Financial Information Systems

Mobile wallets have been rising high in the market capturing the other level of interest among people .But this rising market is only restricted to developed countries, Developing countries are still struggling with the advancement of the technology and right setup required to use these smart phone dependent wallets. The issue related to the high number of cards and bulky wallet exist in these countries as well. When demonetization of all big currency notes happened in India, A different kind of mobile wallet emerged in India called Paytm. Paytm is a digital payment platform that allows you to transfer cash into the integrated wallet, and make the payment from that integrated wallet. You can have any kind of transaction with anyone who owns a Paytm. To setup this account all you need is Mobile number and email id. You can associate your Paytm with any number of accounts and any type of card. Paytm has bridged the dependency of mobile wallets on smart phone. It has provided the facility to make the transfer from your mobile by simply sending a text. It has also removed the dependency from the vendors to install the initial setup required for the mobile wallets. The growth of the Paytm has exceeded the number of users of any other mobile wallets combined. In my opinion if it figure out a way to setup the environment to expand globally, and increase the amount of money that can be added to the integrated wallet, it can capture all the market at once.

References:

http://gadgets.ndtv.com/apps/features/what-is-paytm-and-how-to-use-paytm-wallet-1625271

 

My previous post described the underlying financial technology and its current list of consumers. But of what use is such a discussion if there is no one to supplement the technology with a good business idea? What if there is an application that can fetch information regarding an applicant (which probably by no means is an easy task) in a relatively short period of time and come up with reports. Yes, this would involve a high stakes contract with the government and credit unions and what not. We have access to both ends of the technology spectrum – from the latest in memory databases (hardware) to the always enhancing machine learning knowledge (software).

An application (if developed) might involve gathering and storing data from various sources such as – Credit Bureau, DHS etc. And all this needs to be transmitted/ stored in a secure way that would adhere to the data privacy standards. Because, the systems in context are capable of handling such huge data and have a capability to process it as well; I feel that working on plausibility of such an application is not totally out of the blue and might be realized at some point in the future. What are your thoughts?

Financial information is always prone to targeted attacks which use legitimate software to avoid detection. The attack is carried out internally with no visible files in the hardware but they are hidden in the memory. Hence it is almost impossible to detect the malware and discover the fraud. The attackers sneak into the system to steal all the information they require and later erase their tracks. The forensic investigators find no evidence to work with.

According to statistics, these attacks hit around 140 enterprises to access financial process within the system. The victims are mostly from USA, France, Ecuador, Kenya, the UK and Russia.

A significant malware attack in the recent times was during January 2016, the Trojan.Odinaff effect which was specifically launched to target financial organisations which provide services in banking, trade, payroll etc. The amount of money stolen could go upto millions of dollars. This new wave of attack also carried some specifically designed infrastructure from the previous Carbanak attacks. The companies dealing with security often don’t realise it until its too late and millions are lost to hackers.

“The determination of attackers to hide their activity and make detection and incident response increasingly difficult explains the latest trend of anti-forensic techniques and memory-based malware,” says Sergey Golovanov, principal security researcher at Kaspersky Lab.

References:
https://www.symantec.com/connect/blogs/odinaff-new-trojan-used-high-level-financial-attacks

Invisible malware targets financial information

Based in New York and founded in 2014, Cadre is an online platform that connects investors and operators of real estate. It is also known as Amazon for commercial real estate deals. Its main target clients are group of investors, such as endowments, foundations, institutions, and other high net-worth individuals. By leveraging its proprietary technology, Cadre brings more transparency, efficiency and liquidity to the real estate investing market by providing investors with access to the same information across deals. For an annual fee, members of Cadre can enjoy access to due diligence information and standardized financial data of assets which have been approved for listing on the platform after a comprehensive deal vetting process. Cadre makes money by collecting fees for access to the service as well as a portion of the deal profits based on its own investments. I believe this platform would definitely change the experience of sellers and buyers in such a historically opaque industry. It also creates an opportunity for more people to make investment in commercial real estate. However, Cadre would have to come up with a solution for such a challenge that after some time of interaction, buyers and sellers can make deals themselves to save charges from Cadre.

