Month: January 2017

Within recent years, FinTech has brought to the public a way to donate and fundraise for any cause, ranging from charities to startups. In London, five students have found a way to integrate a new system into an existing one – from integrating a “digital charity box” called “iRoundUp” into an established online payment system “ParentPay.”

By giving access to the public a way to give to good causes without barriers, such as distance, it gives more incentive for the masses to be inclined to help. It also reaches a larger audience, increasing the donating potential that these charities can reach. Since it was an existing platform, the users are already familiar with the interface. By adding in a new option, it gives the users an easy and hassle free way of donating to a good cause.

With the development of technology, this notion of online giving has been widespread across the online community. This gives a new push towards the future of money, where all transactions – from buying, selling, or donating – will be transferred online. By slowly integrating new technologies, such as “iRoundUp” to a larger platform, users can be exposed to the fast changes of technology.

http://techcitynews.com/press_release/no-electronic-loose-change-innovative-fintech-charity-payment-scheme-launched-today-across-6000-uk-schools/

 

Ford Motor Credit has partnered with SF fintech startup AutoFi to launch a new platform on the Ford dealerships website for purchasing and financing cars, accessible from anywhere and on any device. Providing digital financing options is appealing to customers since it allows them to secure a loan online without having to go to the showroom. As of now, the only in-store location is in Ohio, however the platform will soon be rolling out to all national Ford and Lincoln dealerships.

Personally, I think this is a great strategic move on Ford’s part and I believe many others in the automobile industry will follow in their footsteps. They were smart to act on the data they had collected from a survey conducted by Harris Poll that showed 83% of Americans said that they would like to spend as little time as possible at the dealership when shopping for a vehicle. Not surprisingly, the respondents also said they would like to touch and feel a car before purchasing it. Thus, this new platform caters towards both of these survey results since it speeds up and simplifies the buying process using technology, while also offering it in-stores so that customers can still have the opportunity to see the car in person before purchasing it. As customer expectations are evolving, as seen from the survey, Ford’s decision to adopt AutoFi’s technology will be a game changer for both consumers and car dealers.

Source: http://www.altfi.com/article/2602_fintech_car_finance_firm_strikes_deal_with_ford

http://www.marketwatch.com/story/ford-teams-with-startup-for-online-car-shopping-2017-01-23

While artificial intelligence (AI) has been adopted by non-financial institutions for many years, most financial institutions are just at the early stage to employ the technology due to the following reasons:
– Lack of knowledge about the technology
– Lack of clarity of business goals: how much the existing infrastructure needs to be changed to adopt new technology and whether benefits outweigh costs
– Shortage of talents to analyze big data and provide meaningful insights
– Data governance is not well established
– Data is distributed in isolation
– Concern with regulated compliance as “Bankers won’t want to answer extra questions later like, ‘Why did you use this type of solution here?’”
Though we see many hurdles preventing financial services from quickly adopting the technology, there are many increasingly important benefits AI will bring such as efficient fraud detection and cost reduction. As a result, in the near future, AI is expected to be a must-have weapon to compete in the market. Financial institutions need to put more efforts into catching up with the technology by working with regulators to ensure they are comfortable and acquiring talents. Certainly, AI will reduce human work a lot but it cannot completely replace human as hackers are oftentimes smarter than machine and we need people to detect things machine miss or fix things machine wrongly recognize.

Source:
1. https://thefinancialbrand.com/63322/artificial-intelligence-ai-banking-big-data-analytics/
2. https://www.americanbanker.com/news/how-paypal-is-taking-a-chance-on-ai-to-fight-fraud

Millennials nowadays account for more than a quarter of the total population of the U.S. and are forecasted to become the highest-earning generation by 2025. According to ETA’s Transactions Trends survey, more than half of millennials have used online payment services such as Venmo or PayPal to transfer and receive funds. However, cashless and online banking expose millennials to some hidden risks. Certain risks include bank overdraft fees, and digital theft that relates to fingerprint ID or Apple Pay.

