Month: January 2017

A new report filed by the research group Australian Fintech, has found that FinTech Revenue in Australia is expected to grow rapidly over the next few years.  The group has predicted an annual growth rate of 76.3% and the valuation of Australian FinTech will be greater than AUD $4 billion, or roughly $3 billion USD, by the year 2020.  The research group found that, by 2020, there are three areas that financial technology services will grow rapidly in Australia.  These areas are digital payments, personal and business finance, and financial infrastructure and data analysis.  The growth of the FinTech sector is expected to bring about AUD $10 billion in revenue just from traditional financial institutions alone.  The rise of the FinTech will add roughly AUD $3 billion worth of added revenue.  With the large amount of money being invested into the FinTech industry each year it has shown to be one of the fastest growing industries in the world.  Australia has set up the right ingredients to make it a FinTech hub to appeal to companies to hopefully show FinTech firms that Australia is the place to establish themselves.  Because of this Australia has seen a boom within the industry.

One of our politician’s greatest fears has been inflation, but recently economists are examining the deflationary pressure technology places on assets. According to the author of “Janet Yellen Eats The World”, Faisal Khan, this has been achieved through efficiency and transparency.

Technology companies create products that makes your assets better. However, the more interesting way Khan argues technology promotes efficient is through better asset utilization. Companies like Uber help the average consumer turn their assets into another source of revenue, and puts downward pressure on the price of that asset. In a shared economy there is a decreased the demand for assets, which has caused an overall fall in the price of assets.

Technology also makes prices more transparent. The most typical example of this has been Amazon, and the ease at which consumers can discover prices. But according to Khan, big data solutions have moved into almost every industry. For example, even in the food industry, leaders like Tyson Foods are creating smart farms to stay ahead of their competitors.

This deflationary pressure has caused many questions about monetary policy. Khan argues now the government can raise interest rates or minimum wage with the expectation that the deflationary pressure of technology will fight inflation.

Janet Yellen eats the world

In a recent article posted in Forbes magazine, the growth and future of the Fintech industry is analyzed by reviewing its performance in the market over the last 6 years. Fintech investments jumped from $1.8 billion in 2010 to $5.2 billion through Q1 2016 from seed investments to bank takeovers and acquisitions. It is the advancements in traditional banking that Fintech startups are trying to impact positively.
While this industry has massive room for growth and opportunity, many analysts believe that the opportunity for growth is hindered by the amount of increasing regulations within the insurance and corporate finance sector. The more “tightly regulated” a certain avenue of finance is, the more longer it will take to express growth. One of the ways to counter the sluggish rise of these sectors are through the increasing amount of Fintech startups being created in different cities/regions such as London, Zurich and Singapore. These cities are very attractive for any Fintech entrepreneurs due to the more “friendly” governmental and business regulations put into action. Because of this disparity, the current hubs such as New York and Palo Alto may lose their titles of premier financial capitals if regulations continue to roughen and those abroad remain more friendly.

http://www.forbes.com/sites/nikolaikuznetsov/2016/11/22/the-next-phase-in-fintech/#477a982a4a29

With technology guiding banking, there are new innovations that are highly influential to people’s choices. One such choice is “going card less”. It may not be an innovation that is going to be disruptive but, it can create a higher level of security for transactions and ease of use for customers. ATMs of various branches of Bank of America already include the card-free option.  While they plan to convert all their ATMs, Wells Fargo and JPMorgan Chase are installing and testing this option at various branches.

Wells Fargo claims this is how it is going to work:  You’ll log in to the bank app and request an eight-digit access code. At the kiosk, you’ll enter the access code and your regular ATM code to start the transaction.

How the bank thinks it is going to be helpful: Customers need not carry their card all the time. It can make it more secure with card thefts causing issues to customers.

What ATM manufacturers think: They are not sure card-free ATM transactions would prove more convenient than using a card. Also, they don’t see it being beneficial to the card users.

What I feel about the whole card-free ATM: Considering US is not cash based economy, with very limited cash transactions there is not going to be much effect as there are not many withdrawals. But it might be a path leading to a complete mobile/ online banking system without any additional cards required in the future.

 

REFERENCE: https://apple.news/AC6frPQ2qS2-v0JYGP9Z25Q

Fintech, once a slow-growing sector, is now considered one of the fastest-growing sector in Silicon Valley and today’s tech industry. Financial technology is being labelled and defined as a company or start-up that uses technology and solves financial problems, which embodies many different aspects of finance and money.

Historically, there had been low correlation between finance and technology but in recent years, there has been more intertwining between finance and technology, especially with the growth of mobile application and online platforms. A larger and more mature segment of fintech is digital payments which is a $450 billion industry. Other fintech segments includes but not limited to personal finance and investment management, lending, data analysis, money transfer and currency, and crowdfunding. In 2015 alone, more than $22.3 billion were invested in fintech which was more than the prior 5 years combined. Analysts are predicting the fintech sector to be lucrative and rising.

