Financial Information Systems

“Payments happen where people are and where they interact. As social media is exactly doing this, bringing people together and make it easy for them to interact, it is therefore clear that payment and social interaction belong together.”

This is echoed by Massimiliano Alvisini, the regional vice president Northern Europe & Iberia at Western Union. Definitely, mobile payment keeps expanding its services scope to meet customer’s demand and the market development trend, while social media can provide a huge consumer base. I think WeChat is a successful example which supports the above statement.

WeChat is a popular messaging app in China. Compared with WhatsApp or Facebook’s messager, WeChat has a mobile wallet feature that can process both online and in-store payments. As a social media, WeChat has built a large user relationship, which enabled it to developed money transfer service with higher security confidence and convenience to transfer money among users (friends). Specifically, users do not need to type in any payment info. Users just need to open the dialog between friends, and click the transfer tab to send money. Besides sharing stream among friends, users can share a group purchase order via stream that friends form a group to place an order with great discount.

 

Source:

http://www.paymenteye.com/2016/04/05/blockchain-social-media-and-mobile-keeping-track-of-payments-at-money2020/

TransferWise is a peer to peer currency transfer service that has joined several other fintech firms in creating its own “Facebook Messenger bot”. Venmo was the first service to realize how social sending money to friends can be and others have begin attempting to capitalize on this finding. TransferWise believes this is a productive move as messaging services seem to be a place where people want and feel comfortable sending money with one another. Others obviously agree as PayPal, Stripe, Visa, MasterCard, and American Express have their own messenger bots. Services like Facebook would encourage these services to do add capabilities like this as it continues to increase the amount of use of the app by users.

Having these types of new services is extremely convenient way to send and receive money from friends and relatives. I  use Venmo multiple times a week and it has definitely simplified my life. However, it is a scary thought about how much private information many of these services now possess. We continue to sign up with more and more applications to make our life easier yet one would think this would lead us more vulnerable to losing our confidential information.

https://www.fastcompany.com/3068387/new-money/why-payment-companies-are-flocking-to-messaging-apps

TransferWise, a London-based startup, developed and launched a new money transfer service for Facebook Messenger that allows users to send money internationally. TransferWise can exchange international currencies which allows users to use the service wherever they are as long as they are connected to the internet. TransferWise has developed an application programming interface (API), enabling their payment service to latch onto existing businesses capabilities, removing the need for banks and additional fees. TransferWise is currently available in the United Kingdom, United States, Australia, and Europe. TransferWise is also expected to expand to 50 other countries as well. TransferWise is valued at more than $1 billion and backed by many high profile investors.

I think TransferWise is changing the landscape of the digital payment industry as the payment industry moves towards digitalization. TransferWise is very promising because millions of people use Facebook Messenger on a daily basis so integrating a free money transfer system can attract many users to use the service. As companies like TransferWise, Venmo, Apple Pay, etc. are making mobile money transfer and payments easier than ever before, I think in the near future, we’ll see less and less bills and coins circulating as more people and companies adopt different forms of digital payment.

 

Source:

http://www.cnbc.com/2017/02/21/how-transferwises-facebook-hook-up-could-benefit-businesses.html

https://www.nytimes.com/reuters/2017/02/21/business/21reuters-transferwise-facebook.html

 

The world of Fintech is constantly changing. The more competition there is the more each company needs to add to their value chain in order to be successful. As the barriers to entry for start ups in the Fintech world become increasingly more difficult to overcome, one start-up has just received 1.2 Million in funding and is one to look for in the future to set the standard.

Hiatus is an app that connects to your bank account and tracks your monthly autopay subscriptions. It notifies you before you pay for the subscription and allows you to unsubscribe through their interface. However, they are not the only start up to do this. Trim and Truebill also provide this service, so what makes Hiatus different? Bill Negotiation.

With the users permission, Hiatus reaches out to reoccurring bill’s companies in order to negotiate a lower deal for the user. There is no change to the service, instead Hiatus repeatedly reaches out until a deal can be made. Each user saves about $137 a year through this system and the only catch is that Hiatus charges the user half of what they save. So, if the user saves, $137 because of Bill Negotiation feature, Hiatus take $68.50, so the user still saves $68.50 per year.

Source: https://techcrunch.com/2017/02/23/hiatus-raises-1-2m-in-seed-funding-to-track-and-negotiate-your-reoccurring-bills/

We have had a lot of discussions about how we would go about detecting fraud within a financial information system, however we have not really touched on the subject of fraud prevention. There are many ways to prevent fraud from happening, but I think there is one preventive step that a lot of people forget to take. Most companies never mention to their employee’s that steps have been taken to prevent and detect fraudulent activities. Some companies might mention it once in a while or just to new hires during their orientation. This is not the way companies should approach fraud prevention. Companies need to make sure that their employee’s know that all transactions are being constantly monitored no matter how big or small they are. For example, a way that companies can bring this message across is to make sure that there are through checks and balances within the transaction process. If each transaction needs the approval or checks of multiple people across various departments then getting a fraudulent transaction through the system will be tougher and can be more easily caught.

Reference: http://www.corporatecomplianceinsights.com/7-steps-preventing-detecting-fraud/

The use of FinTech has dramatically changed the culture within China. Chinese consumers are pushing changing habits from traditional retail stores to online shopping as a result of company initiatives. Unlike other parts of the world, China is incredibly progressive in terms of loans. Companies like AliPay are offering loans within seconds through mobile apps and online services. Traditionally, it can take several days to weeks to approve credit loans. This is changing the ways in which Chinese are able to access credit and will let them spend more money within their economy. These types of technologies could be in the beginning of the future for other countries and could push other countries to allow for similar infrastructures.

