Tag: finance Page 2 of 3

How Has Fintech Impacted Different Industries

Fintech has spread massively over the years, to the point where it impacts more than just the financial industry. Thanks to the development of fintech, two types of products were created for the benefit of others: B2B and B2C. The first type, B2B, offers different financial services through fintech apps, while the second type, B2C, offers apps that are user-oriented for clients. The B2C model, specifically, was created to compete with financial service providers.

From mobile apps to trading areas, fintech projects vary immensely and allow entrepreneurs to get their money without having to visit the bank. Here are a few industries that fintech has impacted over the years.

Funds Transfer

Transferring funds used to be slow and expensive. If you wanted to transfer money, you really had to think about when you would do it and when you needed the money transferred by if you wanted to get it done in time. However, with fintech, the funds transfer field started to develop; according to Think with Google, 69% of smartphone users transfer money using a mobile app rather than a website. Plenty of online services exist for money transfers, such as TransferWise. These services give small companies and private users the chance to send money to others at a lower price.

Loans

Since many people have credit cards with certain payment limits, it’s possible to take out a loan online. Web and mobile applications such as KreditBee and MobiKwik allow people to use their sites and take out a loan quickly; users can usually apply and be approved for a loan in fifteen minutes. Once approved, the whole sum of the loan can be transferred to any banking card within an hour, and users can access their personal information (balances, arrears, etc.) quickly and easily. It’s no longer necessary to stand in lines and sign physical documents to get a loan; this trend could completely replace habitual crediting.

Chatbots

Chatbots are artificially intelligent bots that can, among other things, help improve the financial process. They can send notifications about changes to whoever is listed, provide helpful information to users, and more. Due to this, chatbots have increased user loyalty, which increases a business’s profit and makes a product more competitive. Several banks globally already use chatbots and have seen these results, using them to notify clients, help clients pay their bills, and so on. Some, like MasterCard, even have a chatbot for Facebook Messenger to improve digital services.

How Your Company Can Harness FinTech

By Jacob Parker-Bowles

On July 2, 2021

In FinTech, Jacob Parker-Bowles

Covid-19 may have slowed down business, but Fintech has achieved double-digit growth in volumes and transaction numbers in the same period. In addition, many companies required employees to work remotely during the pandemic and needed to develop new working methods.

The fintech industry became the choice for businesses that needed to implement digital tools for working at home. Companies found out that Fintech has more uses beyond sorting disruption of traditional business practices. Some teams in accounting and finance found fintech tools can streamline operations, improve productivity and cut costs in these ways.

Simplifying complex processes

Corporations became less productive during the pandemic. Spend reconciliation was one way that finance teams could create efficiencies, but innovation in the area has been slow, and it consumes a lot of labor-intensive time.

Fintech reduces that challenge with tools to automate most of the processes such as:

Three-way matching to approve incoming supplier invoices
Complex and fragmented area travel and expense spend

Fintech tools can automatically link expenditures to individual employees and functions. As a result, they simplify and hasten budget allocations that are ordinarily time-consuming.

A company can harness fintech to provide greater visibility into:

Employee spending
Delivering control
Flagging out of policy expenditures real time
Automated analytics

Another upside is the chat AI that interprets customer questions. Requests increase efficiency by automating financial tasks that involve answering questions about expense processing and invoice payment.

Solution to Fraud

An ACFE survey found that organizations lose 5% of annual revenue to fraud, and detection can take 14 months. A third of all fraud cases occur because organizations lack internal controls.

The pandemic created a perfect environment for fraud as it thrives during recessions and economic instability. Fintech AI and machine learning algorithms in its software control fraud mastering standard patterns of company finance and flag anything unusual or new. The team in charge will notice and review. A/ML has a higher level of sophistication to root out fraud than the rule-based approach. The tools can search and compare data to sense questionable correlations or other irregularities.

The payoff for shifting to newer processes is transformation. Finance practices in an organization will gain the same benefits that the financial sector has gained by adopting Fintech tools. It only requires collaborating with a reliable Fintech provider.