Several new fintech companies and innovative banks are designing services to keep millennials’ finances more secure in the new digital landscape. Robo-advisors, such as Mint send notifications to help users keep track of their spending. Budgeting tools like Fudget and Goodbudget allow users to keep track of exactly how much they are spending on hidden fees like subscriptions. Innovative banks such as N26, Tandem and atom are offering a wider range of loans, accounts and overdraft policies to suit users’ spending habits. Some payment gateways like Stripe, Braintree and Google Pay are also available, which provide millennials with safe and convenience ways to the online payment process.

Source: http://www.ibtimes.com/millennials-money-how-fintech-will-help-lower-risks-cashless-society-opinion-2479617?utm_medium=email&utm_source=fintechweeklycom

 

In continuation to my last week’s blog Fraud Management via Analytics, here are few more fraud identification strategies that are based on analytics:

Duplicate transactions: The identification of possible duplicate transactions would be a possible symptom of fraud that should always be examined. Ordinarily, one would expect that invoice number vendor number combinations, would be unique. Therefore, the existence of transactions with the same invoice number vendor number combinations would be an unexpected pattern in the data.

Text and Graph analysis: Sometimes ‘flat’ data does not tell the whole story. Adding spatial operations enhances analytics with an additional dimension based on patterns, relationships, and inferences. Any visualization tool can bring to surface some glaring unusual behavior in business. There may be correlations that are only visible in graphs/visuals, which could be easily identified using statistical techniques like cluster analysis and spatial recognition.

Similarly, text examination could be another built-in secret security framework, if done at random intervals and coverage, which could analyze unstructured data for sentiments and relationships. Statistical packages like Python or XL-Miner, can be used to effortlessly start a self-analysis journey. It can positively impact detection, recommendations and resolutions.

Even/Rounded amounts: Another digital analysis technique is to identify even value amounts, numbers that have been rounded up. The existence/re-occurrence of even amounts in some accounts may be a symptom of possible fraud and should ideally be probed further. Frequent rounding of travel expenses can be detected via this technique.

However, fraud symptoms are only symptoms and care should be taken to properly investigate each aspect before jumping to any concrete conclusion. The actual analysis relies on the critical thinking skills of the fraud examiners’ ability to integrate the output into a cohesive actionable analysis product.

The use of physical security tokens during two-factor authentication has been a fairly common practice in corporate America. It creates a more secure system. An annoyance of this process has been the need to carry the physical token. There are many form-factors, but resemble key fobs. If you forgot or lost the token, you would need to contact the IT administrator to login to your computer.  Imagine if you are about to present at a meeting, but unable to login. Awkward…

Citi Bank is now rolling out a soft-token system for their clients. Instead of a key fob, users can download a Citi Bank app to generate login credentials. This has many advantages. One is less likely to lose an essential item like a mobile device than a keychain. Most people have their phones with them constantly, so users have the power to login to their financial systems whenever they want. They will not have to wait to receive a physical token, which can take days if you work in a geographically dispersed company. Finally, less paperwork! The process of getting physical tokens at a company takes signatures. Soft tokens have great advantages that Citi Bank’s clients will benefit from.

Link: https://www.finextra.com/newsarticle/30048/citi-ditches-physical-tokens-for-app-based-login-to-corporate-platforms

The upcoming Practice Exercise for procurement was quite difficult for me. Besides not knowing how to use SAP at all, the instructions listed in the assignment were not that clear and took a bit of time to figure out what it was asking me to do exactly and how to do it. One of the websites that helped me get through one of the parts in the assignment was tutorialspoint. Below is a link to their Purchase and Requisition section.

https://www.tutorialspoint.com/sap_mm/sap_mm_purchase_requisition.htm

It has a great section on how to create purchase requisitions and purchase orders from purchase requisitions. One of the best parts is that the instructions include clear screenshots of the of each step. One of the issues that I had was that I could not figure out what my purchase order and document number were. From these screenshots I was able to get an idea of where this information was located. The only thing that I wish tutorialspoint did better was to have more comprehensive tutorials. It was quite difficult to figure out the next few parts in the assignment and I could not find the tutorials for them on tutorialspoint.