Reference: www.scmp.com/business/china-business/article/2073798/how-financial-technology-driving-chinese-consumer-spending

Japanese largest financial services company and one of the three Japanese “megabanks”, Mizuho Financial Group, announced their blockchain application development earlier this week, after completing the first trial of its customized digital currency and cross-border document sharing technology supported by IBM and consulted by Cognizant.

In the announcement, Mizuhuo concluded that the trial was successful, and their “tamper-proof” blockchain solution is proved to be effective for sharing information among several subsidiaries within the Mizuho group, as well as same-day cross-border settlements of securities transactions and digital currency transfers, with significant “cost savings and enhanced usability”. Through the blockchain technology, Mizuho confidently expressed their next goal of “storing and managing large volumes of data over a distributed ledger”.

Mizuhuo’s announcement is one of the first several trial feedbacks of companies adopting blockchain technology. And, the result turns out to be expectedly satisfying. With the development in the blockchain solutions, different institutions could seek the opportunity of collaborating with technology provider for customizing their unique and conforming blockchain solutions, to better serve within their institutions and differentiate among their competitors.

Source: https://www.cryptocoinsnews.com/japan-megabank-mizuho-completes-digital-currency-document-sharing-trial-over-a-blockchain/

The presence of FinTech has been growing strongly in China recently. Experts in the industry think this emerging popularity for fin tech is one of the main factors contributing to the increase of consumer spending in China. Mobile Payments technology has made increasingly easier for the Chinese population to make online purchases, and goods can often be bought very inexpensively online in China. Online retail sales increased almost 26 percent in mainland China in the past year alone, pushing a 10 percent increase in overall retail sales. As the number of mobile users also increases in China, so does the ability to which this financial technology can be accessed. This could potentially push even more growth in the near future to come. The ability to get a loan through fin tech has also been eased , and this in turn gives more money to be spend on the online marketplace. The potential for mobile lending is also large, as aforementioned the number of mobile users in mainland China is rapidly increasing. If these trends continue it will be interesting to see how the growth of the rest of the world will be effected.

 

 

 

 

http://www.scmp.com/business/china-business/article/2073798/how-financial-technology-driving-chinese-consumer-spending

Public Bank of China is set to issue its own cryptocurrency which means getting a step closer for becoming one the first major central banks to do so. PBOC announced in January 2016 that it will have its own cryptocurrency soon.

China have embraced digital payment to such a large extent, that according to Financial Times “Chinese mobile payments were nearly 50 times greater than those in the US last year”. This new PBOC-backed cryptocurrency wouldn’t seem much different to existing payment methods such as Alipay or WeChat but for sellers getting digital payments directly from the buyer will assist in lowering transaction costs as the middleman is cut out of the process.

This new technology shift will have huge benefits for PBOC as well. Instead of relying on monthly surveys of businesses, or collations of spending from the statistics authority, using blockchain will allow to trace transactions and collect “real-time, complete and authentic” data to compile precise monetary indicators such as money supply growth. Policies could then be fine-tuned on a day-to-day, even hour-to-hour basis, giving an unprecedented level of precision to monetary management. The central bank will have unprecedented knowledge of how the economy runs.

A PBOC research paper last year outlined how digital money could work:

• The PBOC creates cryptocurrency and transfers it to commercial banks when more liquidity is needed
• Consumers would top up digital currency from modified automated teller machines or from bank tellers and store it in a crypto wallet on their mobile phone or other device
• For purchases, consumers wire from their person wallet to the merchant’s account
• The merchant deposits the cryptocurrency into their commercial bank account
• The cryptocurrency would be part of the overall money supply, replacing part of the outstanding paper tender, a separate paper published in the central bank’s magazine said in September.

Cryptocurrency like bitcoins didn’t get support as their legit adoption could have benefits so significant that centralized exchanges would not be able to compete. I think it’s a great move by PBOC which will surely have positive impacts on consumers and the government, curbing out the disadvantages of involving middle-man in transaction systems, and may also set examples for other nations to follow.

PBOC- Cryptocurrency

References:

https://www.bloomberg.com/news/articles/2017-02-23/pboc-is-going-digital-as-mobile-payments-boom-transforms-economy

https://www.ft.com/content/00585722-ef42-11e6-930f-061b01e23655

Banks are beginning to feel the pressure placed on them by FinTech startups looking to disrupt the traditional method of banking. Companies are targeting the customer experience and building off the growing use of mobile banking and easy access to banking operations. Banks do have a large advantage when it comes to the infrastructure associated with payment transactions and the many risk and compliance standards. The capital and regulatory speculation makes it hard for startups to keep up with banks. Instead, it is recommended that the two (large banks and startups) utilize each other’s resources in a mutually beneficial manner. One example is the banks’ close relationships with sales representatives and local integrators, which can be leveraged by the FinTech industry to better understand a customer’s needs and find a new point of access for their products. In turn, banks can utilize the large amount of data they have access to in order to develop easy to use interfaces for their customers.

So often companies focus on overpowering their competition instead of sharing resources to get ahead together. I enjoyed how this article identified the threat that big banks are facing and turned it into a positive for both parties involved. Ido believe that is important for banks to recognize customers’ desires for mobile banking and other easy forms of money management. It is also important to recognize that these new forms of technology must be slowly integrated given the importance of security when it comes to these sorts of applications.

 

http://themarketmogul.com/banks-take-advantage-fintech/