Great Podcasts All About Fintech

By Jacob Parker-Bowles

On June 6, 2021

In FinTech, Jacob Parker-Bowles

Podcasts have become one of the most popular forms of media over the last few years, and for good reason. Practically anyone can make a podcast if they put the energy into it and podcasts can be about pretty much anything. One topic that has plenty of podcasts to check out is FinTech. You can find many podcasts covering the subject, with each one giving a different perspective than the other. Some may discuss news, while others may attempt to teach their listeners all about the subject. Regardless of what you’re looking to listen to, there’s a FinTech podcast out there for everyone. Here are a few great podcasts all about FinTech.

For FinTech’s Sake

Although this podcast is only around 2 years old, it’s easily one of the most popular and high-quality FinTech podcasts out there. Hosted by Zach Anderson Pettet, the show takes a look at what happens at the intersection between finance and technology, exploring the perspectives of founders, investors and, incumbents. Episodes of the show range anywhere from 20 minutes to an hour and a half, so you’ll get plenty of variety as well as many guest hosts.

Breaking Banks

Highly considered to be the #1 FinTech podcast in the world, Breaking Bank is hosted by Brett King, a FinTech expert who has written several books under his belt. The show takes a look at how technology and the way customers behave are bringing about changes and will continue to change banking over the next 10 years, as well as how it’s affected banking over the past 200 years. Every week Brett and his team discuss the most important financial topics and they’re constantly inviting new guests to give their own perspectives so you’ll always have something new to look forward to.

Banking Transformed

Technology has changed banking drastically, and there’s no denying that. But for some of us, that isn’t easy to accept, especially if you’ve been working in banking for a long time. Banking Transformed is hosted by Jim Marous, one of the top 5 banking and fintech influencers in the world. In each episode, Jim takes a deep dive into the impact that digital disruption has had on banking and will continue to have on banking, as well as the leadership and cultural challenges that come with it. Jim’s ultimate goal is to help listeners embrace the change and make the most of it because things will only continue to change with the passage of time.

FinTech 101: What is a Green Bank?

By Jacob Parker-Bowles

On February 8, 2021

In FinTech, Jacob Parker-Bowles

What Is a Green Bank?

You may have heard the term “Green Bank” and wondered what it meant. This short article will explain the term and concept behind it.

Green Banks in a Nutshell
A green bank is a bank that exists for the sole purpose of battling earth climate change by funding projects that may be able to decrease the global carbon emissions and increase the use of alternative and renewable fuels and energy. They tend to support infrastructure spending in wind, solar, and other renewable energy space.

Green Banks: Functional Model
Green banks are not climate charities. Their funding is expected to be paid back with a profit for the bank. Currently, they are supported by some states in the U.S. and also by private funding. Green Banks utilize philanthropic and public funds. They generally fund energy projects that beyond the research stage and “good to go”. The Coalition for Green Capital (CGC) is a nonprofit agency that is deeply involved in advocating for green banks’ continued development.

Where Did the Idea for Green Banks Originate?
The idea for green banks started in 2008 when two entrepreneurial-minded, Ken Berlin and Reed Hundt, came up with the concept as part of the Obama transition team’s plans for promoting cleaner energy changes in US society. A proposal to enact federally supported green banks was attached to the American Clean Energy and Security Act. The concept never made it as legislation at the federal level. Green bank supporters were not daunted. Consequently, green bank advocates persuaded some states to take up the cause.

Green Banks: Some Statics
Currently, there are at least ten states that have at least one green bank. In addition, they are in the early stages of catching on globally as well. They also exist in Australia, the United Kingdom, and Malaysia. Within the U.S., green banks have already been involved in the funneling of some $3 billion in funds for clean-energy projects.

Green Banks: Their Future Development
With the advent of the Biden presidency, green banks may again find a firmer footing at the federal level. Indeed, in December 2020, Mr. Biden proposed the idea of a national green bank. They appear sure to gain more traction internationally as the desire to dampen climate change takes hold.

How to Forge a Career in Fintech

By Jacob Parker-Bowles

On December 24, 2020

In FinTech, Jacob Parker-Bowles

Fintech companies offer innovative solutions to financial problems. They help banks to improve their customer service and be more flexible. Due to the growing popularity of the fintech industry, their jobs can be very rewarding. But what does it take to forge a career in fintech?

Start Small, Learn and Grow

Fintech is a booming industry, meaning that there’s more to be discovered. As a result, there’s a lot of opportunities in this industry. It helps to get into the industry with some experience in the financial sector.

