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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

One of the mina points brought to us by Chris Skinner is his opinion that traditional banks are unable to compete with many of the specialists that technology has helped create. Banks are truly unfit to compete with many specialist firms in the sense that specialists have implemented systems have created far simpler financial activities. Today, larger banks have structures that are largely inflexible and can limit their ability to account for new trends and customer preferences. While banks continue to have a place in our financial world, Skinner wonders if banks will be relegated to “low-margin utilities” while smaller fintech firms deal with the customer relationship side of business.

One interesting point that Skinner brings up is the possible use of data by banks that right now not being used. It is still unsure how effective this data could be and whether it is even worth taking the time to analyze this data. In contrary to this article, I think banks should capitalize on the massive amounts of data they have. Banks should be making efforts to capture, understand, and act on the data left by their customer base. Ultimately, I think this could leave banks with better customer relationships and perhaps more business.

 

https://www.forbes.com/sites/tomgroenfeldt/2017/03/06/mobiles-blockchain-and-cryptocurrencies-can-expand-or-threaten-banking/#3955520e5789

Keyo, a biometrics-based payment start up, have been making great strides in eliminating payment methods. Currently, biometrics are primarily used for NFC payments. It requires you to carry your phone and use your finger. Keyo eliminates the need for a device altogether.

Keyo works by mapping the blood vessel patterns in users’ palms. The users can wave their hand over updated POS systems and see transaction options. Keyo allows users to store multiple cards and see transaction history via an iOS app.

I believe this a great thing for electronic payments. Although, fingerprint sensors are secure, they can be falsified by removing people’s thumbs or using scotch tape. Keyo uses blood flow patterns that cannot be replicated. It eliminates the needs for cards and keys. This product is destined to be ported to more grand items, such as cars and homes.

Keyo is in early stages of testing in Japan. It will take a few years for big retailers to use this technology at store locations. Until then, this is a cool but impractical technology. This company will pioneer this new payment method.

Blockchain technology has been described as the ultimate solution to several of the banking industry’s largest inefficiencies. Ryan Zagone, an executive at a crypto-currency firm joked at a blockchain event “it felt like blockchain would fix every financial problem and cure zika along the way. We’re in a hype cycle.” The theory and potential use cases of blockchain has created significant optimism among investors and executives.

While there has been significant hype around the technology, there has been little success of its applications. To illustrate this, Ryan Zagone points to Vermont’s failed implementation of blockchain to keep track of land titles. The core issue experienced in Vermont’s implementation of blockchain is that the technology is too complex for practical in-house use. In the near future, it seems that the technology will only be adopted in areas where the complexity of blockchain is outweighed by its provided benefits. An example would be cross-border lending where mitigating the risk of dealing with untrusted parties will greatly increase their efficiency. Overall, blockchain has the potential to benefit several industries, but its complexity will make it difficult for the technology’s wide spread adoption.

Resource:

http://fortune.com/2016/11/02/blockchain-failures-successes/

On Friday, the SEC issued a decision to reject the Winklevoss’ petition to form a Bitcoin ETF. Since the beginning of the year, Bitcoin has remained constant over $1k/coin and in recent weeks hovering around $1.2k/coin. The goal of the ETF was to make access to the new currency in the regular market. Bitcoin brings a potential promise of large returns within a short period of time due to its increasing popularity.

The SEC denied the request due to the lack of regulation and oversight capabilities by an outside body. Bitcoin was mainly created to avoid these types of centralizations. Unless the SEC will update their requirements, it looks unlikely to see a Bitcoin ETF in the near future.

Reference: https://www.forbes.com/sites/laurashin/2017/03/10/sec-rejects-winklevoss-bitcoin-etf-sending-price-tumbling

Data Analysis Techniques for Fraud Detection such as the process mining software like Celonis or ProM are invaluable tools that can help an analyst find out unusual trends. However, the use of social network diagrams and other tools that look into an employee’s friends and connection is getting close to crossing the line between their personal and professional life. It seems like if an employee or group of employees are being suspected of financial fraud, the first step would be to see if the suspects had left any trails within the financial system that can be used against them. However, sometimes this step could prove to be difficult if the suspect is being careful about their motives. Then alternative methods would need to be done like for example social network diagramming. The problem still lies on whether looking into a person’s social circle would be enough proof to incriminate them or even give enough reason to conduct a deeper investigation. There could be cases where false positives can appear and that would lead the company down a path that would leave them open to a counter suit.

Reference:

https://whitecollarhackingcontest.wordpress.com/2015/05/10/data-analysis-techniques-for-fraud-detection/

 

The article tries to discuss the competitive advantage Financial Institutions will have when putting dynamic transactional data in the cloud, and also says the risks involved can be mitigated. I think the traditional firewalls and security measures might suffice to protect data within one’s premises, but will not hold against data on the move.ie the data put on cloud services . So what are the options Financial Institutes have to handle risk?

