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Mobile payment is becoming more common to use. You can use your smartphone to pay for grocery shopping. In 2015, the revenues from mobile payments reached $450 billion. The mobile payment also extends to wearable payment. Apply watch can be used to pay merchants who accept contactless payment.

MagicBands are wristbands is in Disneyland as a wearable payment. The band can be used to pay tickets, gifts, foods as well as opening rooms of Disney hotels. It eliminates bags to carry around when having fun in Disney.

Sources: https://www.mobilepaymentstoday.com/articles/will-mobile-payments-give-way-to-wearables/

In 2017, Fintech will continue to be influential. With Fintech becoming more and more widely used across the industry, it challenges the traditional models, gives business and customers better and easier solutions, and also provides better technical tools to companies.
Data will be more accessible to individuals and business. In 2017, there will be more data for business to analyze. Business companies can clean and compile the data they got and solve the business questions they come up with. By doing so, companies can come up with better solutions for the services and products they provide to customers, and help to operate the business well. The influence of Fintech helps artificial intelligence to emerge. Artificial intelligence will be more welcomed by advisors to track the account activities through products and services; and they analyze the data to understand customer behavior.
In addition, the mobile workforce will still be a trend. More and more companies will launch their own apps and mobile transactions will be greatly increased to make people’s life easier.
With Fintech becoming a trend in business, hope the new tools and processes will secure the systems, and make the fraud much easier to be detected.
https://www.finextra.com/blogposting/13503/five-key-trends-that-will-see-fintech-enhance-its-role-and-impact-in-2017?utm_medium=email&utm_source=fintechweeklycom

Chip card security is the latest standard in credit card security.  The data on chip cards is constantly changing, making it extremely hard to isolate and extract. To clone, someone would have to get into the physical chip circuit and manipulate things to get your bank information.

U.S. retailers who have implemented EMV have seen counterfeit fraud costs decrease 54 percent (compared to the period of April 2015 to April 2016). Meanwhile, counterfeit fraud costs increased by 77 percent YOY among merchants who haven’t yet upgraded Chip cards are different in that they have sophisticated encryption built right into the chip.

In 2014 US card Fraud,45% of them are online,37% counterfeit, 14 % lost/stolen 4% others. Overall we can see even though there would be proposed decrease of frauds like theft or duplicating other kinds of frauds like online frauds would not be affected by this change in features of the card.

Next generation of devices like Coin which can store debit, credit cards can be used for payment or cards stored in e-wallets like apple pay. As no card is physically visible in my view it would be difficult even to copy the card number which could make online fraud difficult.

References:http://www.creditcards.com/credit-card-news/emv-faq-chip-cards-answers-1264.php

http://www.vanillaplus.com/2015/08/07/10551-history-of-cashless-payments/https://squareup.com/townsquare/why-are-chip-cards-more-secure-than-magnetic-stripe-cards/

http://www.creditcards.com/credit-card-news/emv-faq-chip-cards-answers-1264.php

http://creditcardforum.com/blog/credit-card-statistics/http://www.creditcards.com/credit-card-news/credit-card-security-id-theft-fraud-statistics-1276.php

http://www.smartcardalliance.org/publications-end-to-end-encryption-and-chip-cards-in-the-us-payments-industry/http://www.bbc.com/news/business-38174011

Germany’s Central Bank president Jens Weidmann has expressed concerns about the current growth of fintech. He specifically sees it as a threat to current banking and financial industries because the technologies are new. He fears that firms will be overly vulnerable in implementing technology that hasn’t been tested in an economic downturn. He stated that “assessing the risk was impossible without reliable data” (Koranyi, 2017).

While his concerns about using untested technology is valid, he seems to be missing the point. Financial technology improvements allow for better user access, reduced clearing and settling times, and less reliance on intermediaries. The only way to see how this holds up in the real world is to try it. If Weidmann wants reliable data to assess risk, he needs to let people get data first.

Additionally, Weidmann is talking about fintech as if it were all one concept. It’s not. There’s blockchain technology; there’s cloud based advances; there’s biometric financial solutions, the list goes on. Each different financial technology should be assessed on its own merits and risks. Not all innovations are good, but we shouldn’t deprive ourselves of opportunity just because of this fact.

http://www.reuters.com/article/us-fintech-bundesbank-idUSKBN1591LV

Artificial intelligence has been introduced into the world of banking via a new application called Finie. This app uses highly specialized AI engines that adapt to and learn from user requests. Users can ask questions like, “Can I afford to buy groceries this week?” or “How much did I spend eating out last year?” This kind of technology is a step above the AI technologies we see in Siri, Echo, and Alexa which are more simply programed to respond to a preset cadence. The article brings up the point of Finie-type technology being integrated with Apple Pay. Although a great thought, I find possible future issues with this type of integration.

