Month: January 2017

Bitcoin’s price fell 10% this week when the People’s Republic of China announced their intent to investigate companies using bitcoin (CNBC). As explained in the article, “Chinese investors dominate the global bitcoin volume trade” which has led Chinese authorities to question whether the use of this financial system is having a negative effect on the renminbi (CNBC).

The idea that a national government is looking into an peer-regulated system like bitcoin begs the question of how far does a country’s jurisdiction reach in regulating its own citizens’ use of such system. This investigation, at least according to the article, indicates that the Chinese government is attempting to reduce Chinese bitcoin users’ exchanges. Because of its large presence in China, it will be very interesting to see how authorities will investigate whether or not this digital currency has a significant effect on the renminbi, their national currency. In the age of skepticism of financial information systems, the whole world will be watching and waiting to see how the bitcoin will react and whether or not this peer-to-peer financial system can withstand this economic superpower. (WC 183)

Reference: http://www.cnbc.com/2017/01/11/bitcoin-falls-5-as-china-plans-to-investigate-firms.html

In the years since the crash of 2007-08, policymakers have concentrated on making finance safer. The magical combination of geeks in T-shirts and venture capital that has disrupted other industries has put financial services in its sights. In this way a new generation of startups is taking aim at the heart of the industry—and a pot of revenues that Goldman Sachs estimates is worth $4.7 trillion. Like other disrupters from Silicon Valley, “fintech” firms are growing fast. They attracted $12 billion of investment in 2014, up from $4 billion the year before.  However, the fintech firms are not about to kill off traditional banks. The upstarts are still tiny. Nonetheless, the fintech revolution will reshape finance in three fundamental ways.

First, the fintech disrupters will cut costs and improve the quality of financial services. They are unburdened by regulators, legacy IT systems, branch networks—or the need to protect existing businesses.

Second, the insurgents have clever new ways of assessing risk, which can be called data-driven lending. This kind of data-driven lending has clear advantages over decisions based on a single credit score or meetings between banker and client.

Third, the fintech newcomers will create a more diverse, and hence stable, credit landscape. The business of internet-based firms is less geographically concentrated than that of bricks-and-mortar lenders.

If fintech platforms were ever to become the main sources of capital for households and firms, the established industry would be transformed into something akin to “narrow banking”. The bigger effect from the fintech revolution will be to force flabby incumbents to cut costs and improve the quality of their service. That will change finance as profoundly as any regulator has.

References:

http://www.economist.com/news/leaders/21650546-wave-startups-changing-financefor-better-fintech-revolution

http://www.inc.com/magazine/201509/maria-aspan/2015-inc5000-fintech-finally-lifts-off.html

Financial information systems (FIS) are the neural network of business organizations. They record the financial impact of every business transactions and translate the consolidated impact into actionable information on cash flow, revenue, profitability, and taxation for executives, shareholders, and external stakeholders.

Today, with businesses generating up to one million transactions each day, FIS are the cornerstone of effective and accurate financial reporting on the strategic level but also for day-to-day operations. Additionally, FIS are an important element in ensuring regulatory compliance. Modern FIS allow you to investigate, audit, and optimize business processes using financial information.

In the future, FIS will play an even more important role. Innovations in financial technology (fintech) record, integrate, and manage financial information in radically different ways. Fintech will change not only the role and scope of FIS but will affect existing business models and promote completely new business models.

Understanding the fundamentals of FIS, the relationship of FIS and business processes, and being able to analyze and design FIS using innovative financial technology help you to become an invaluable addition to any business organization.

Let’s do this!