However, it’s not necessary. A person with a law degree can learn on the job and become an expert in no time. Therefore, one shouldn’t procrastinate. If they think this is the industry for them, they should go for it. They can start at the bottom and work their way up.

What’s Fintech All About?

Fintech is an interesting industry because an individual works in two vast industries: technology and finance.

An example of an emerging fintech trend is open banking. Here, the bank allows tech startups to facilitate customer service and transactions through an app. The customer has to consent before using the app. Once the customer agrees, the bank discloses that person’s banking details to the startup.

Any person that works for the bank or startup is already involved in the fintech industry. That’s how easily one can find themselves working in the fintech industry.

Skills Required

There are three sets of skills that are important in the fintech industry: software and hardware engineering, finance, and communication.

A person with coding skills can work in the product development department. Their work will be to code programs or applications that can be used to improve the financial sector. The person with finance skills helps the coders comprehend what the app is supposed to do. The person with communication skills will help to monetize the fintech solution.

Finally, the fintech industry can be very demanding. If one wants to succeed, one has to consider work and personal life. They have to be in perfect balance. Too much work can leave a person feeling exhausted and unmotivated. Therefore, it’s always good to think about one’s health and happiness.

The Ins and Outs of Cryptocurrency Mining

By Jacob Parker-Bowles

On October 30, 2020

In FinTech, Jacob Parker-Bowles

Most people have heard of cryptocurrencies by now. Bitcoin and Ethereum are two prominent examples of this type of currency. Crypto is designed to be secure. It utilizes blockchain technology to create a secure record of transactions. Many people invest in crypto by trading through marketplaces, much like traditional ForEx markets. Of course, it’s also used for transactions. Cryptocurrency has the advantage of being anonymous. It’s very difficult to trace. Famously, this intense focus on security has made it very popular on the dark web.

Cryptocurrency is created through a process called mining. Miners also add new transactions to the ends of blockchains. Working as a cryptocurrency miner requires some seriously powerful computer technology. Traditionally, powerful graphics cards have been needed to conduct an effective cryptocurrency mining operation. Miners also need to be very proficient at math. It’s a competitive field, and being able to solve problems more quickly than other miners is essential to success.

These days, miners tend to work in large teams. It wasn’t always this way. It used to be fairly easy for an individual miner to get set up. In fact, in the beginning, there was really no financial reward for creating new blocks in a chain. The people who did this work simply believed in cryptocurrencies. Over the years, some big investors have been getting involved in the mining space. This includes big high street banks. Individuals have had to form larger groups in the hope of competing with these large groups.

The financial rewards of cryptocurrency mining are sizable. A newly-mined block can be worth up to 12.5 bitcoin. That’s quite a bit of money. Each new block needs to contain data proving that the miner who’s claiming it actually did create it. Essentially, they must show their work in solving the mathematical problems in order to get the reward. This is still a fairly wild marketplace. Japan has started regulating crypto, but only lightly, In other countries, there are still no rules.

It’s expected that this will change in the near future. For one thing, investors risk being burned and losing large sums of money. For another, it’s highly likely that governments will want to start collecting taxes on the capital gains associated with cryptocurrency transactions.

Benefits of FinTech for Small Companies

By Jacob Parker-Bowles

On October 3, 2018

In FinTech, Jacob Parker-Bowles

Financial technology, known as FinTech, is changing the way many small business owners run their companies. Struggling to find financing from lenders and strict regulatory compliance is leading many smaller companies to focus on FinTech. Instead of relying on traditional lenders to help support their companies, many entrepreneurs are now turning to affordable solutions from financial technology companies.

FinTech Product and Service Offerings

FinTech companies offer a range of solutions for small companies. Business owners have access to lending, foreign exchange services, and digital business solutions. Many finance experts agree that the rise of FinTech is not just a passing fancy, but a real shift in the way small business owners generate revenues and profit. A report from the World Economic Forum suggests that FinTech will change the entire business environment.

From invoicing solutions, peer to peer lending, and supply chain financing, FinTech companies are gaining a real market presence in the business world with their low-cost solutions. Additionally, these companies are not hamstrung by the regulations that many traditional banks face.

