Month: January 2017

When fraud is perpetrated by employees with access to internal systems, there are several relatively easy things you can do to spot the fraud:

1. For starters, check the accounts payable system to see if there are any vendors without an address on file. If there are vendors without addresses, there is a possibility that accounts payable clerks are routing those checks to themselves.
2. Also, analyze the activity of vendors in your system. A large company may have 50,000 vendors on file that it has done business with, but may only have done business with 10,000 of them in the last few years. Those unused vendor files are ripe for abuse by malicious employees, who may by cutting checks for bogus work, and then funneling that money to themselves.
3. Take a close look at the names of the vendors on file. Malicious employees who are committing AP-related fraud may modify the names of existing vendors or create fictitious companies out of whole cloth. They may add their own initials to the front of company names, use anagrams, or use with silly names like Mick E. Mouse.
4. Cross referencing employee addresses with vendor locations routinely turns up some employees with their hands in the cookie jar. This can be done very quickly by simply matching address numbers and ZIP codes.
5. In years past, fraudsters would perpetrate their theft using post office boxes, which are guaranteed anonymity by the US Postal Service. This is one of the reasons that many companies now require actual addresses to be on file. You can flush out the little rascals by cross-checking the physical addresses of the UPS Stores and other similar stores with employee and vendor addresses.
6. In some cases, it may be useful to use visual tools to analyze street addresses in more details.
7. Many businesses close on the weekends, so if checks are routinely issued on Saturday or Sunday, that would be a giant red flag of fraud.
8. Fraud fighters can use Benford’s Law (also called the First-Digit Law) to identify suspicious patterns in checks. If the company requires a senior manager to sign off on checks over $25,000, and there is a big disproportionate increase in the number of checks written just below that number, that would be a strong indicator of fraud.

Reference:

Eight Ways Analytics Powers Fraud Detection

 

Automated Robot Advisories:

Robo Advisors [e.g. Betterment, Wealthfront]: One-to-one communication between financial advisor and client was the defining feature of the relationship in the traditional wealth management and investment advisory. With lower fees, Robo Advisors use automation to select investments that meet client’s’ risk tolerance and growth goals. For less complex portfolios, algorithms can determine the appropriate level of risk in bringing investment services to an underserved market.

Robo Advisory companies globally are focusing on broadening the scope of robo advisory beyond simple portfolio rebalancing. As this area matures and diversifies into more sophisticated portfolio construction and other offerings, investment is expected to grow significantly. In the future, we will likely see a broadening focus of digital advice including a much more holistic view of the clients’ assets, income and liabilities; not just the assets under management for that given platform.

Robo Advisors are also expected to address investor behavioural issues by fostering adherence to sensible investment plan appropriate to one’s circumstances rather than chasing the last ‘hot’ sector.

While one of the leaders in the space is Betterment, a New York–based firm, Wealthfront is another firm that has more than $1 Bn under management under its proprietary algorithms. Old established players Vanguard and Charles Schwab launched Robo Advisers and now have more than $20 Bn under management. Other firms engaged in automated advisory services include Mint‐Bills, WiseBanyan, Bloom, FutureAdvisor, Personal Capital, and Motif Investing.

References:

https://www.accenture.com/_acnmedia/PDF-2/Accenture-Wealth-Management-Rise-of-Robo-Advice.pdf

https://fundersclub.com/blog/2016/11/30/your-money-in-20-years/

 

Over the past several weeks, an uncertainty has existed in the United States, and even the world, as to how the new US President – Donald Trump, will affect the tech industry and Silicon Valley. In a recent Newsweek article (Maney, 2017), Kevin Maney keyed in on five major sectors targeted by the Trump Campaign rhetoric, that if followed through on by the new administration, could stifle growth and innovation. The  areas discussed included “Humle the Technology Industry”, “Dismiss Alternative Energy”, “Derail Health Care”, “Ignore Russian Hacking”, and “Shift resources from Cities to small Towns and Rural areas”.