Sources:
http://www.businessinsider.com/what-is-cadre-and-how-to-invest-in-its-real-estate-deals-2016-6

http://realestatetechnews.com/blog/real-estate-tech-startup-cadre-brings-in-massive-fundraising-round

https://rctom.hbs.org/submission/buy-an-office-building-online-with-cadre-amazon-for-commercial-real-estate-deals/

Blockchain is the underlying technology that supports the digital currency Bitcoin. The technology is a system of distributed ledgers. To validate the transactions on the ledgers, independent users verify the transactions. Once the transaction has been verified, it is stored permanently in the distributed ledger.

Traditionally, third party auditors carry out the function of verifying transactions. Through adopting blockchain, auditors can rely on the already verified transactions that are permanently stored in the system. This will reduce the time required to perform an audit since auditors will no longer have to verify individual transactions.

Adopting blockchain may allow third party auditors to rely on the blockchain auditors and focus more on a governance role for the types of blockchain transactions. Overall, blockchain is changing the way that financial transactions are being recorded and as such will disrupt the industries that have been created to verify the transaction systems currently in place.

Resource:
http://economia.icaew.com/features/july-2016/how-blockchain-will-impact-accountants-and-auditors

In my last blog, I went out on a limb to predict that a bitcoin resurgence was on the horizon, and this week the digital currency hit an all time high on the Bitcoin Price Index (BPI), closing out at $1,172.09.

Amidst all of the bitcoin hype, Rebecca Ungarino, with CNBC, penned an article titled “Bitcoin is surging – but that might not mean what you think” (Ungarino, 2017).

Ungarino gives credit to Bitcoins increasing presence in the mainstream, even pointing out big name players such as Microsoft, Subway, WordPress, and JP Morgan, with the latter also advancing the related Blockchain FinTech, but she doesn’t seem convinced that it will truly become a mainstream currency. She attributes much of the growth to just the recent highs in the equities market.

I’m not ready to take a victory lap, but I do believe that in this unstable global political environment, Bitcoin will continue its march towards mainstream acceptance. I agree that the volatility will remain, but the underlying trend of increased participation by more and more reputable companies will give this technology the support it needs, and deserves. Stay tuned.

Ungarino, R. (2017, February 23). Bitcoin is surging – but that might not mean what you think. Retrieved from www.yahoo.com/news: https://www.yahoo.com/news/bitcoin-surging-might-not-mean-174606526.html

How Fintech is evolving and How Does that Affect Financial Information Systems?

In an article written by Chris Skinner, he argues that Fintech has grown so much that it is difficult to use “Fintech” as an umbrella term to describe all of the processes it encumbers.

The author describes that Fintech firms have three business models to choose from.

1. Creating a New Financial Structure: This path has been helpful in raising funds for start-ups by connecting them with donors, rather than approaching a bank for a loan.
2. Removing Friction from Financial Markets: This can be applied by creating an alternative system that can be setup much quicker, in comparison of the setting up through the traditional bank system.
3. Reducing Costs and Overcoming Inefficiencies: Banking systems are much slower and cost more to run efficiently.

Overall, Fintech aims at reducing the limitations of a traditional banking system. Financial Information System are the backbone of Fintech system, in that the FIS does all of the data processing and established a list of controls.

While Fintech cannot replace the bank as a whole, it is important to remember that while banking systems are generally slower and outdated these systems take years to develop because of the amount of testing and development that is required to keep these system secured. While Fintech aims at creating faster solutions for start-ups, I argue that we should also consider the amount of testing placed on these Fintech systems. Remember its your money, wouldn’t you want it to be secured as possible?