Source: https://www.tutorialspoint.com/sap_mm/sap_mm_purchase_requisition.htm

Many articles posted recently have noted the promising technological advances that aim to improve fraud detection in banking. However, some of these technologies may have launched too quickly, some should have still been in beta testing. Lansing, Michigan discovered that the automated system used to detect fraudulent unemployment claims has been wrongly accusing citizens. The system accused roughly 40,000 citizens between the years of 2013-2015 of which the state now must sort through individually. Though the system was originally thought to be an efficient solution to fraudulent claims, these faults will come at a great cost to the state. While this isn’t a very common occurrence across FIS systems, I think it is important to consider the rapid growth of the industry and look at some of the systems with a flicker of speculation. Testing of these systems must be robust in order for them to be confidently implemented and successfully executed. Though the testing can be expensive and timely, it could save major disasters such as this one from occurring and it’s far less expensive and timely than the consequences that come from a mistake in the system as large as this one.

http://www.beloitdailynews.com/article/20170128/AP/301289924

Hyperledger Project:

The Hyperledger project is an open source collaborative effort created to advance cross-industry blockchain technologies. It is a global collaboration including leaders in finance, banking, Internet of Things, supply chains, manufacturing and Technology. The Linux Foundation hosts Hyperledger as a Collaborative Project under the foundation.

 

Projects under Hyperledger Project

Blockchain Explorer

Blockchain-explorer is a project in Incubation that was proposed by Christopher Ferris (IBM), Dan Middleton (Intel) and Pardha Vishnumolakala (DTCC) to create a user friendly web application for Hyperledger to view/query blocks, transactions and associated data, network information (name, status, list of nodes), chain codes/transaction families (view/invoke/deploy/query) and any other relevant information stored in the ledger.

Fabric

Hyperledger fabric is a project in Incubation that was proposed by Tamas Blummer (DAH) and Christopher Ferris (IBM) as a result of the first hackathon during which a merge between IBM’s proposal and DAH’s proposal was started (see Proposal).

fabric is an implementation of blockchain technology that is intended as a foundation for developing blockchain applications or solutions. It offers a modular architecture allowing components, such as consensus and membership services, to be plug-and-play. It leverages container technology to host smart contracts called “chain code” that comprise the application logic of the system.

 

Ref: 1) https://www.hyperledger.org/

2) http://www.r3cev.com/about/

 

According to a “Digital Disruption” report by Citigroup, China has overtook U.S. as the number one investor in Fintech. In terms of global investment, China more than doubled it’s share from last year and is currently investing in 46% of the world’s fintech, while the U.S. is currently investing in 41% (down from 56% in 2015).

This phenomenon can be attributed to several factors. Firstly, private markets in the U.S. has been hindered by financial regulations. Firms such as Lending Club and OnDeck are faced with either the burden of these regulations, or they have failed to meet their expectations. On the other hand, the lack of regulations in China, as well as the growing middle class allows businessmen to invest in fintech for those who are eager to capture the growing fintech market. Currently, China has the highest volume of financial transactions of any country. The opportunities of fintech in China is unlimited.

Additionally, firms in China receive higher valuations and funding from venture capitalists. The biggest of all is Ant Financial (Alibaba’s online payment platform with over 450 million active users) with a valuation of $60 billion. In contrast, the top valuation in the U.S. is Stripe (another online payment platform) with a valuation of $9 billion.

 

Sources:
http://fortune.com/2017/01/23/china-fintech-invest-citi-report/
https://ir.citi.com/5X%2BQYT5l2T%2BYUV4%2FL%2FhUjyK%2B0cD27TLg380o6tX3OwKdy7TrZXEKM9ByXlGUuCvXEjpUnEPhKoU%3D
http://www.itwire.com/business-it-news/business-intelligence/76564-china-overtakes-us-in-fintech-investment-report.html