 

Source:

http://www.nytimes.com/interactive/2016/04/07/business/dealbook/The-Fintech-Power-Grab.html?_r=0

http://www.nasdaq.com/article/4-reasons-the-fintech-potential-remains-untapped-for-2017-cm729084

 

The implementation of California’s new Financial Information System, FI$CAL, is experiencing major delays that have pushed back the projected final stage of launch over a year and has already gone $237 million dollars over budget. While originally budgeted at $616 million, the Oracle ERP system is projected to save the state up to $415 million per year. Although state auditor Elaine Howle has been critical in the management of the project, there is no denying that the implementation must be done properly for effective use. The system will be the integral financial tool used throughout the state and therefore state employees working in the system will also need to be well trained in the use of the system. Though I am not denying the right of Howle to question Accenture’s timeline and timeliness, the annual savings of the new system must be kept in mind through the process. Moving forward, it is clear that transparency and the cohesion of contractors and state employees must be improved upon.

Calif. Accounting Software Overhaul Blasted

http://www.sacbee.com/news/politics-government/the-state-worker/article124839264.html

An organization trying to incorporate better financial information systems into their daily operations, need to understand the importance of Transaction Control and its roots lie in the very basic way of making a business transaction. Much of the failure despite huge investment in a financial information system is due to bad tracking of the cash flow in and out of the company. Sure, prior to online internet based transactions, exchange of cash against resources was the only legitimate way a transaction and was considered complete but with companies scaling their operations to reach across borders (both locally and internationally) and also in size, it is important to understand that tracking of cash flow is anything but easy.

By switching to cashless transactions, the cash flow can be monitored in a structured manner and the workflow can be set to adhere to various compliance requirements and approvals before a transaction can actually be considered complete. 

Switching to a cashless environment involves great efforts but is sure to complement the objective of having a Systematic, Secure, Integrated, Digital, Automated and Standardized Financial Information System.
Link – https://jfin-swufe.springeropen.com/articles/10.1186/s40854-016-0023-z

Automated Financial Service through Artificial Intelligence.

As pointed out by Horton, head of innovation at Synechron, “many banks have identified onboarding and know-your-customer process as the priority area.” Data analysis through machine learning algorithms will help financial institutes predict their customers’ needs and expectations and therefore deliver financial advice that meets customers’ requirements. As a consequence,  AI advising robots may replace a number of human financial advisors. However, Biz Tech predicts that more mature and astute investors may still prefer human advisors for their strategies.

More Block Chain Adoption and Integration

“Blockchain is a digitized and automated technology that is considered tamper-proof.” Because of the security, Blockchain is expected to be adopted by more and more financial institutes in 2017. McKinsey & Co  predicts that more than 100 blockchain solutions will be explored in 2017.

Blockchain integration will be another trend in 2017. Carlo R.W. De Meijer, an independent economist, claims that “Existing systems within financial institutions need to adapt to the blockchain element. It must fit in with other banking systems.” He further suggests that blockchain integration should not only be confined within a financial organization, but also be integrated into other organizations’ systems through the financial systems that include blockchain technology.

Source: http://www.biztechmagazine.com/article/2017/01/what-s-ahead-fintech-2017

Fintech becomes an increasingly significant trend in business that even banks are reaching out for technology solutions from Fintech vendors.
According to the article, with the life simplified by technology, customers have expectations for seamless, intuitive and easy processes when handling bills, managing accounts, or engaging in financial activities. Take Canadian bank for instance, it combines its traditional business systems with technology solutions from Fintech vendors for better customer experiences, while protecting bank’s data assets, managing system and mitigating risk stably and securely at the same time.
I believe working with a mature Fintech vendor is a wise decision for banks, when compare to developing Fintech system by themselves. By doing that, banks can provide customers with service in shorter time and save the budget and labor for other important uses. However, banks bear risk, too. Before cooperation, banks need to spend heavy research on choosing the right partner vendor in order to have consistent and secure system. Banks should be concerned about the amount of information provided to the vendor to avoid unnecessary leak of information. In addition, frequent communications are highly recommended between banks and vendors.

link to the article: http://www.digitalistmag.com/customer-experience/2017/01/10/improving-customer-experience-look-to-fintech-04826561

The evolution and revamping of the banking industry has been growing rapidly with fintech, as venture capital in this sector was up to $12 billion from $4 billion the year before for the years 2014 and 2013, respectively. The reason for this high growth seems to be due to fintech’s ability offer similar services as traditional banks while relying on a peer-to-peer platform grounded on specialized software. Lower costs and easier access, allow users to get loans, send cash overseas, and manage their wealth. In addition, a changing landscape with the relevance of new technologies such as smartphones and cheap data processing are allowing fintech companies to have a median to access such a large market and subsequently, disrupt it. The millennial generation will also force traditional banks to change their business model, as they are accustomed to web-based technology and are trusting of the new financial innovations. The three equal parts to which banks make money through interest (both borrowing and saving), charging for making payments, and a collection of fees (overdrafts, brokering investments, etc.) are all challenged by fintech companies. Even though fintech’s top companies handle billions in trade where traditional banks handle trillions, fintech has a lot of room to grow. There was a point where banks used to view fintech companies as unable to penetrate they market, but now there is cause for concern with their business model being threatened.

Link to article:
http://www.economist.com/news/special-report/21650290-financial-technology-will-make-banks-more-vulnerable-and-less-profitable-it