Author: mdonofrio

I decided that since this is the last blog post, I would do a highlight of what I’ve learned over the course of the last 10 weeks from this class. I have used smaller financial systems before such as Quickbooks, PeopleSoft, and Netsuite, but nothing to the same scale as SAP. What I enjoyed about using SAP in this class was the depth and intensity of data which allowed us to late edit and examine the tables from SAP. Using Celonis us helped me join together skills I learned in OMIS 105 as well as my knowledge of the P2P process that I had to audit during my summer internship. Working et EY performing IT Risk Assessment gave me a nice background before this class, but I believe this class significantly helped solidify my skills as well as understand SAP better. By knowing the intricacies as well as potential of fraud examples in SAP, I will have a jump start if I ever have to audit a financial system like SAP. Thank you again for a wonderful quarter.

Although we only use SAP as a ERP system, they also offer some minimal cloud based solutions for customers. SAP recently updated their cloud product in order to help companies rely less on software and more on the cloud. The latest update includes artificial intelligence and machine learning to help customers better use their current ERP systems. With machine learning, SAP could suggest “the best vendor for a procurement manager based on price, past performance, ability to deliver and so forth”. This allows less work for the user as well as takes some stress of searches away from the ERP software by using the public cloud instead.

SAP president noted how using the two simultaneously can be a difficult task. Because ERP systems have to be extremely secure and stable, updates and interfaces between the two systems must be precise and seamless as to not provide any hiccups in the ERP software. He says that both products can co-exist but a full implementation of both systems is not a process that can be rushed, but that the future is moving to the cloud even for ERP.

SAP adds AI and integrated analytics in latest cloud release

On March 1st, new regulations set by the New York’s Department of Financial Services, went into place which affected all of New York’s banks. The regulations require that all banks that have over $5million in revenue must establish a cybersecurity program that will be maintained and audited. A list of all regulations that must be implemented in two years include
-Notification of security breach protocols
-Have a CISO responsible fro protecting data
-Have pen testing, risk assessment, and multi factor authentication practices
-developed audit trail capabilities
-Retain all data for 3-5 years

Working at EY I focus on IT Risk assessment, so I highly agree with all the new regulations that are being set forth by the DFS. Since cyber attacks are becoming more prevalent and dangerous, every company, especially financial institutions with so much data on their clients, need to be prepared to deal with these threats. Although the proposed regulations don’t cover everything to make business invulnerable, they create a good baseline for other states to build off of when creating their own cybersecurity regulations for businesses.

http://www.darkreading.com/risk/new-cybersecurity-regulations-begin-today-for-ny-banks/d/d-id/1328295

We always talk about how traditional financial institutions are being disrupted by fin tech, but some smaller scale independent financial advisors are being left behind by the fin tech revolution. Larger firms have the capital and streamlined services to invest in large expensive fin tech products. But independent advisers with less than 200 clients don’t have the ability to purchase such systems, and can’t utilize fin tech to their advantage.

InvestmentLink CTO Wayne Robinson, says that to break into this forgotten market fin tech firms need to develop more customizable software that will give more control to the user. Independent firms have more diverse clients with different needs and therefore need a software that allows them to provide the best practices for their clients. By creating a more often software, the product can become cheaper for these firms and put more advanced fin tech in their reach.

http://www.fintechbusiness.com/industry/643-ifas-being-left-behind-by-fintech-companies

At a conference hosted by the Australian Prudential Regulation Authority, the chairman both praised and criticized the large increase in spending on new financial technologies in the banking sector. He is quoted saying “Companies must continue investment in existing technology platforms while at the same time putting money into new technology which may well replace it”. His main point was that we see a huge uptick in new services offered to consumers and how they do their banking, but if the back-end hardware gets outdated, it will no longer be able to support the increasing number of transactions it is being tasked with processing. That’s why it’s important to still continue to investment in the infrastructure of the financial system.

