It doesn’t matter if you are working in the banking sector, risk management, portfolio management, or any other field of the finance industry, your job might already need you to have programming skills or will soon require you to at least code in any single programming language. The reason behind it is financial technology or fintech.
For businesses who know what fintech is, would understand how it is making the finance industry more and more automated and technology-driven. This has forced financial professionals to deal with the programming aspect more often. It eventually leads to an increased demand for financial professionals with programming skills. But it has also helped finance companies stay relevant to the current market.
Fintech advancements, automation, and technology have already started disrupting the traditional roles that financial professionals are playing in financial organizations. For example, stock-picking was once a highly desired skill which is now pushed down to the corner. The pension funds, retirement plans like 401k, and more are moving towards passive funds which run on auto-pilot. The entire process of stock picking is now automated including picking the stocks based on past data and managing the investments done in them.
There are many options to choose from programming related to finance. But whatever you pick depends mostly on your job description and the systems your company uses. So, in this article, we are going to learn how programming can help you with your job in finance, how you can start learning to program, and what you can apply to your profession.
What’s the use of programming for finance professionals?
While we are discussing how mastering programming languages can help you with your job in finance, you need to understand that programming is just a tool to automate all the things that were once done manually in the finance industry. Let’s say we have a pretty simple task of finding out the days when the stock prices of a stock increased right after a constant fall for three days from the data of a particular stock price for the last ten years. You can accomplish this task manually, right?
Just sit down with the day and go day by day, check each day’s prices for the stock and then mark the day when it meets all the criteria. Well, let me tell you, doing this would take you probably more than 250 days, and that too if you are checking 2500 entries for the 10 day period. Do I have to mention now that it would be a waste of a lot of time and energy? You can say that you can get this done in a day or maybe in a couple of hours but a computer programming language can get this same thing done within a few seconds.
Another important benefit of using a programming language at your job is that it allows you to perform the task we discussed above repeatedly. In the case of doing it manually, if we were given another stock to mark the entries then we might end up taking the same time we did on the first one. But that is not the case with programming.
All you have to do is write down all the rules and set of instructions in your programming language for what you want and then just keep applying it to new sets of data. You will get the results within a few seconds every time.
Programming languages are highly capable of managing and processing huge chunks of data. And that makes the job of a finance professional easy. In the finance industry, you have to always deal with millions of data points while making a decision, and most of the time, the sources of these data points are different.
For example, if you have to mark the end of the day stock prices from the data feed and then merge it with the data of a client’s portfolio then you will be spending a lot of time after that if you are doing it manually. But if you choose to use programming languages then it can help you manage and manipulate data easily and without spending more than a few minutes on it.
To conclude this, I would just say that programming can help you make better decisions based on logical rules, financial models. It can also automate all the mundane repetitive tasks, manage and manipulate data easily. Every programming language is capable of achieving these goals but each one has something unique to offer that is suited especially for some specific task. Now, let us move on to discuss the choices of programming for financial professionals.
Choice of programming languages and tools and for finance
The programming choices are classified into three different categories:-
1. General purpose programming languages
This category includes the most basic programming languages like Java, C, C++, Python, VBA, and more that are widely used in finance software and web development.
C and C++ programming language was used by quantitative analysts for a long time to develop algorithms but after the advent of Python, the wave started to shift towards it. And now most of the developers are seen using Python in the finance industry. It’s easy to use and you can incorporate various functions and features from its large range of open-source libraries into your website and application.
Many top financial organizations, banks, and hedge funds around the world have used Python to develop their core trading and risk management systems. Another interesting thing about python is that it is very suitable for data analysis which is at the core of a finance job. Python can empower your programming by offering powerful tools like IPython and libraries like pandas which include easy-to-use data structures and data analysis tools.
2. Specialized languages
In this category, we are talking about some of the advanced programming languages like Haskell and statistical programming languages like MATLAB and R programming.
Haskell is one type of functional programming language that has various applications in the industry and is used to avail advantages in many projects. For example, ABN AMRO needed a high-level language for their project to measure the counterpart risks for their investment banking activities on the portfolios of financial derivatives and guess which language did they opt? – Haskell.
It is very important that along with a general programming language like Python, investment banks and other financial institutions need to use statistical languages like R and MATLAB. Considering the recent advancements, programmers must learn Python first as their primary language and then master R for statistical analysis. R programming is supported by a large online community of developers. It offers a variety of packages that help you perform different kinds of analyses. R is also proved to have good support for big data analytics.
3. Retail-level programming language
A retail-level programming language means a language that is specially developed for a single software. There are many such programming languages out there that were built into their own software. For example, AmiBroker is a type of technical analysis software with its own programming language, or as TradingStation has a trader’s programming language named EasyLanguage that enables you to build and modify indicators and trading strategies in the software platform.
Similar to this, many finance software has in-built language support. You have to learn these languages too if you or your company is using such software, or if you are looking to make a career related to the area where such software is used.
Now, apart from the programming languages, it is also important that you learn SQL. It is the language of working with databases. DBMS or database management systems are used to store a lot of data related to the finance field, customers, and business. So, if you want to effectively store and retrieve data from the databases then you must earn SQL too.
So, here we are, at the end of the article. I hope you have enjoyed reading it and find some helpful information too. Now, if you are a financial professional and planning to add one more skill to your resume – programming, then I suggest that you should start with learning the basics of general programming languages. These languages are widely used not only in finance but in other industries too.
So I would recommend you to master one or two widely used general programming languages like Python and Java. After that, according to the company and field you work in and what your career demands, you should move on to either learn specialized languages or retail-level languages. Of course, it will be better if you can learn both of them. But while we are taking one step at a time, you need to opt to learn the languages that your career and job demand the most, and then you can swiftly move on to others.
If you have any further questions or suggestions, kindly drop them in the c comments section below. I would love to address them as soon as possible.
Binary Blogger has spent 20 years in the Information Security space currently providing security solutions and evangelism to clients. From early web application programming, system administration, senior management to enterprise consulting I provide practical security analysis and solutions to help companies and individuals figure out HOW to be secure every day.