Not being paid on time is a problem many suppliers face all over the world.  To negate this issue, a cluster of new fintech firms have begun making a charge to change how supply chains are financed.  Greensill Capital, a fintech company founded out of Australia, uses an approach to take advantage of buyers’ low credit risk by raising funds in the capital markets and paying their clients’ suppliers on an agreed date.  The lender will then wait to collect the full value of the invoice from the buyer at a later date.  Currently, with low interest rates, and the period of finance being so short, the discount that Greensill takes is barely noticed by their customers, but it improves the cashflow for suppliers without shortening payment times for buyers–a win for both parties.

I believe this strategy for fintech firms could lead to a lot of success, but I don’t see there being room for as many firms as there are right now.  I think eventually the market will reduce into just two or three large short-term lending firms to help the cashflow problem for suppliers.

 

http://www.economist.com/news/finance-and-economics/21714377-factoring-invoices-has-become-cheaper-and-faster-hard-pressed-suppliers-how

A recent Bloomberg article titled “Threat of Blockchain Prompts New Strategy for Germany’s SAP” (Ricadela & Kharif, 2016) would lead you to believe that the 85$ Billion dollar enterprise application software solution provider was somehow in danger of obsolescence by this new blockchain trend. Quite the contrary, as SAP, through its’ Innovation Center Network (ICN), is well ahead of the game, and has been so for several years. The authors approach to the story is that SAP is perhaps threatened and is nervously developing new strategies, but SAP is actually embracing the new technology and doing what any other successful company does – continuously innovate and adapt with the market. IBM, Microsoft, Deloitte, JP Morgan Chase, and Toyota, just to name a few, are all heavily involved in utilizing blockchain technology. SAP is working with its banking, farming, medical, energy, and its media markets to integrate this technology with its existing products, and in new offerings.  Despite its centralized ledger of transactions that forms the basis of SAP financial applications, there is unlimited potential for integration of the decentralized blockchain technology in the areas of e-ledgers, security, and other efficiencies, resulting in lower operating costs to its users.

Ricadela, A., & Kharif, O. (2016, July 29). Threat of Blockchain Prompts New Strategy for Germany’s SAP. Retrieved from www.bloomberg.com: https://www.bloomberg.com/news/articles/2016-07-29/threat-of-blockchain-prompts-new-strategy-for-germany-s-sap

theirnetworth.com: http://www.theirnetworth.com/Businesses/SAP/

Gross, R. (2015, November 23). Will you recognize innovation when you see it? Retrieved from blogs.sap.com: https://blogs.sap.com/2015/11/23/will-you-recognize-innovation-when-you-see-it/

Krompholz, A. (2015, December 3). The blockchain voyage – from the Bitcoin network to Blockchain-as-a-Service. Retrieved from blogs.sap.com: https://blogs.sap.com/2015/12/03/the-blockchain-voyage-from-the-bitcoin-network-to-blockchain-as-a-service/

There are a number of global technology companies entering the Korean market. Technology is playing a bigger role in money transfers, transactions, and consumer banking. The two innovations that have been incorporated have been blockchain technology and artificial intelligence. These forms of technology are currently being used to challenge the big players in the markets by attracting new customers through ease of use and efficiency.

New startups are constantly challenging traditional banks to attract customers through the newest and most secure form of technology. I believe that major banks will acquire small startup financial technologies to attempt to gain a competitive advantage over other banks. It remains to be seen what sorts of technologies will prove to change the market as a whole, but when it comes to banks, security is the most important factor. Artificial intelligence appears to be the closest form of financial technology that could be incorporated at the moment.