Chairman Byres makes a valid point because when you update everything about a system besides the processes that truly drive the system, it will eventually be less functional. It’s like paying $5,000 for upgrades like a stereo, rims, spoiler, etc, to a car that costs $1,000. From the outside, it may look nice and flashy, but it won’t be able to perform as good as it looks.

http://www.fintechbusiness.com/industry/642-don-t-get-distracted-by-fintech-toys-apra

With every new disruption in the business world, if companies fail to a rapt, they will go out of business. In the banking industry, every company must now develop digital solutions or services in order to stay competitive. The article polled senior banking retail executives to see what they saw for the future of banking.

-49% of executives said that the traditional model of banking will be dead
-by 2020 people will value cheap services over human interactions for banking needs
-Cash will count for less than 5% of transactions as we move to a digital age
-Top priorities include customer segmentation to give customers of all groups exactly the right product

I mostly agree with the article. There are now apps to get mortgage and car loans through your phone and doing banking online has never been easier. The only reason I got to my bank is to deposit cash, which I never carry anymore. We could see a significant decline in brick and mortar banks as everyone becomes accustomed to banking online. Fintech startups that create their apps to target the future needs of these banks will most likely be some of the more prominent but unheard of companies in the coming years.

https://thefinancialbrand.com/63617/digital-banking-strategies-fintech-data-analytics/?utm_medium=email&utm_source=fintechweeklycom

MetroMile:
While not exactly a fintech company, almost closer to an insuretech, MetroMile offers car insurance for drivers on a pay per mile system and offers different packages by . This is best for drivers who drive very little because rates start at five cents a mile and a $35 monthly fee.

Stash:
Stash is a portfolio and wealth management app that help users manage their investments and suggest new ones. They allow users to invest with as little as $5 and allocate their money as they wish.

Tilt:
Tilt tries to combine peer-to-peer payments, crowdfunding, and event tickets together in one app. They charges a fee for commerce sales but other transactions are free, much like Venmo. Tilt claims they are the fastest growing app on college campuses, a very coveted market.

What these start-ups all have in common is that they try to disrupt a system already in place. Payments, purchases, and portfolio management are primed to be taken over by tech companies as they try to bring services that seemed more white collar, to the blue collar and younger workers. The insurance industry has been using tech to gather data about drivers, but this is the first time the data is being used by a tech company to offer insurance.

https://www.fastcompany.com/3066666/startup-report/5-fintech-startups-to-watch-in-2017

Belgium and London have agreed to set up a “fintech bridge” that will enable cooperation between the two countries in the financial sector. The deal was struck between “B-Hive”, (part government owned platform that was designed to link Belgium’s fintech sector with that of traditional fintech sectors), and Innovate Finance (trade body of Britain’s fintech sector). The announcement comes after Britain’s success signing similar “fintech bridge” deals with Australia, Singapore, and South Korea.

After Britain left the EU, some were worried that startups and other financial firms would leave Britain in order to remain taking advantage of the EU”s passporting system which allowed free trade of goods and services throughout the EU. Belgium’s Finance Minister says that there was no intention to use this bridge as a way to poach employees and companies to relocate to the EU, instead reassuring that London will stay the financial capital of Europe. “Britain’s fintech sector, employed over 60,000 people and generated $8 billion in revenue, according to the Treasury.” This shows a strong sector in Britain that may be resilient to move elsewhere unless economic conditions became extremely favorable.

http://www.nytimes.com/reuters/2017/01/11/business/11reuters-belgium-britain-fintech.html

https://www.google.com/amp/s/amp.ft.com/content/f493d7c4-d9a0-11e6-944b-e7eb37a6aa8e?client=safari

This discussion focuses on different financial technologies that facilitate payments between users and different companies. Companies, Bango, Gresham, and Paysafe all reported geoth and optimism for 2017 despite Brexit and London leaving the EU. Bango processes mobile payments , Gresham offers financial technology services for banks, while Paysafe focuses on digital payments for gambling. This isn’t surprising due to the rise of technology in all sectors of business, as well as the burst in mobile transactions as well as we all become more dependent on our phones. I’m interested to see which companies will last in the future before we see a financial technology titan for mobile users. Eventually there will come a time where smaller companies can’t maintain a large enough market share to stay competitive and only a few will remain. All we know for sure is that financial technology, especially in mobile, will only grow in years to come. Continue reading Financial Technologies optimistic earnings and outlook