I see the next four years in two views. The first will be in alignment with the negative actions described by Maney as to the effects of Trump’s promised policies, but I also envision a second outlook, not mentioned by Maney. This overlooked  observation would include an uprising, powered by immigrants and the same technology that Trump’s action is predicted to suppress, that would overcome his actions, and in the end, keep the Valley on track producing some of the most innovative tech companies in the world.

 Maney, K. (2017, January 27). DIGITAL DIVID AND CONQUER- Trump has a brilliant plan to turn Silicon Valley into a desert. Newsweek, pp. 46-47.

This article brings up the idea that Americans and America in general, are not the greatest at managing money. With the introduction of financial technology, there is a space in which Americans can learn about money management, but most fintech companies focus heavily on payments and lending. This focus exacerbates the issue of poor money management. Additionally, media coverage surrounding fintech is heavily focused on technologies that simply make it easier for people to spend and send money rather than save or invest money.

There are certain companies pushing out applications with a focus on money management, but these are few in comparison to the type of applications mentioned previously. Considering that most Americans spend the same or more than what they make, a focus on financial literacy is important for future financial successes. The article goes on to state that an increase in financial literacy for voters and politicians would enable America to solve its economic issues. Although the sentiment of the article rings true, the statements seems drastic. There is more that can be done (ie. education) to improve financial literacy irrespective of fintech. Such solutions will ultimately aid in this financial literacy issue, not solve it.    

http://www.thinkadvisor.com/2017/01/23/when-it-comes-to-financial-literacy-fintech-is-dro

With Robo advising achieving the main stream status, there are many newcomers coming up with innovation and old ones striving to catch up. Here lets discuss about few rob advisors in the market which offer high net return for low investments.

Betterment and Wealth front are considered to the best ones in the market with low management fees and good minimums. They are quite easy to use with their interactive interfaces.Most of the consumers prefer them for their low account minimum features,making it accessible to many. They offer diversified portfolios with tax loss harvesting and automatic rebalancing.These services differ in their fee structure. Wealth front offers flat fee with whereas betterment offers a tiered payment structure where it reduces fee for higher account balances.

There are efficient rob advisors which manage the portfolio free of charge like WiseBanyan and charlesSCHWAB. These are not completely free, they carry few expenses in funds and trades.
Vanguard and Personal Capital offer hybrid services which offer both human advisor and computer based advices. But these have high account minimum fees,but they offer personalised services.For taxable accounts, wealth front and personal capital offer high optimisation and tax efficiency for taxable accounts. Betterment and fidelity go offer the better services for retirement plans.

Major players like Wellsfargo are also venturing into the Robo-advising field to capitalize on the growing oppurtunity.

Source:
https://www.nerdwallet.com/blog/investing/best-robo-advisors/

What the Article Says:

This article discusses Fintech and how it’s growth effects businesses and consumers of England. As the technologies emerge and flourish to produce better-targeted services with lower pricing, banks are taking advantage of “lower transaction costs, improved capital efficiency and stronger operational resilience.” When discussing its tangible benefits, the article honed in on the specific case of mobile banking. While the government must be aware of the numerous potential risks, mobile banking is becoming more flexible for businesses and consumers. Peer-to-peer lending is expanding, wholesale banking is shifting to order-driven trading, and the technologies are improving efficiency, accuracy, and security of mobile banking processes.

My Thoughts:

I think this article takes a good, unbiased approach on analyzing Fintech in England. Rather than focusing solely on the positive effects that most people see, it brings about major questions for people to consider, such as “What implications are there for the aggregate level of operational and cyber risk in the financial system?” These are questions that regulators have to address, as there are several potential fraud and privacy threats when it comes to fintech such as mobile banking.

