurrency. He is elucidating what factors may be responsible for price fluctuations (also known as price volatility)—a very common phenomenon observed with this digital currency. His recent research reveals the more attention investors pay to cryptocurrencies, the greater the price volatility. This finding is vital both for investors looking to include cryptocurrencies in their investment portfolios and to exchanges where cryptocurrencies trade.
Welcome to the future! Al Guindy is excited to be part of the innovation happening here. And he does hope you enjoyed the tour.