One of the largest gaps FinTech companies fill is lending solutions. Traditional banks often turn away small business owners seeking smaller loans. By offering so-called “micro-loans,” FinTech companies provide a critical lending solution for smaller companies that need less than $50,000. The Small Business Administration considers any loans of $50,000 or less as “micro-loans.”

Many FinTech companies also offer strategic invoicing and expense solutions. In many cases, small business owners have free access to these solutions using easy to download apps.

Other FinTech Solutions

Lending and tracking invoices are only two of a countless array of solutions offered by FinTech companies. Property management companies can accept payments from tenants using the solutions. Additionally, loans are available to help some of the costs of repairs and security deposits that many residents struggle with while property management companies still receive those funds upfront.

Many experts agree that FinTech for smaller companies is still in its infancy. Adopting FinTech as the primary source of business solutions for entrepreneurs is still a challenge. However, many experts do agree that FinTech companies have found a niche by providing services to smaller companies that largely go unrecognized by bigger banks.

What Is PSD2?

By Jacob Parker-Bowles

On March 23, 2018

In FinTech, Jacob Parker-Bowles

PSD2 (or the second Payment Services Directive) is a law in the United Kingdom and other parts of Europe that has affected payments since January 2016. All payment service providers (PSPs) were required to adhere to the new policies by January of this year. Although many Europeans may not assume this law affects them, let’s look at the ramifications of adapting to these new standards.

What does PSD2 consist of?

In order to understand the impact of PSD2, we should first explore what it is comprised of. According to waar.ch, the law is meant to open the payment services market up to more competition by regulating standards. Some of these include:

Stating of exchange rates when making a payment in another currency, such as an online purchase from a foreign site.
Increasing security measures, including a two-factor authentication system.
Limiting payer liability in the event of an unauthorized purchase, either from information theft or vendor error.

How does PSD2 affect consumers?

Consumers had previously been exposed to unfair and deceptive banking practices, which includes limited access to fee schedules and hidden interest rates. A lack of competition in the banking sphere reinforced these practices. As a result of PSD2, customers can expect more transparency and open communication regarding the status of purchases, rates/fees, and other financial services.

Another benefit is the ability for third-party payment providers to offer better solutions to traditional banking services. This may include investment products, accounts, and payment vehicles. Even online banking can change, as consumers can use sites and apps to easily access information.

How does PSD2 affect the marketplace?

Competition is expected to increase as a result of this law due to exposing unethical practices. I expect many fintech companies to debut, with solutions for every client concern. These can range anywhere from budgeting apps to alternative payment platforms. One area that should see substantial growth is wearable payment devices.

Regardless of the amount of competition this brings, we can expect to see more secure platforms and better incentives for consumers. A bank cannot simply bring people in because they exist; they must now prove they are worthy of your money. Payment systems likely will increase their move toward digital, as new businesses provide vendors with plenty of options for cashless payment accessibility.

In Conclusion

Although you may not see immediate changes in your banking routine, you can expect to hear news of increased options in the near future. I anticipate this change will affect the general population in a very positive way. Even further, this law opens the door to fintech entrepreneurs who would normally shy away from competition. In a year’s time, I believe traces of this law will show up in our everyday lives, and it may even influence other countries’ banking systems.

Fintech Around the World

By Jacob Parker-Bowles

On September 21, 2017

In FinTech, Jacob Parker-Bowles

Fintech, short for financial technology, is a commonplace term in first world economies such as those of the United States and Europe. Even if you don’t work in the finance sector, you are probably familiar with it. It makes its way into the news all the time with hyperbolic speculation about how fintech will be the ultimate disruptor of traditional banking, overturning archaic legacy systems. It’s true that financial technologies have shaken up traditional financial markets to a certain extent, but exactly how much and in what ways varies across the globe.

To get a sense of how much the fintech sector is disrupting markets, we should look at stock investments in the major fintech markets around the world, on both a macro and micro scale. Overall, fintech has taken the world by storm. According to statistics collected from the 2017 FinTech Adoption Index, the average adoption rate of fintech products around the world is 33 percent- up from 15 percent in 2015. Even in emerging markets such as India, Brazil, China, Mexico, and South Africa, the adoption rate is about 50 percent. Fintech funding around the world totaled $49.7 billion between 2010 and 2015, and $25.8 billion in 2016 alone. As of 2016, there were approximately 1,400 fintech companies throughout 54 countries.