 

https://www.cryptocoinsnews.com/bank-korea-fintech-companies-will-reshape-financial-industry/

On a regular evening of November 8th, 2016, when people were done with work and getting home around 8:00 pm IST, an announcement from the Prime Minister Narendra Modi forever changed the Indian economy. The Government of India had demonetised all the INR 500 and INR 1000 notes which constituted to almost 86% of the total cash. India which was the most reliant on cash and faced the biggest crash crunch ever. In one of the world’s biggest economy, almost 95% of transactions were cash, 90% of vendors dint have means to accept electronic payments, and half the population dint have bank accounts. So a common man couldn’t buy and an average business dint have means to receive payments.

The aftermath of demonetization resulted in pushing the country towards the use of electronic wallets. Many new bank accounts are being opened, mobile wallet payments and other e – payment services saw a surge in users.During the dawn of this cashless society the sole beneficiaries are electronic payment firms which have seen in sudden rise of new customers. India’s major mobile payment company PayTm backed by chinese e-commerce giant Alibaba reported a 700% increase in traffic with about 500 million transactions in a single day. MobiKwick, Freecharge, Oxigen Wallet are other leading electronic payment companies who also saw a sudden increase in users.

Street vendors also have opened up paytm accounts with machines outside their shops claiming to accept e-wallet. The whole move of demonetisation is a boon for electronic payment companies. Ofcourse the wide use of smartphones and internet has been the core support element for these digital transactions. There are many innovative solutions coming up from various sectors trying to implement their own systems. India has broadened its digital economy, striving for technological advancements in the digital payments and hence would be a good base for any fintech startup.

Reference:
http://www.forbes.com/sites/wadeshepard/2016/12/14/inside-indias-cashless-revolution/#132ebda618c7

Information technology has revolutionised various domains such as engineering, communication, management and finance, increasing the productivity and accuracy. Financial services in the past decade have benefited largely with the support of information technology. The use of computer programs and technology to aid financial services is termed as Fintech. Similar to Information technology , a new technology has emerged during the past years, which eases human effort far more. With this technology, humans can teach machines to make decisions like humans, thus enabling them to work and make decisions like humans. This is Artificial Intelligence.

What is a Robo Adviser?

A robo-advisor (robo-adviser) is an online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial partners. Certain algorithms are run by the software that provide advice to automatically optimize decisions and hence replaces a human advisor. Robo advice started around 2008 in the US and gained momentum from 2011 with over 100 solutions in the market. Hence this opens up a huge potential in the coming years. The financial advice provided by robo-advisors come at an incredibly lower cost compared to traditional human advice. Hence this is eliminated many wealth management services by large. Robo advice is majorly used in investment banking,insurance and mortgage advice.

The algorithms run by the robo advisors usually take into account an individual’s investment and risk preferences along with their desired target return. An individual has the aoption of being able to chose between passive or active asset management. But the true innovation lies in the digital advice space as asset management has already been around for quite a long time now.

The main target market for these services have been young and new investors who have been accustomed to doing things online. An investor could skip going to a human financial advisor and could go through a robo advisor and gain access to many advisory services. This would save a lot of money and time.

Can we trust a Robo Advisor?

With Robo advisors turning into a rage by attracting young investors with their high accessibility and low fees, ultimately the question comes down to “Can I trust a robo advisor to make my investment?

As it is a considerable new technology, we have limited historical data to validate the effectiveness. It faces many challenges in the form of security breaches and SEC regulations. Also if we want to invest all our cash, we want to make sure that we get our ROI and the decision is working for us. Another huge obstacle to robo advisors would be how receptive it would be towards market downtrends. At the end of the day we ask ourselves if we could place our whole savings on an automated financial machine run by algorithms. Hence although it is replacing human advisors, they still have a long way to go.

Reference:

http://www.investopedia.com/terms/r/roboadvisor-roboadviser.asp

While online sales channels have grown dramatically over the last few years, the retail market keeps developing more and more shopping options to bring benefits for both customers and merchants. For example, “Buy online – pickup in store” is an online-offline integration that reflects the change of customer shopping behaviors and the development of mobile payment. The new frontier, mobile payment, offers customer a convenient way to pay at retail terminal and online via smartphones and its market expected to approach $800 Billion in 2017.

