Category: Uncategorized

Fintech has already disrupted the banking industry, and is now treading in new territory by making its entrance into the $14 trillion mortgage lending market. To put things in perspective, the mortgage market is about 14 times larger than Student Loans (about $1 trillion). Despite the massive size of the mortgage market, there hasn’t been much disruption in this space, allowing banks to claim major market share. Wells Fargo, JP Morgan Chase, Bank of America, and US Bank are the key dominant players. However, mortgage lending from commercial banks have significantly dropped from 74% in 2007 to 52% in 2014.

There are currently a handful of fintech players making its way in the mortgage market such as Radius Financial Group, Clara, and Lenda by offering a digital mortgage solution. With the help from a few other home loan mortgage companies, Radius was able to close six loans without paper documents.

The mortgage loan process can be tedious, frustrating, and never-ending. I think there is great potential for automation in this space and believe there is a growing demand for electronic mortgage solutions. According to a recent survey conducted by J.D. Power, “20% of buyers of all ages weren’t happy with their lender, providing further support that there is demand for a new type of mortgage service.” Automation will make it easier and more convenient for home buyers and sellers since it will cut down on time, fees, and face-to-face contact.

Reference: http://www.investopedia.com/articles/personal-finance/011917/how-fintech-can-disrupt-14t-mortgage-market.asp

http://www.forbes.com/sites/jaysondemers/2017/01/11/7-ways-the-internet-of-things-will-change-businesses-in-2017/#247886a71260

This article touches upon seven different ways that the Internet of Things (IoT) would potentially change business in 2017. The Internet of Things is, in a brief summary, a new technology revolution that connects all sorts of electronic devices together that can track, record, and send consumer data to those manufacturers. One way that IoT can affect businesses is by improving the efficiency of certain processes, like inventory management, that can enable less worker time, and essentially less room for error.

The ability to track, view, and gather data using technology isn’t new but certainly IoT would simplify and automate many tasks that would otherwise need worker supervision. Then, with the improvement of these inventory systems, financial information systems managers, auditors, and many more stakeholders must question the reliability of the financial system in terms of accuracy, security, and functionality. From the viewpoint of system architects, 2017 would be a good year to get into the IoT designing business, which will also keep systems testers and regulators employed. The Internet of Things, with its ability to collect and store more irrelevant data will also inevitably make finding fraud much more difficult, something that auditors have something to look forward to.

Here are five great reasons why Bitcoin’s price will continue to rise in the future.

1. Bitcoin value increases over time by design: 

   With Bitcoin’s transactional volume increasing worldwide every day, a cap on production in the future, and a reduction in Bitcoins produced every 10 minutes just implemented July 10th, Bitcoin values will continue to climb for the foreseeable future. U.S. Dollars and pretty much any fiat (paper) currency you can think of are losing value every year due to inflation, which is the increase of supply of said currency. Bitcoin is deflationary, by design.

2. Fiat currency fatigue: 

   With global access to the Internet, and so many recent economic collapses of paper currency, there is more interest than ever in a flat-out better economic system that is not so prone to failure after failure. Mexico and Ecuador have been in discussions to mimic the Bitcoin blockchain and create their own digital currencies. Tunisia, a North African nation, has already started its own national economic blockchain, and Japan has accepted Bitcoin as a national currency, on par with the Yen itself.

3. Wall Street/ Big businesses hasn’t jumped onto Bitcoins bandwagon yet: 

   Blockchain technology has been the darling of Wall Street, not Bitcoin. This is not without some good reason. Bitcoin has been embroiled in scandals and regulatory purgatory in many global locales, so it can be seen as a financial wild card to place big bets with. PayPal has caressed the exterior of the Bitcoin concept, but it still is not a part of their core business. Microsoft and Dell are the other major players, but until a mass adoption event happens, or is forced to happen by some greater economic meltdown, Bitcoin will be seen as an outlier, not the best bet.

4. Cash is leaving the scene anyway: Nations around the world are funnelling the mainstream into the digital payment system and away from cash through soft bans. They may be doing it for economic control over all transactions, and the ability to record and tax every transaction in the future, but consumers will get closer and closer to the realization that Bitcoin is really their digital currency of choice.
5. The Global Reserve currency keeps loosing value: As the U.S. Dollar keeps accelerating its inflation through ‘QE Infinity,’ which increases supply and erodes its value every year, global interest in it continues to wane, and a Bitcoin will cost more and more to buy on the weakening dollar. Since Bitcoin is not beholden to any country or economic paradigm run by the banking system, it can sit on the sidelines and collect value, like Gold and Silver will, while the legacy financial system continues to burn down around them. ‘Digital Gold’ has treated Bitcoin owners very, very well over the years, making incredible returns in six out the last seven years.

References:

https://cointelegraph.com/news/5-reasons-why-bitcoin-value-must-increase-in-future

 

https://www.selectleaders.com/candidate/viewjobdetails.do?&jid=49138

A new startup in Singapore called Touché is developing a device that allows customers to pay via fingerprint. Upon using the system the first time, customers will pay normally via credit card. The credit card will then generate a unique signature to each individual customer. The customer will then scan their fore and middle finger on the device to register their fingerprints. For each subsequent visit to the (currently 150) shops and restaurants that are participating, the user will only need to scan their fingerprints to pay. Both customers and participating shops and restaurants can see the purchase history, expenditures, and offers. Currently, the company has already received $2 million in funding.