Source: https://www.cryptocoinsnews.com/bank-of-england-governor-fintech-brings-great-promise-and-risks/

Link to the full Article:

http://www.forbes.com/sites/shelliekarabell/2017/01/29/sharing-economy-nice-but-does-it-create-real-jobs/3/#8dc39ff4f1e4

The Sharing Economy Main Sectors:

1. Travel
2. Transportation
3. Finance
4. Labor
5. Streaming

The sharing economy has become a booming source of services and revenue in the market. Airbnb has an estimated value of $30 billion and Uber is estimated at $68 billion.

The question now becomes is this a “phenomenom” or is it a necessity in our growing world. Shellie Karabell, describes the sharing economy as “changing the way established businesses work.”

“The sharing economy is requiring on-demand insurance” Denis Duverne

Sharing economies allow people to provide services or goods to customers with little or no capital. It also removes the needs for business organization such as managers and associates, you are your own boss.

While the sharing economy has become an extra source of income or a full-time job for some people. What is the effect on the economy as a whole? It brings the question of liability and consistency.

For example, if you were to become an Uber driver and you pick up a passenger and for whatever reason the passenger gets hurt because there was a car accident, Who is held liable? Uber or the driver? While Uber is a business, to what extent are the Uber drivers known as self-contractors compared to employees?

While the sharing economy may be providing an easier to services, it’s affecting the current business model and it brings up the question to what extent can the sharing economy hold up to the demand.

FinTech has disrupted the financial services industry by bringing technological innovations to the well-established industry. While FinTech has created many technological innovations in the financial sector, Fintech has created new areas of fraud. FinTech such as crowd funding and peer-to-peer platforms have provided consumers with the ability to access new methods of investing and acquiring loans that do not have the same regulatory oversight as traditional methods. FinTech is creating new marketplaces for financial transactions to take place. The marketplaces that are being created through FinTech are experiencing high risks of fraud due to the lack of regulatory oversight on the rapidly evolving industry.

In order to combat the increased fraud risk as a result of FinTech, the RegTech industry has started to develop with FinTech. RegTech describes technologies that increase the efficiency of operations by providing legal and regulatory compliance. Some examples of RegTech used to combat fraud are biometrics and tokenization of transactions. With the creation of new marketplaces and faster payments, it is critical to continue to adopt regulations to FinTech in order to prevent serious financial fraud from occurring.

Reference:
https://www.taylorwessing.com/download/article-fraud-in-fintech.html

There are a few ways that Fintech has been able to disrupt the trading market and open up new possibilities in online trading. No-free trading is one way that has become increasingly popular. Fintech companies such as Robinhood have found way to garner large MAUs and offer trading without charging a fee. Speaking from experience, the app is easy to use and seems seamless, and has a large following especially with the youth of society. Binary options are also being offered by fintech firms, and are fin derivatives that allow you to bet on an asset with a specified time horizon. There is also no unlimited risk so it has become a popular option for day traders. Another way the industry has changed is the concept of social trading. This entails following strong traders on social media and using their strategies and trading in a similar way. This includes preset platforms in order to ease the trading process and make it easier to replicate these strategies.

3 Ways Financial Technology Has Disrupted Online Trading

This article talks about the recent rise and potential of FinTech in Mexico. The writer gives some factors as to why FinTech has taken off, why it could continue to rise, and some potential obstacles.

I found this article to be fairly interesting, and told me a lot of things that I didn’t know where happening in Mexico. For example, I was not aware just how much the Mexican government had invested in technology and infrastructure. I was also not aware that Mexico had been able to attract so many entrepreneurs who have Silicon Valley experience. Based on the article, it seems like the main factor for the rush of FinTech investment in Mexico is the combination  untapped number of potential customers. In places like the U.S., new FinTech companies have a lot of competition from existing FinTech and traditional financial companies. In Mexico, it seems that the market hasn’t been saturated yet, so it makes sense that investors would be so willing to try to move into the market. In addition, it makes sense that many investors would try to use Mexico as a test market for the rest of Latin America.

 

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The rise and rise of Mexican fintech