Category: Uncategorized

According to “Money may make the world go round, but at what cost?” by Matthew Wall, it talks about a new method of transferring money abroad. One company mentioned in the article, TransferWise, created peer-to-peer transferring by “matching people transferring money in one direction with people transferring it in the other.” What TransferWise aims to do is to create an affordable and also convenient way of moving different currencies without the bank’s “monopoly on moving money around the world.” The company saw a business need, such as lack of availability when it came to methods of moving/sending money, and created a platform by incorporating FinTech.

Through this innovation, consumers are no longer limited to bank transfers, which tends to be expensive depending on the currencies being exchanged. As the article mentioned, “the future of money is digital, given the continued rapid rise of mobile phone adoption.” With mobile adaption, it makes the process hassle free and convenient for users. However, with such ease comes skepticism surrounding security. Since it is still a new innovation, consumers will have to be convinced of its reliability. Until then, the market of international money transfers may continue to stay in the next few years.

Source: http://www.bbc.com/news/business-31639262

This article shows how financial technology can simplify and make it easier to understand financial data. Many people look to invest money and once they read about the different finance instruments they can invest in they research about these products such as equity, debt, insurance etc. The information on these products isn’t easily understandable and due to this people over pay through fees, choose the wrong instrument and sometimes don’t even go through with investing their money because of the financial jargon describing these products. To tackle this, they have created a financial interactive technology which is similar to a nutrition label for a financial product. The financial label is interactive which not only makes it simpler to understand but also increases your knowledge of the products you are trying to invest in. For example, you will be able to understand attributes of funds you are trying to invest in a simpler manner like expense ratio of the fund or that fund’s NAV. To me this is a great use of technology as people need to invest their money in the most efficient way possible even though they do not have a financial background. This financial technology helps them to do so.

 

https://knowridge.com/2017/01/interactive-nutrition-label-for-financial-products-helps-investors-make-better-choices/

Professors at Oakland University in Michigan researched the practices of their AIS program and concluded that the program would better prepare graduates if the accounting aspect was better integrating information systems into it. While reading the research, I noted many parallels between their program and ours. Our AIS program requires students to take accounting classes and MIS classes and similarly to theirs, few accounting classes have information systems rooted at the core. In addition, our MIS program does have a managerial focus which leads us to be less technical than the researchers were hoping for. However, we differ from their programs in that our AIS students are required to take this class, OMIS 150, which satisfies exactly what the professors believe would produce better professionally equipped graduates. After reflection about the different styles of programs, I am in agreement that the integrated approach is much more beneficial to graduates and that more programs should attempt to offer courses of this nature. For example, one of the recommendations was to introduce “how accounting data sits within the overall enterprise database” in principle of accounting courses.

http://digitalcommons.calpoly.edu/cgi/viewcontent.cgi?article=1024&context=acct_fac

As big banks are very risk adverse and small/medium sized business are often seen as quite risky, they have had a history of difficulty when it comes to dealing with banks and lending. In today’s world, there is good news for SMBs, because thanks to fintech, there is more competition in lending for loans, payroll, etc. The dual benefit of more competition is that these new fintech companies have a huge market of SMBs that want to work with them, and at the same time the SMBs can benefit from the increased speed, security, and convenience that the fintech companies provide.

Considering the banking industry is an oligopoly ruled by a few players, I think the rise of fintech provides the industry with a lot of opportunity for improvement through the use of technology and innovation like algorithms and encryption that will both improve the kind of services offered and lower prices for financial services, because many more players can now enter the industry. The use of technology in IS brings the great benefit of lower costs and less barriers to entry, while also allowing new and customised services to be created on company-by-company basis to provide for greater financial information service.

https://smallbiztrends.com/2017/01/fintech-trends.html

According to the article, Nanthan Mueller overused his position at company and caused a $8 million fraud. He worked as a manager and had power to request and approve the check. In addition, he knew everyone else’s password to the system, so he requested a check by using his colleague’s system and approved by himself. By doing that, he first paid off his credit card for several times by getting checks from “Universal” account, which stores transactions with an insurance company. Later he opened a bank account under the name of “Ace Business Consulting” and started getting checks from “Ace” account like other routine transactions.

I think there are still many Muellers out there, and it is significant to keep the financial information system under controls. First of all, FIS should have authentication controls that can restrict the access of authenticated users and limit the information and capabilities for each user. Moreover, the FIS needs more development within the system that can detect unmatched transactions automatically and avoid fake check requirements. In addition, physical safeguard is important. The same employee should not have the authentication to both request or approve the check and print the check.

http://www.journalofaccountancy.com/issues/2014/aug/fraud-20149862.html

As the industry of Fintech grows, more and more people and companies are utilizing a form of loans called micro-loans. Although micro-loans are still in its formative stages and there are many interpretations to what a micro-loan is, it is generally a small loan ranging between $500-$100,000. Historically they have not been very profitable, but fintech has changed the way these loans work. Fintech has made it possible for people to apply for a loan and instantly get cash. An app called Kabbage provides this service to small businesses who can get up to $100,000 in as little as seven minutes with the click of a button.

