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From the rise of Fintech, we have seen growth of P2P online transactions and banking sectors. There also has been much hype about digital currency and physical banks being replaced. As the years, have progressed the investments also continue to grow.

With the trending tech in the industry, the new startups are moving towards insurance and wealth management which have still been underdeveloped with little innovation. The new and interesting technology in the industry is “Robo Advisors”, which are used to assess a user’s risk profile and match the relevant low-cost investments. The algorithms are designed to optimize the returns and taxes with your investments.

With the Fintech industry growing, so are the technologies. Adding new technologies like AI, makes me wonder what awaits us in the future.

SRC: http://www.forbes.com/sites/nikolaikuznetsov/2016/11/22/the-next-phase-in-fintech/#736e473a4a29

Img Src: http://www.forbes.com/fintech/2016/#164120bc5668

This article mentions a very interesting point regarding the predicted futures of marketplace lenders such as Lending Club, OnDeck. It states “if the funding pressure continues, large banks could end up acquiring the marketplace lenders, or pieces of them.” I share the same opinion and also believe such synergy is the appropriate way this industry should operate. I personally never believe in the success of those marketplace lenders. Even though, they help more people gain access to needed financing more quickly and cheaply compared to traditional banks, they are more prone to adverse selection problem due to less time of doing sufficient due diligence about their borrowers. Consequently, it will lead to increasing defaults and more seriously, bankruptcy of those lenders. The synergy will help combine banks’ extensive expertise of screening and managing loans, and marketplace lenders’ disruptive technology. As a result, it will not only benefit both banks and marketplace lenders but also secure the lending industry.

Source: https://www.nytimes.com/2016/05/10/business/dealbook/as-lending-club-stumbles-its-entire-industry-faces-skepticism.html

The article talks about how FinTech has not been able to create a social website in the vein of Facebook. The author gives some examples of some failed websites, some reasons why social FinTech hasn’t worked, and some thoughts on the future of social FinTech.

I am not surprised that FinTech (as of 2015) hasn’t been able to create a successful social media website. People tend to be very cautious when it comes to their money. As such, I doubt that many people would be willing to trust strangers with financial and monetary advice. When it comes to finance, many people probably put greater trust in experts and established brands, such as Bloomberg and Charles Schwab. In addition, I agree with the author that another reason why FinTech may have trouble catching up with established companies besides expertise is that they have more accurate data. I believe that if a FinTech company were to succeed in going social, it would have to convince experts be a part of the FinTech, and allow customers more open and less expensive access to the same data that companies such as Bloomberg use.

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Why Has “Social” Failed In Fintech?

Bitcoin is emerging as a new form of currency exchange and method for people to convert their black money into white. There have been enough bitcoin regulation available in market for now and people are selling and buying them on the web. There are no government regulation related to them and no one to enforce any rules on them. People who bought them long ago can sell them now at the current price making a lot of money in return. This can be evolved as a new form of share exchange market with no set of rules available of how much to sell and at price to buy.This process is creating the irregular form of money which should not be supported in the real world.The inventor of Bitcoin Satoshi Nakamoto has not been found in person yet and certainly nobody knows how much virtual money he had collected and for what type of purpose he is using it for. These type of money can be used for illegal and harmful type of action on international level.Without any International body involvement ,the invest of the money in the bitcoin will be stuck as their are no regulations to convert your virtual money into actual currency.

With virtual currencies becoming more popular, the I.R.S. has started to seek oversight on these transactions in order to ensure that the proper tax regulations are being followed. Companies such as Coinbase have provided users the opportunity to anonymously store and exchange their digital currency. The I.R.S has requested that the company reveal their customers in order to ensure that any capital gains or losses are being reported correctly.

The advancement of digital currencies has finally reached a point where the government has recognized the need to develop a system of greater oversight. Untraceable transactions have provided an opportunity for users to hide capital gains and launder money. In order to prevent financial technologies from creating opportunities for fraud and tax evasion, the industry needs to work with legislatures to establish government oversight that is effective and does not impede the growth of financial technologies.

Reference:

Millions of accounts are made each and every day.  These accounts include social media like Facebook and Twitter, personal financial information like bank accounts and work accounts.  With this many accounts coming at you from every direction, it oftentimes seems like the easy approach to create a universal password for all the accounts.  Yet, if this password were stolen, decoded or just plain guessed; how much damage could a single person be able to inflict if they essentially held your entire life or company’s life in their hands?

This made me wonder what were the common pitfalls in making a password and what steps can be utilized to prevent any of them being stolen in the first place.  Some advice when creating a password includes:

1. Use a different password for each account
2. Use a minimum of 12 characters
3. Replacing I’s with 1’s and a’s with @’s is easily cracked
4. Don’t use personal information such as dog or cats name
5. If possible make a passphrase instead of a password
   1. Example: “goodluckguessingthispassword” instead of “password1234”
6. If you have some variation of these passwords, change it as soon as possible
   1. 123456
   2. password
   3. qwerty
   4. football
   5. baseball
   6. 123456789

Link: https://www.theguardian.com/money/2016/may/21/how-create-perfect-password-hackers-online-accounts-safe

Collinson, Patrick. “How to Create the Perfect Password.” The Guardian. Guardian News and Media, 21 May 2016. Web. 22 Jan. 2017.

 

 

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