Nowadays, several mobile payment technologies have been introduced to the customer and widely adopted on the market, such as Android Pay, Apple Pay, and Samsung Pay. With a mobile wallet, customer do not need to carry a couple of cards and cash, and can go shopping without making a long stopover in the checkout line. However, it also creates new security vulnerabilities and risk that mobile payment developer need to solve. The solution depends on not only software end but also hardware end, as an integration of encrypted chip design, encryption algorithms, and multi-factor authentication methods. Adding different biometric technologies can increase efficiency and security in user verification, payment process, and data transfer.

Source:

http://247wallst.com/technology-3/2016/12/27/global-mobile-payment-market-expected-to-approach-800-billion-in-2017/

Smartphones are more ubiquitous than ever, and the number of mobile payment options available to consumers is increasing. Bloomberg Technology noted, “by 2019, eMarketer estimates that the total value of transactions made by tapping a phone on an in-store terminal will reach $210 billion, up from $8.7 billion in 2015.”

 

There are four types of businesses making major moves in mobile P2P payments: social messaging companies, banks, card networks, and other payment companies. Each of these types of companies has its own objectives and strengths in offering mobile P2P payment services.

Major banking institutions, such as JPMorgan Chase & Co., Bank of America Corp., Wells Fargo & Co. and U.S. Bancorp, have a created a joint venture called clearXchange that allows customers to transfer funds instantly to another bank account through their phones.

Social media and messaging apps have also joined. Customers can pay using social media apps Facebook Messenger and use WhatsApp has a commerce channel.

With companies like Venmo processing more than $1 billion in one month in mobile P2P payments, and the thousands of other companies like Square processing billions more on mobile devices, the fintech industry and mobile payments industry is ripe to becoming one of the next valuable sectors in tech.

References:

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

http://www.businessinsider.com/facebook-messenger-promotes-p2p-payments-2016-9

The evolution of the mobile payment

With loads of sensitive information at stake, financial institutions are a large target for those looking to commit financial and identity fraud crimes. However, there is a rising tool that these institutions may soon be able to employ to help catch fraudsters in the act: Artificial Intelligence. AI has long been considered useful for a wide array of unique application, however, the concept of using artificial intelligence to detect criminal patterns is new in thought.

One of the new tools being rolled out by the payment company, MasterCard, is called Decision Intelligence. This tool allows payment companies to analyze transactions on a real-time basis, allowing companies to combat fraud on the front lines. A core aspect of artificial intelligence in the concept of pattern recognition, something that the payment companies and financial institutions are looking to take advantage of in order to autonomously flag transactions that seem suspicious. This tool will also reduce the number of “false events” which are triggered when an authentic transaction is flagged as suspicious and the customer’s card is declined.

As more and more banks and financial institutions begin to invest in autonomous and artificial intelligence driven fraud detection systems there will be in immense change in how society finds and catches criminals and may even raise the debate for preemptive actions.

Technology continues to affect and change many industries including the financial sector. New fintech firms are putting pressure on many of the current titans of the financial service industry to evolve. Wall Street is being pressed to change as individuals have greater access through technology to alternate products that are usually seen as cheaper, more intuitive to use, and at times can give better returns. Mobile applications, portfolios that automatically re-balance, increased transparency, and new ways to track success are all new developments that are making banks and financial institutions lives a little more difficult. Fintech companies are at times able to create services and products that are better for customers with far less capital or employees.

Overall, I think the rise of money management fintech can allow people greater access to information, resources, and services that would not have been available decades ago. These fintech firms can even the playing field and hopefully allow people to save and invest money with greater ease. I also think that many investment firms, mutual funds, and other professionally managed firms will see a decrease in business in the coming years as there will be other cheaper ways to diverse one’s holdings.

https://www.bloomberg.com/view/articles/2016-06-08/fintech-is-ending-money-management-as-we-know-it