In the macrocosm, it is clear that fintech is a dominant and growing force, but to understand its impact on a deeper level, one should examine regional trends. Here is how the fintech sector plays out across European, U.S., and Asian markets, based on recent data from GP Bullhound and CB Insights.

United States

The United States is a hotspot for fintech activity, representing nearly half (46%) of all global fintech startups valued at $1 billion or more (or unicorns, in finance speak). The United States exhibits a fairly consistent trend over recent quarters where the volume of fintech deals being made is decreasing while the amounts are increasing. The reason for this trend can be attributed to a shift toward large-scale private investments, which could affect the supply of venture capital funding to other startups.

Europe

Fintech investments in European markets, in contrast to the purely capitalist United States, tend to be smaller and more regulated. Only one European fintech investment as of the second quarter of 2017 exceeded $50 million in value. Although the volume and value of investments have decreased since the first quarter of the year, investments follow a pattern according to the European financial year, whereby investors seeks to capitalize on early-stage fintech startups before the end of the fiscal year. Additionally, traditional banking models in the UK are starting to give way to technology-driven ones, as can be seen in ClearBank, the first UK clearing bank built on cloud technology rather than legacy systems.

Asia

The Asian fintech market has experienced rapid growth in the second quarter of the 2017 fiscal year, with deal value and volume both experiencing five-quarter highs. The reason for the spike in Asian fintech markets can be explained by huge investments in financial technologies alongside traditional financial institutions. Rather than disrupting traditional institutions, fintech businesses in Asia tend to supplement the existing infrastructure.

It’s easy to make generalizations about fintech and the effect it has on traditional financial markets around the world, but when we take a step back and examine how it plays out across key markets, it becomes apparent that fintech has a long way to go before it becomes the ultimate disrupter of financial markets people speculate. For now, it exists within a highly volatile market where traditional systems such as legacy banks continue to exist alongside fintech startups, many of them gradually morphing their financial offerings.

Jacob Parker Bowles: The Shifting Paradigm Of Venture Capitalists And Fintech

The Shifting Paradigm of Venture Capitalists and Financial Technology

By Jacob Parker-Bowles

On August 2, 2017

In FinTech, Jacob Parker-Bowles

Several years ago, before fintech (financial technology) became a household name and widely accepted form of banking and finance management, venture capital firms specializing in this area did not exist. In recent years, however, fintech has become one of the fastest-growing areas for venture capitalists.

Venture capitalists invest in companies that they believe to have large growth potential, so it is no surprise that so many venture capitalists have chosen to funnel their funding into fintech startups- the industry is worth nearly $900 billion, comprising over 1,000 companies and $105 billion in funding. According to VB Profiles’ Fintech landscape report, outside funding for fintech companies more than doubled between 2014 and 2015, from $17.8 billion to more than $38 billion.

With all that growth in the past few years, it seems that it would have to plateau at some point, and as recent trends suggest, that just may be the case, with financial technology experiencing a paradigm shift. In 2016, global venture capital investment dropped off to $25 billion from $47 billion in 2015.

So what gives? Venture capitalists are not losing faith in startups, but they’ve had a sort of reality check. According the Morgan Stanley, “Pullback in fintech investment over the past year is indicative of a realization of lower return on investments than initially hoped due to some unique challenges to disrupting in the financials industry, and our suspicion is that VC investors will continue to scale back investment.”

As venture capitalists step back, legacy firms step in. A fear of disruption can be attributed to the reason traditional financial firms are now hopping on the fintech bandwagon. The threat of disruption from fintechs is forcing incumbents to up their investments in technology to gain operating efficiencies and preserve market share,” Morgan Stanley explains.The proposed deregulation of Wall Street from the Trump administration is another factor. Deregulation would free up incumbent firms’ spending as they wouldn’t have to put out as much money for regulatory compliance and would have more to invest in fintech startups.

This shift in investment patterns is unlikely to have a direct, adverse effect on fintech startups. What is likely, though, is that established Wall Street firms will gain a competitive edge with fintech companies, putting them on a more level playing field as they adapt new technologies to improve their business models.