• Accept the Risk – If the decrease in operational costs, outsourcing of IT and flexibility offered by cloud platforms outweigh the risk of a data breach, the bank must accept the possibility of damaging its brand due to such incidents . Risk retention is only advisable if it does not pose any financial threat.
• Mitigate the Risk –  Removing PII & PCI before moving to cloud helps reduce amount of risky activity. Ramping up security measures and firewalls at company expense is another risk reduction strategy.
• Eliminate the Risk– The only way to eliminate this risk completely is to keep data on premise.Even then it is not ideal situation as on-premise data stores are also susceptible to hackers.
• Transfer the Risk-Altering the contract with cloud vendors so that there are strict data monitoring clauses transfer some of the the risk. Insurance is also a good way to transfer risk. Investing into legal and compliance teams to protect themselves from legal issues are other steps to transfer risk to a 3rd party.
• Risk Avoidance- When you forsake the activity containing risk, it is risk avoidance. Risk avoidance usually leads to risk elimination.

I feel that banks with sensitive data can not transition to a cloud framework unless they understand that the security in the cloud has whole new dynamics and technology than the security measures that they are historically used to.

Reference:

Financial Institutions Weigh Risks, Benefits of Cloud Migration

After its self-removal from the European Union, United Kingdom became one of the first countries that found lack of enough people to fill FinTech positions. According to a report from Business Insider earlier this year, there are 28.3 percent of Digital Project Manager positions open and remain unfilled after two months in the U.K.. Speculation has been high as to how the U.K. will do once it removes itself from the EU. Plus, big banks have already threatened to move jobs from U.K. to overseas, which could potentially cripple the British economy with jobs remaining unfilled for longer.

Reports also showed that FinTech funding in the U.K. has fallen by 33 percent in 2016, comparing to $1.2 billion in 2015. This showed an even larger uncertainty in the FinTech sector for U.K., along with its geo political and macro-economic factors. The reports concluded, “Despite being the global FinTech hub more clearly needs to be done to fill FinTech positions in the U.K. job market and improve its standing long after it removes itself from the European Union. Only time will tell how successful this is.”

Source: http://www.businessinsider.com/hardest-fintech-jobs-to-fill-in-uk-according-to-indeedcom-2017-3?r=UK&IR=T

Off late Robo advising has been making all the right noises regarding financial advice. There seems to be a lot of potential and in future, the number of Robo advising companies are only expected to grow.

Going back a few years, customers had a couple of options when it came to financial investing. They had to do all the investment themselves or hire a financial advisor. Hiring a financial advisor had limitations, the biggest being having a minimum asset requirement which was around $0.5 million. These advisors charged around 2% of your investment which meant around $10,000 annually. Comparing this to Robo-advisors which typically have a min investment between $25,000 to $50,000 and charge around 0.5% management fees. At the surface level, Robo advising seems a much better option but can it replace human financial advisors?

Robo advising has the prospects of replacing financial advisors but in the end, I believe it comes down to individual preference. For many people wealth is personal and a lot of emotions are attached to it. They want to make future life decisions based on wealth and these people would not a want a robot advising them. At the same time, many people don’t have the time, grasp of finances and desire to consider all investment options and would prefer a robot to give financial advice. Another point to ponder upon is, after 2008 financial crisis the markets have been on the rise. A financial crisis is imminent in the future and when this happens would you want a robo advising you or would you prefer a human who you talk to and share your concerns?

References:

https://investorjunkie.com/35919/robo-advisors/

https://www.nerdwallet.com/blog/investing/best-robo-advisors/

China is on track to beat its $10 billion funding it raised in 2016 for Fintech. A Bloomberg report said the investment areas focused on will most likely include big data, artificial intelligence, blockchain, and cybersecurity.  The managing director of China financial services at Accenture, Albert Chan, expects more money to go into investment services, online lending, and robo advisors.

CBInsights came out with a report stating that deals accounting for around 43 percent of the global funding taking place in Asia in 2016. A couple major Chinese companies have been pouring money into the Asian financial technology sector.   JD.com raised $1 billion in January of 2016.  Multimillion-dollar Chinese investment firm Huiyin Group announced the launch of a 420 million blockchain and bitcoin fund.

Albert Chan expects the venture capital funding to continue.  He says, “this year we are likely to see continued significant investment into fintech in China both from new market entrants and traditional financial institutions.”

China will continue to be a leading market for Fintech due to its hot market and economic growth.

https://www.cryptocoinsnews.com/china-set-exceed-previous-fintech-investment-record/