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Is Python good for finance?

15 August 2023

Is Python Good for Finance?

With finance going increasingly digital, the importance of leveraging quality data and automation continues to grow. This makes Python, with its large ecosystem of specialised libraries, an intriguing option for financial analysts and developers. But is Python truly a good match for the diverse needs of finance?

An Introduction to Using Python in Finance

Modern finance rests on processing data to uncover insights, build models, and improve decision-making. Python makes these tasks more effective through its strengths in data manipulation, visualisation, and rapid development capabilities. Which is why so many companies train staff in python courses.

Major financial institutions already use Python for mission-critical applications and infrastructure. Python has also become pervasive in fintech innovators looking to disrupt traditional finance. The language appears well-positioned as a vital finserv technology going forward.

But to solidify Python's suitability for finance, let's examine its technical capabilities relative to common requirements.

Python Provides Robust Data Structures and Analysis Libraries

At its core, finance relies on working with tabular data of transactions, holdings, exposures, etc. Python's Pandas library shines here by providing flexible DataFrame structures ideal for financial data.

Pandas integrates tightly with other key Python data analysis libraries:

  • NumPy provides high-performance arrays to store and process numeric data.
  • matplotlib enables plotting of visualizations to uncover insights.
  • SciPy delivers advanced math and statistical functions.
  • statsmodels supports econometrics tasks like time series modeling.

Python offers a full-featured environment for understanding financial data at scale.

Python Can Rapidly Develop Financial Applications

In addition to crunching numbers, Python allows quickly building and enhancing systems to support financial workloads:

  • APIs for retrieving data from external sources.
  • Web applications for analysis dashboards and interactive models.
  • Automation scripts for financial operations.
  • Integration with Excel and other tools via Python libraries.

Python supports agile software practices to deliver solutions faster. This development velocity aids iteration and innovation.

Python Offers Specialized Finance and Econ Libraries

While Python itself provides general data capabilities, the ecosystem offers targeted finance and econ libraries:

  • zipline powers backtesting and live trading with Python.
  • pyfolio enables investment portfolio analysis and visualization.
  • QuantPy delivers modeling frameworks for risk, optimization, and quantitative analysis.
  • pypha provides tools for portfolio hedging and risk analysis.

Domain-specific libraries enhance Python's utility for specialized finance tasks.

Python Supports Automation and System Scalability

Beyond analytics, Python assists financial operations in key ways:

  • ETL automation to extract, transform, and load data.
  • Dashboards and reporting to monitor budgets, risks, and performance.
  • Productionalizing models into scalable, reliable services.
  • Infrastructure management to scale systems reliably.

Python scripting helps streamline financial workflows and scale systems cost-effectively.

Python Adoption Continues Growing in Finance

Leading financial organizations and applications highlight Python's momentum:

  • Banks use Python for trading systems, risk management, and data analytics.
  • Hedge funds and prop shops automate trading strategies with Python.
  • Quantitative and algorithmic trading rely on Python for analyzing signals.
  • Portfolio management and optimization leverage Python libraries.
  • Fintech startups use Python to deliver data science innovations.

Python serves both established finance firms and disruptive newcomers successfully in key domains.

Python Does Have Some Drawbacks to Consider

While Python offers many strengths, also consider some limitations:

  • Not as performant for low-latency systems as C++ or Java.
  • Dynamic typing can make large codebases harder to maintain.
  • As a general language, not tailored specifically for finance.
  • Smaller talent pool than languages like Java or C#.

However, Python continues gaining momentum overall despite these drawbacks in certain use cases.

The Future Looks Bright for Python in Finance

Expect Python's popularity in finserv to continue growing for several reasons:

  • Community of Python data science tools will strengthen.
  • More financial data will become available in Python-friendly formats.
  • Python skills will become even more sought after and essential.
  • Increasing focus on automation and analytics matched by Python.

While challenges remain, Python appears well-positioned strategically thanks to its balance of usability and scalability.

Python Stands Out as a Choice for Financial Firms

In summary, Python delivers tangible results for financial applications both big and small:

  • Data analysis power through Pandas, NumPy and statistical libraries.
  • Financial domain specificity via econometrics and quant finance libraries.
  • Development velocity benefits from Python's flexibility.
  • Operation automation enabled by Python scripting.

Both financial experts and software engineers can leverage these Python strengths to boost productivity and innovation. 

We hope you enjoyed this piece, you might enjoy our articles on Is there an official Python certification? or How does Python for Data Science help in analysing real-world datasets?

About the author: Daniel West
Tech Blogger & Researcher for JBI Training

+44 (0)20 8446 7555

[email protected]



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