• Finie is already integrated into mobile banking applications
  • Apple does not have this technology so it is at a disadvantage to be truly competitive
• Type of regulations that will be put in place as mobile banking is still an emerging market
• Undercutting the number of jobs in banks and for accountants

Despite these issues, the promise of evolving financial applications like Finie, provide for a dynamic marketplace in which consumers have more options in how to manage their finances ultimately pushing for the banking industry to evolve.   

http://money.cnn.com/2017/01/19/technology/india-cash-biometric-payments-davos/index.html

This article reports on how India is planning on switching to biometric payments in the next few years. India has plans to eliminate physical cash and credit cards for their 1.3 billion citizens.
There are far reaching effects with India’s move to a completely digital payment method. The most concerning with moving towards this system relates to its security, the reliability, and implementation. Even though producing counterfeit bills is relatively difficult, producing counterfeit digital money seem to be much easier with a few clicks. With biometrics, there should be concern with how reliable the system is. If the system is down or doesn’t recognize the biometric identifier, people would not be able to trade, which could bring the Indian economy to a halt. Additionally, the sheer size of the Indian population will make this a very difficult system to implement which affects the upkeep of removing and registering new users. It will be interesting to see if India actually pulls through with this project.

New software and advances in Near Field Communication technology has changed the way we buy the things we want.  Instead of cash and cards more people are using their smart phones and wearable devices.  Just wave your device in front of the credit card reader and you are on your way.

In 2015 three companies pushed their mobile pay technology and really got the industry moving.  Apple Pay had its first full calendar year in the market place, Samsung launched it’s own mobile pay service, and Google relaunched it’s wallet in the form of Android Pay.

Banks around the world are also joining in.  At the end of 2014 there were only 7 banks that had services supporting mobile pay and now 55 banks around the world have started programs.

In the last year Apple has been able to gain millions of registered users for the Apple Pay service and to add to that success they have launched the Apple Watch.  This wearable device will make it even easier for mobile pay users and is sure to bring more attention to the industry. Last year Apple was able to ship 8.8 million watches and later this year Samsung and Sony will be launching their own wearable devices.

References:

http://www.forbes.com/sites/kevinanderton/2016/04/29/mobile-payment-and-the-future-of-money-infographic/#525f32dd1e30

http://www.businessinsider.com/sc/mastercard-mobile-payments-2015-2

For the past two weeks we have been learning about the structure of a financial information system. I found this article to be interesting because it revolves around the hardware or infrastructure that supports the FIS.

David Weldon the author of the article predict 4 major moves in 2017.

1. More systems are turning to cloud computing rather relying on its own in-house servers. Upgrading the physical hardware every couple of years is an expensive investment and as more companies are offering cloud computing as a service, why not pay them and worry less about maintaining your own system.
2. Vendors are working together to minimize their faults and improve the services offered to their clients.
3. Data efficiency and security are always a main concern for customers.
4. Systems will be able to reach a point where they can make predictions, whether it is a forecast or a recovery time from a downfall.

While the author did point out great topics, I would also like to add one more bullet point to the list. I think the Internet of Things deserves a mention. While the author did briefly touch on IoT, I believe that we will see an increase of IoT products and services this year. This could affect FIS, in which IoT devices will be able to read and analyze data, such as scanning a Goods Receipt document and automatically creating a transaction that will update the Master Data.

Article Link: http://www.information-management.com/news/infrastructure/4-predictions-for-cloud-computing-and-machine-learning-in-2017-10030720-1.html

What the Article Says:

With Donald Trump’s recent election, his proposed changes are expected to have major effects on the financial services industry, especially with regards to financial technology. The types of businesses that are affected in this sector include online marketplace lenders such as bitcoin and blockchain technology, money management applications such as Mint, digital wallets, money transmitters like Venmo, and more.

The majority of the changes are in the area of controls and regulations, with a specific intent of encouraging growth and expanded access to credit through online marketplace lending. The Financial Services Innovation Act, introduced by Patrick McHenry in 2016, hopes to “encourage those with interesting and innovative ideas to come to the regulators to try to ensure a compliant product.” The bill is far from complete and Trump’s administration intends to create “drastic changes in regulatory compliance requirements.

My Thoughts:

With Trump’s new presidency, there has been an overwhelming amount of dissent in his proposed policies. While most did not have definitive terms during his candidacy, his recent election should have sparked the administration to roll out the action plans. Trump seems to have good intentions, but it’s now up to him to determine how to act to get the nation on his side.

Source: http://thehill.com/blogs/pundits-blog/finance/312047-financial-technology-rules-are-set-to-change-in-the-trump-era

The U.S. insurance industry represents the largest in the world, with an annual revenue (think insurance premiums) of more than $1.2 trillion. However, there have been few major technological innovations in this massive industry, making it the perfect target for financial technology startups.

Therefore, the World Economic Forum predicts that the most significant fintech disruption will take place in the insurance sector. While 90% of insurers fear this technological revolution, many insurance companies are beginning to see fintech not as a threat but as an opportunity. Quite a few traditional insurance providers are embracing fintech and incorporating innovative new technologies into their offerings.

Source: http://www.investopedia.com/articles/insurance/121416/could-fintechs-insurance-innovations-disrupt-industry.asp