Fintech - the tech drivers for your success.
The financial landscape, both business and personal, is changing fast. We want to do things better, faster and more easily. We expect our tech to help us handle the ever-increasing pace of life and to help us meet our goals.
Fintech and its phenomenal growth rate demonstrates that point to perfection. We are no longer just satisfied with new tech; it must be tech that makes a visible improvement in the way that we live.
And Fintech companies are perfectly poised to take the lead here. They have the expertise to provide the solutions that people are looking for but are flexible enough to be completely responsive to changing market needs as well.
How can Fintech help you and your business manage change and achieve your goals? Let’s examine exactly that, shall we?
Improved Data Analytics
For Fintechs, improving data analytics has been, and will continue to be, a particular area of focus. Advances in computers in general and machine learning, in particular, have made it possible to process vast amounts of data in mere minutes.
This puts a range of whole range of new and exciting opportunities on the cards for businesses.
Say, for example, that one of your business goals is to improve the cash flow of your business through better account receivables processes. A lot of companies, big ones included, manage and track invoices through an Excel spreadsheet.
This takes a lot of work – the invoice details must be captured in the sales system, then captured by the accounting depart and then transcribed to the spreadsheet. It is a lot of extra work, but was, up until a few years ago, the best way to do things.
Enter the age of Fintechs that can incorporate your sales and accounting functions into one system. The data only needs to be entered once, meaning less work and less probability for errors to creep in.
Which is great, but the real advantage of the system is that the CFO can, at any time, download the latest aging reports and see the most up to date status of the accounts receivable.
They can check on a day to day basis exactly how much is owed to the company and by the client if they like. The data is available in a matter of seconds, allowing them to create truly accurate cash flow forecasts and to accurately manage their provision for bad debt.
What a difference from the old spreadsheet system that you would have to request a few days in advance from the accounts receivable department. This is an example of online business intelligence in action.
We are now living in a mobile world, rather than a material one, so it is no surprise that the second most important area of focus for Fintechs is on providing solutions through mobile devices.
With the use of mobile applications, consumers have better access to information and also more payment options. Carrying on from the example above, what if your client could open up their invoice on their smartphone, click a link and pay it then and there?
There are many Fintechs that already do offer this kind of product, bundled with their accounting software. The client is taken through to a secure payment gateway, and the payment gets processed immediately.
The opportunities are endless. With the level of data analytics, we are now capable of, sending a client a completely personalized voucher or discount with pinpoint accuracy is now something that is within the realm of possibilities for both large and small businesses.
Artificial intelligence – we’ve seen it portrayed in movies often enough. Who didn’t love the emergency medical hologram in Star Trek Voyager and his acerbic wit? And who didn’t think about unplugging their computer after watching The Terminator movies?
Okay, so I am showing my age a little here, but the point is that artificial intelligence is not something that is unfamiliar to sci-fi fans. It is a very futuristic notion - the idea that machines can learn and evolve - but it is something that is relegated to shows like Star Trek, for now, isn't it?
Actually, it might surprise you to learn that machine learning is not as futuristic as you might think. In fact, we have been taking advantage of “smart” computer systems that are able to learn for a while now.
Every time you "Ask Google" or Siri to look up something for you, you are using a form of artificial intelligence. These programs and other virtual assistants like them are capable of learning.
They can learn, for example, the way you pronounce certain words, what searches you perform most often, etc. Artificial intelligence is why YouTube always seems to know what videos you want to watch. Learning algorithms are the reason why and how, for example, Expedia can offer you great deals in destinations you might like. The programs have learned from your previous search history.
Anyway, that’s all great, but what does any of that have to do with Fintechs? Going back to the example of our accounting program provided by a Fintech. Artificial intelligence is what allows the application to match payment amounts to the right invoices.
That is, however, only a very small part of what artificial intelligence and Fintechs can do when they team up. Say, for example, your goal is to cut down on the amount of junk food you eat. That has absolutely nothing to do with Fintech, does it?
Except that right now there is a programmable credit card being developed. A card that can be programmed not to work on specific days at individual retailers. Now, a junk food craving is easy enough to satisfy when all you have to do is swipe your credit card.
Other examples are simple savings apps that remind you to make a weekly payment to your savings account and make it easy to facilitate the transfer.
Scared of the Terminator? The age of the machines is already here, so you may as well embrace it.
Automation, strictly speaking, should fall under the category of artificial intelligence, but I believe that it deserves a mention on its own. I feel that this will have the most impact on our business and personal lives.