The mobile payment market in China reached $5.5 trillion last year, as reported by People’s Daily. The prevalence of mobile payments is evident in Nieslen’s survey estimating 86% of Chinese consumers paid with mobile apps, outnumbering other countries, with the People’s Daily quoting that 60% make small payments weekly. Even those in remote villages can make purchases. Being simpler than other payment solutions also allows smaller businesses to accept payments, and some Internet finance companies have begun spreading overseas. Alipay by Ant Financial Services Group now offers online payment and tax refund services for Chinese tourists. It will be interesting to see if the Chinese mobile payment industry will affect how other countries handle mobile payments.

The article does not make it entirely clear whether these mobile payment numbers only account for payment solutions like Alipay or Apple Pay, or whether they include proprietary options from individual businesses. Personally, I’m an advocate for the former, as having multiple apps to make mobile payments at different stores can be dangerous, since you’re storing your credit card information in multiple, potentially unsecure locations. The popularity of mobile payment solutions like Android Pay and Apple Pay in the US also largely depends on the willingness of businesses to adopt such payments. While I do shopping at Safeway a lot, for example, their terminals don’t accept mobile payments, even though they accept the new chip cards (which are theoretically more secure than the magnetic stripe). That being said, I’m encouraged by the growth of mobile payments in China and hope that more businesses will begin to adopt mobile payments.

Source

http://economictimes.indiatimes.com/news/international/business/china-third-party-mobile-payments-climbs-to-usd-5-5-trillion/articleshow/57344545.cms

Currently, many fintech products available to the financial advising market are targeted to either end clients or larger dealer groups and institutions, leaving the smaller advising companies behind.  The reason it is difficult to make technology for independent financial advisers is because the more money they spend on software, the less they have for their clients.  Independent financial advisors typically have 80-200 clients, and are unable to pay the expensive premium for a large piece of software without heavily effecting them or their clients.  In order to meet the needs of smaller firms and break into the market, Mr. Robinson, the CTO of InvestmentLink, says fintech firms will need to produce software that is “easily customizable by the technical layman” so that smaller businesses are able to invest in the technology and use it for their own needs.  The key to emerging in the financial advising sector is to release products that are targeted towards specific needs and best-practice ways for small and medium sized financial advisers and accountants, while still giving them all the control in how they present themselves to their end clients.  This way they can deliver the products as their products while still bringing a lot of value to their customers.

 

http://www.fintechbusiness.com/industry/643-ifas-being-left-behind-by-fintech-companies

A recent article on Forbes entitled, “Three Reasons Fintech is Thriving“, brought up a few points about the recent growth and expansion of the Fintech market and some future predictions that come along with it.

Slow to Grow and Change

The article started with an overall analysis of the market which caught my attention when it brought up the point that technology and finance are typically at odds. One of the major points it brought up was that Technology is typically a fast moving industry focused on growth and new development, whereas finance is a much slower industry that changes primarily in response to improvements in efficiency, regulations and international and domestic financial climates.

The shift from traditional financial companies to those with more technology companies has begun to pick up pace as younger investors begin to accumulate wealth that was once nearly entirely concentrated in traditional financial services providers. Technologically aided financial services are not only affecting the consumer areas, but also in a business context where providers seek to reduce costs and increase value through technology.

Giants Still Control the Market

With all of the recent developments in financial technology, many would be surprised to learn that traditional providers have retained a large majority of the financial services market share. This has been done through a combination of organic developments along with a growth-by-acquisition strategy that has allowed the traditional providers to sweep up smaller, technology-driven firms to scale up and provide more value in their offerings. In addition to this, traditional service providers have expanded their market by developing products and services specifically oriented for small businesses and entrepreneurs.

Overall, the growth in the Fintech industry is exponentially increasing on many different facets. The future of the industry seems to be open to interpretation, but look for the traditional providers to seek to acquire smaller Fintech firms or face a loss in market share.

Source: https://www.forbes.com/sites/rohitarora/2017/02/22/3-reasons-fintech-is-thriving/#266f19da1017