Month: February 2017

Bank of America announced that it will integrate Zelle, a peer-to-peer (P2P) payment feature, into its own banking app, allowing users to send payments to one another. With the growth of P2P payments,BoA hopes to attract users to its mobile banking app.

“U.S. mobile P2P volume is expected to reach $336 billion in 2021, which is a 61% compound annual growth rate since 2015 when it was $19 billion.” Banks may be trying to capture a share of this massive payment volume before likely industry leader Venmo can freeze them out.

I think adding a P2P feature is an effective way for banks to better engage their consumers. According to the article, the average Venmo user accesses the service at least twice a week. Banks can potentially be more effective since they can also provide other services in their app, giving consumers more mobile offerings and more reasons to stay engaged.

Banks also have the upper hand in terms of consumers’ trust when it comes to financial services. As studies show, 75% of customers trust their banks more than mobile wallets. With the mobile app, customers will never have to leave the safety of their financial institution to make a payment. In addition, they won’t have to provide their account number to a third party app, which is a very attractive aspect for users concerned with protecting their identity and payments.

Source: http://www.businessinsider.com/bank-of-america-app-gets-zelle-p2p-capabilities-2017-2

In this article, the author argues that U.S. regulation laws have help slow down FinTech growth in the United States, while such investment has grown in Europe and in Asia.

First, I feel that the article’s headline is a bit misleading. Just based on the headline, one might think that FinTech in the US was being actively crushed by a plethora of oppressive government regulations. However, the article, if anything, argues that the problem isn’t with the number of regulations, or even what the regulations are, but that the speed of the FinTech industry has trouble working with the inconsistent, slow, and currently confused regulation agencies. The writer does not name specific regulations that he feels are hurting FinTech, only mentioning stuff like, “policies and taxes,” which honestly, is not terribly useful for the reader.

The writer does seem to imply that one solution for the U.S. is to pass sweeping federal rules to encourage FinTech growth (like in Europe), instead of letting each state come up with it’s own rules. As far as the confusion factor, while the writer does not explicitly accuse the Trump administration for sabotaging efforts to grow FinTech, it does seem clear that he is frustrated by Trump’s inability to give a straight answer and general avoidance of the topic.

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US regulatory environment threatens the rise of fintech

Here are my ideas on blockchain in voting system

Currently, we are beginning to use blockchain in a variety of domains like banking, shares. I feel this concept has wider applications like in social like in voting systems. If we can integrate the current system with biometric and blockchain we can make it more transparent and fraud resistant.

Let’s look at the steps in normal voting:

1. Voter goes to respective voting center along with valid Identity
2. Authorized officer checks identity
3. Person votes on paper or electronic voting system

The steps 2,3 are flawed as the identity can be easily modified and system either paper or electronic can easily tamper.

Proposed steps

1. The person can now vote from any voting center or from a mobile phone which supports biometric.
2. His identity would be confirmed by fingerprint and iris scanner
3. The vote would be recorded on system powered by blockchain

Advantages

• Foolproof system if properly implemented
• More flexibility for voters
• More transparency compared to existing system

Difficulties:

• Need proper biometric information to get proper results
• Convincing people for collecting their identity
• Building and maintaining biometric databases as they are high-value information

 

References:

https://en.wikipedia.org/wiki/Blockchain_(database)

Mobile wallets have been rising high in the market capturing the other level of interest among people .But this rising market is only restricted to developed countries, Developing countries are still struggling with the advancement of the technology and right setup required to use these smart phone dependent wallets. The issue related to the high number of cards and bulky wallet exist in these countries as well. When demonetization of all big currency notes happened in India, A different kind of mobile wallet emerged in India called Paytm. Paytm is a digital payment platform that allows you to transfer cash into the integrated wallet, and make the payment from that integrated wallet. You can have any kind of transaction with anyone who owns a Paytm. To setup this account all you need is Mobile number and email id. You can associate your Paytm with any number of accounts and any type of card. Paytm has bridged the dependency of mobile wallets on smart phone. It has provided the facility to make the transfer from your mobile by simply sending a text. It has also removed the dependency from the vendors to install the initial setup required for the mobile wallets. The growth of the Paytm has exceeded the number of users of any other mobile wallets combined. In my opinion if it figure out a way to setup the environment to expand globally, and increase the amount of money that can be added to the integrated wallet, it can capture all the market at once.

References:

http://gadgets.ndtv.com/apps/features/what-is-paytm-and-how-to-use-paytm-wallet-1625271

 

My previous post described the underlying financial technology and its current list of consumers. But of what use is such a discussion if there is no one to supplement the technology with a good business idea? What if there is an application that can fetch information regarding an applicant (which probably by no means is an easy task) in a relatively short period of time and come up with reports. Yes, this would involve a high stakes contract with the government and credit unions and what not. We have access to both ends of the technology spectrum – from the latest in memory databases (hardware) to the always enhancing machine learning knowledge (software).

An application (if developed) might involve gathering and storing data from various sources such as – Credit Bureau, DHS etc. And all this needs to be transmitted/ stored in a secure way that would adhere to the data privacy standards. Because, the systems in context are capable of handling such huge data and have a capability to process it as well; I feel that working on plausibility of such an application is not totally out of the blue and might be realized at some point in the future. What are your thoughts?

Financial information is always prone to targeted attacks which use legitimate software to avoid detection. The attack is carried out internally with no visible files in the hardware but they are hidden in the memory. Hence it is almost impossible to detect the malware and discover the fraud. The attackers sneak into the system to steal all the information they require and later erase their tracks. The forensic investigators find no evidence to work with.