We see it with automatic payments – the amount deducted effortlessly and automatically for your debit order on a monthly basis. Now think of the whole range of mundane transactions that could be done for you automatically.
Back to our accounts receivable example again – with automation, the debits and credits for an entry can be quickly and easily posted, in a matter of minutes. Remember how I was saying that you might allow your clients to pay their invoices via a link on their phones?
Automation makes it possible for those payments to be registered immediately in the accounting space. Automation allows for up to the minute accounting statistics.
In combination with smart programming, it can highlight clients that should be contacted as a priority to chase up payment.
It also allows companies to offer real-time discounts for early payments immediately and without adding to a staff member’s overall workload. Or it can help you to incentivize other good payment behaviors by your clients.
Part of the appeal of the new products that Fintechs are coming up with is the immediacy of transactions and the reduction in costs. Many Fintechs make use of blockchain technology when designing their systems.
Why is this important to you? Because blockchain tech has wholly disrupted our banking industry and is one of the reasons that around 91.3% of banks worldwide acknowledge the need to partner up with Fintech companies.
Blockchain tech is not the only change that Fintechs have brought to the table, but it is likely the one with the most far-reaching consequences.
It all started with a little thing called Bitcoin. Which, when it was first started in 2009, was widely disregarded. Major banks and financial institutions thought it was a fad, something that would never gain traction.
Fast forward to now, with over 90% of the major banks already experimenting with their own blockchain based payment systems and the picture is very different.
Blockchain tech is now seen as a way to combat fraud, speed up transactions and help reduce infrastructural costs.
It is a very simple idea and one that essentially makes a "world computer" a reality. It is simple. When signing up for a blockchain based app, you download a copy of the chain onto your computer, and so the data is stored on several computers within the network.
It does not seem like a good idea to spread out all the information across so many different nodes until you understand how the blockchain actually works. The data is permanently recorded. It cannot be deleted and the fact that it is stored on so many computers makes is more secure.
If you wanted to change a transaction that has already been recorded, you would have to change not only that transaction but also all the subsequent transactions in the chain. And you would have to do it on every computer within the network. It is a mammoth task.
New transactions have to be signed using your private key to digitally verify authenticity. Before the transaction is added to the chain, a computer within the network will need to solve a sophisticated encryption algorithm and then confirm the results with the other nodes.
Only once the transaction has been verified in the manner it is added to the record. It is added to a particular block of data. Each block is time stamped and contains some of the information from the block prior to it. This makes moving the blocks impossible and the system more secure.
Financial transactions are only a small part of what blockchain tech can do. Ethereum, for example, has included programming code within their chain to allow users to conduct transactions, and also create dapps and smart contracts.
Dapps, are just applications that are distributed directly to the end user and, while this is a good thing, it's not likely to have too much of an impact for the average user. Smart contracts, on the other hand, could have a significant effect.
Smart contracts are written in programming language and execute automatically. The system needs work before it can be adopted in a general business setting because the contracts are unstoppable.
Say, for example, that you want to buy electronic components and you set up a smart contract. It might state that funds are payable on delivery. So, as soon as proof of delivery is entered, the funds are paid across.
The issue here is that there is no recourse if the delivered goods are not working, or if the wrong goods are delivered. All the seller has to do is to enter proof of delivery. So, yes, there is work still to be done. Yet we cannot underestimate the impact this will have upon supply chain, procurement and potential cross border trade regulations and automated tax revenue (A perfect Brexit solution?)
However, when the kinks have been worked out, can you imagine how much easier it would be to work simple contracts? Neither party has to trust that the other will hold up their end of the deal – the funds are put in escrow and released when the contract is complete.
Another interesting real-world application of this kind of technology could be the processing of simple estates, for example. The contract could be initiated by the testator in place of a standard will.
For the contract to be executed, the beneficiaries would have to put in a date of death. The system could then confirm this against official death notices and then transfer the assets to the stated heirs automatically.
Now, granted, we are nowhere near that stage yet, but it is an example of how Fintech might help us to deal with the changing needs of society.
We are continually looking for ways to simplify processes, to automate mundane functions and to make things run a lot more smoothly. Fintech has already gotten started with that. It has already had a significant impact on our lives and looks set to continue doing so at a great rate of knots.
All these daily and structural improvements help business and personal consumers improve quality, access, speed and the ease of objectives and goal achievements.
What examples can you share of your use in how Fintech helps your goals? Let us know in the comments below.
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