Security Concerns
Physical Security:
Similar to Apple Pay and Android Pay, the device uses a method of authentication called tokenization. This allows the device to generate a one-time, unique token that authenticates the purchase each time the user pays with their finger. Furthermore, two fingers are needed to authenticate the payment providing another layer of security if users are concerned.

Data Security:
However, as secure biometrics can be, there is still an issue of data security. Although information is encrypted, if people other than the stores/restaurants and the user were able to retrieve the data, the data privacy of the users will be breached. This means that purchase history and expenditures of users in the system will be compromised.

 

Sources:

https://www.techinasia.com/touche-profile-funding
http://www.channelnewsasia.com/news/singapore/touch-and-go-singapore-company-launches-biometric-payment/3433924.html

A new breed of developing technology has become prominent among the likes of Millennials and Gen Xers called Fintech (Financial Technology).  As the younger generations have become early adopters of the new technology there has been a group that more resistant towards this massive shift to nontraditional financial institutions; the Baby Boomers.

In an interesting article I read recently entitled, “Boomers, it’s time to embrace the power of fintech“, the author talks about some of the useful applications that the older generations may have for this new technology.

Paying Bills

Recently, there have been a number of mobile applications that assist with centralizing and automating the hassle of paying bills on a monthly basis. These applications could help simplify the monthly financial obligations faced by individuals into a simple interface that allows the user to be more cognizant of their current financial positions.

Health and Medical

Another use the author mentions for these new financial technologies is in the medical and health arena. From pricing out and managing medical prescriptions to test results and other health based information there are applications that assist with many different medicinal areas. With the benefits of secured, portable and accessible information, many people are beginning to take an active role in managing their health through the suite of free and paid for technology.

Investment and Cash Management

As the number of Boomer retirees is set to increase for the foreseeable future, the importance of wealth management is rapidly increasing. With applications such as Mint, which centralizes all your financial and investment information and provides analysis based on spending and investment return, retirees can utilize this information to make informed decisions about their finances.

Source: http://www.chicagotribune.com/business/sns-201701131830–tms–savagectnts-a20170113-20170113-column.html

Organizational Growth and Data Security

Article URL:

http://www.information-management.com/news/security/organizational-complexity-greatest-threat-to-cybersecurity-study-finds-10030706-1.html

I found this article from the website Information Management to be very relevant to the topics discussed in class this week. The article was discussing that the number one threat to their information systems is their “organizational complexity.”

The reason for this is that most security features are “too difficult” for employees to utilize and use. The article describes that most employees are accessing company data on their personal devices many times on public or unsecured network connections.

In class we learned about master data and how different department have different views on the master data. Having each department with a different view not only promotes a Segregation of Duty, but it could also limit the amount of access an intruder can have when they breach the information system.

However, that also poses the question how can information system respond better to hacking intrusions. As the article claimed, we want to ensure that employees are productive and the information system will connect all departments, but at the same time we need to address the issues surround data protection. How can we guarantee the integrity of the data, if a security breach has occurred?

 

Raisin is a German fintech company that allows customers in Europe to invest in savings accounts around the EU that offer the best interest rates. Raisin, formerly called WeltSparen, does not hold any of the customer’s money, but instead opens each saver an individual account at the bank where their money is invested.  The money invested by the consumer can be stored in any of the partner banks across the EU, regardless of which country the customer is from or currently has their money.  There are over 50,000 customers who use Raisin, accounting to $2.1 billion deposited in 27 partner banks across 14 European countries.  Raisin is continuing to add more banks as they grow, as well as find partnerships with other fintechs to make sure their products stay attractive.  They claim that customers have earned over 20 million euros in interest since their launch three years ago.  The employees at Raisin have stated that they believe the next billion will be easier than the previous one.

 

http://www.businessinsider.com/fintech-raisin-reaches-2-billion-investment-milestone-2017-1
https://fintechvalley.org/2016/11/14/fintech-valley-interview-raisin-a-company-profile/

As we talked about in class, Bitcoin is a revolutionary financial system that had the goal of replacing traditional currency. Unfortunately, the process was not as widely adopted as many had hoped, but there were still few who were lucky to have cashed in early on the adoption of bitcoin, making a fair amount of money along the way. For the first time in three years, Bitcoin jumped over $1,000, outperforming all other currencies in 2016. However, this is not cause to celebrate and jump on the Bitcoin bandwagon, as it has been widely criticized for being one of the most volatile currencies in the current market. However, it does demonstrate that the current market does show promise for alternative financial markets. I am very interested to see how this market will continue to grow.

US financial technology regulation has undergone some changes as of December 2016. For example, the OCC—Office of the Comptroller has announced that it will consider to allow fin tech applications to become “special purpose national banks”. In addition, the US Federal Reserve also released its information regarding regulation for distributed ledger technology. Until now most regulation has been nonexistent in regard to financial regulation technology. Also talked about is the Financial Services Innovation Act which was discussed this past fall. This would create an environment in which fin tech firms can test products/services absent of the regulatory consequences that would originally take place. This would also help to ease the sharing of data of these results and help to improve the level of innovation in the fintech industry.