According to statistics, these attacks hit around 140 enterprises to access financial process within the system. The victims are mostly from USA, France, Ecuador, Kenya, the UK and Russia.

A significant malware attack in the recent times was during January 2016, the Trojan.Odinaff effect which was specifically launched to target financial organisations which provide services in banking, trade, payroll etc. The amount of money stolen could go upto millions of dollars. This new wave of attack also carried some specifically designed infrastructure from the previous Carbanak attacks. The companies dealing with security often don’t realise it until its too late and millions are lost to hackers.

“The determination of attackers to hide their activity and make detection and incident response increasingly difficult explains the latest trend of anti-forensic techniques and memory-based malware,” says Sergey Golovanov, principal security researcher at Kaspersky Lab.

References:
https://www.symantec.com/connect/blogs/odinaff-new-trojan-used-high-level-financial-attacks

Invisible malware targets financial information

Based in New York and founded in 2014, Cadre is an online platform that connects investors and operators of real estate. It is also known as Amazon for commercial real estate deals. Its main target clients are group of investors, such as endowments, foundations, institutions, and other high net-worth individuals. By leveraging its proprietary technology, Cadre brings more transparency, efficiency and liquidity to the real estate investing market by providing investors with access to the same information across deals. For an annual fee, members of Cadre can enjoy access to due diligence information and standardized financial data of assets which have been approved for listing on the platform after a comprehensive deal vetting process. Cadre makes money by collecting fees for access to the service as well as a portion of the deal profits based on its own investments. I believe this platform would definitely change the experience of sellers and buyers in such a historically opaque industry. It also creates an opportunity for more people to make investment in commercial real estate. However, Cadre would have to come up with a solution for such a challenge that after some time of interaction, buyers and sellers can make deals themselves to save charges from Cadre.

Sources:
http://www.businessinsider.com/what-is-cadre-and-how-to-invest-in-its-real-estate-deals-2016-6

http://realestatetechnews.com/blog/real-estate-tech-startup-cadre-brings-in-massive-fundraising-round

https://rctom.hbs.org/submission/buy-an-office-building-online-with-cadre-amazon-for-commercial-real-estate-deals/

Blockchain is the underlying technology that supports the digital currency Bitcoin. The technology is a system of distributed ledgers. To validate the transactions on the ledgers, independent users verify the transactions. Once the transaction has been verified, it is stored permanently in the distributed ledger.

Traditionally, third party auditors carry out the function of verifying transactions. Through adopting blockchain, auditors can rely on the already verified transactions that are permanently stored in the system. This will reduce the time required to perform an audit since auditors will no longer have to verify individual transactions.

Adopting blockchain may allow third party auditors to rely on the blockchain auditors and focus more on a governance role for the types of blockchain transactions. Overall, blockchain is changing the way that financial transactions are being recorded and as such will disrupt the industries that have been created to verify the transaction systems currently in place.

Resource:
http://economia.icaew.com/features/july-2016/how-blockchain-will-impact-accountants-and-auditors

In my last blog, I went out on a limb to predict that a bitcoin resurgence was on the horizon, and this week the digital currency hit an all time high on the Bitcoin Price Index (BPI), closing out at $1,172.09.

Amidst all of the bitcoin hype, Rebecca Ungarino, with CNBC, penned an article titled “Bitcoin is surging – but that might not mean what you think” (Ungarino, 2017).

Ungarino gives credit to Bitcoins increasing presence in the mainstream, even pointing out big name players such as Microsoft, Subway, WordPress, and JP Morgan, with the latter also advancing the related Blockchain FinTech, but she doesn’t seem convinced that it will truly become a mainstream currency. She attributes much of the growth to just the recent highs in the equities market.

I’m not ready to take a victory lap, but I do believe that in this unstable global political environment, Bitcoin will continue its march towards mainstream acceptance. I agree that the volatility will remain, but the underlying trend of increased participation by more and more reputable companies will give this technology the support it needs, and deserves. Stay tuned.

Ungarino, R. (2017, February 23). Bitcoin is surging – but that might not mean what you think. Retrieved from www.yahoo.com/news: https://www.yahoo.com/news/bitcoin-surging-might-not-mean-174606526.html

How Fintech is evolving and How Does that Affect Financial Information Systems?

In an article written by Chris Skinner, he argues that Fintech has grown so much that it is difficult to use “Fintech” as an umbrella term to describe all of the processes it encumbers.

The author describes that Fintech firms have three business models to choose from.

1. Creating a New Financial Structure: This path has been helpful in raising funds for start-ups by connecting them with donors, rather than approaching a bank for a loan.
2. Removing Friction from Financial Markets: This can be applied by creating an alternative system that can be setup much quicker, in comparison of the setting up through the traditional bank system.
3. Reducing Costs and Overcoming Inefficiencies: Banking systems are much slower and cost more to run efficiently.

Overall, Fintech aims at reducing the limitations of a traditional banking system. Financial Information System are the backbone of Fintech system, in that the FIS does all of the data processing and established a list of controls.

While Fintech cannot replace the bank as a whole, it is important to remember that while banking systems are generally slower and outdated these systems take years to develop because of the amount of testing and development that is required to keep these system secured. While Fintech aims at creating faster solutions for start-ups, I argue that we should also consider the amount of testing placed on these Fintech systems. Remember its your money, wouldn’t you want it to be secured as possible?