This has changed not only the way micro-loans are used, but it has changed the way small businesses approach loans. Traditionally, small businesses would have to put up collateral with a bank to receive any sort of loan, but fintech has given small businesses access to borrowed cash much quicker. Not only does it expedite the loan acquisition process for small businesses, but interest rates are often much lower than that of a bank. Fintech and micro-loans has made it a much easier process for small business to apply for a loan.

 

Reference: http://www.techbullion.com/micro-loans-fintech-influencing-loan-industry/

The Office of the Comptroller of the Currency (OCC) recently announced that it will consider FinTech Company applications for a national bank. This decision is very progressive of the OCC, but after considering the cost effective nature of online banking, and its ability to reach consumers at any point in time, the OCC decided this was the best move for customers. If FinTech companies became nationally chartered banks they would have the ability to provide lending, deposit, or payment systems services. State chartered Fintech Banks are also a possibility but would have to be approved by individual states. New regulation will slow the process of these banks becoming established, however, we can expect these institutions in the coming years.

If these banks are established they will create strong competition for existing financial institutions. The author says if these banks are established credit unions could become “uberized”. Credit unions are limited by the amount of customers they can serve, their strict corporate structure, and their restricted lending authority. I would recommend credit unions establish alliances with the Fintech companies before they become strong competitors. This way they would be able to profit off Fintech’s imminent growth.

http://www.natlawreview.com/article/fintech-banks-new-uber

This article discusses how there is a large market in developing nations for fintech companies because of their ability create a whole new mobile banking services where traditional banking services do not exist.  These companies will be able to do this because there are great indicators that mobile cell usage in developing nations is rapidly increasing across many income levels.  The first thing that popped into my mind at this point in the article was the challenges that these companies were going to face when digitizing a country that lacks the infrastructure to do so.  The article goes on to highlight the exact challenges that I was thinking of.  These challenges are lack of infrastructure and efficient cloud services, users without a data footprint, and consumers who have chaotic and cash based lives.  The most important of these issues is the users whose access to the internet is very limited.  I believe that market that these fintech companies can actually reach is going to be smaller than they believe due to the fact that people in these developing countries cannot afford smartphones and have access to the internet needed to utilize these fintech services.  Once the internet accessibility infrastructure in these countries is much better, these fintech companies will begin to thrive and grow even more.

 

Article link: https://hbr.org/2017/01/fintech-companies-could-give-billions-of-people-more-banking-options

London, considered by many as the financial capital of the world is bound to be affected by Brexit. It remains to be seen if Brexit is going to be beneficial or detrimental for the UK Fintech industry. While reading about the effects of Brexit on Fintech I came across a lot of conflicting articles and experts have varied opinions. I personally feel Brexit is going to be detrimental for the UK because

• The loss of passporting which gives London-based business access to all the European Union nations to sell their services is going to be a big blow for the UK fin tech industry. This could result in a loss of 30,000 fintech jobs and 40 billion pounds in revenue.
• VC-backed Investment trend in the UK has been decreasing whereas in Europe the Fintech industry is booming.

 

• Limited market access might result in less foreign investment which in turn would prevent many fintech startups in the UK. Also, the existing startups would be tempted to move to other countries where it is easier to get funding.
•  The biggest problem is going to be the talent pool. The loss of passporting will result in an exodus of highly skilled talent in the UK.

http://www.techworld.com/news/e-commerce/uk-could-lose-30000-fintech-jobs-after-hard-brexit-3652882/

http://www.businessinsider.com/brexit-is-already-hurting-uk-fintech-2016-12

Articles for why Brexit will be beneficial for the UK fin-tech industry:

http://www.businessinsider.com/a-hard-brexit-might-actually-be-a-good-thing-for-fintech-2016-10

http://www.marketwatch.com/story/brexwhat-why-brexit-wont-necessarily-kill-londons-fintech-scene-2016-08-31

 

 

The article comes from the journal FinTech Weekly and is written by Bryan Yurcan. A group of Fintech companies has recently created a lobbyist group, based on the premise of allowing consumers to share fin data with certain third parties. Companies included in this effort include Kabbage, Ripple, Envestnet-Yodlee, and Varo Money. This effort stems from a larger struggle between banks and FinTech firms such as these regarding users sharing their bank information with users consent. Banks claim that these practices can be dangerous in regard to information and identity theft, but these firms seem to think that the banks are trying to keep away the competition. The lobby group also puts forth a plan for easing the process of allowing this type of information to be shared, stating that a risk hierarchy should be established and the customers should be allowed to note this and continue with their data sharing. It is in the customers interests to be able to view their financial situation in its entirety.