Article | February 10, 2020
Small businesses in emerging economies are notoriously underfinanced. Despite making up over 99.5% of the economy in Latin America, SMEs face a financing gap in the trillions of dollars. For example, up to 78% of small businesses in Argentina and 45% in Peru struggle to grow because of financial constraints. Numerous articles and institutional white papers point to the lack of trust between banks and SMEs as a major cause of this financing gap. Banks simply do not know how to accurately calculate small business risk, especially in volatile economies in Latin America, so they offer high interest rates or pass on providing credit altogether.
Article | September 14, 2021
Digital transformation had a huge impact on every sector, and this includes finance. Digital disruption in finance can be defined as an event where new technologies replace traditional methods for financial transactions. This article will discuss how technology for finance has changed over time, why it's vital to stay current with digital trends, and what you need to do to make your company ready for the future!
Make plans for the coming age of Digital Transformation
The finance team has traditionally used tools like spreadsheets, reports, and presentations to managing its processes. However, digital disruption in finance is creating new challenges for the finance department because of these changes - they need to learn how to use technology effectively or risk getting left behind! Here are some examples demonstrating why digital transformation of your company's financial processes can be beneficial.
Digital transformation gives the finance team access to better systems to help them do their jobs more efficiently and effectively.
Digital transformation gives the finance team access to better tools that will allow them to be more agile and deliver new services for their clients.
Digital transformation saves money for the company because new technology is cheaper than old technology like spreadsheets and presentations.
As such, if you want your company ready for the future, make sure your finance department is aware of digital trends and knows how it can integrate new technology into its workflows.
Prepare for a transaction revolution as automation and blockchain infiltrate further into the financial process:
While financial institutions have been working on transformation plans for many years, the recent cryptocurrency and blockchain revolution indicates that things are moving faster than ever before. As a result, banks are starting to understand that they need to be open to new technologies and ways of working to stay relevant in their industries and attract new clients. Financial institutions need to brainstorm new ideas and innovative ways of working that will allow them to be relevant in today's market while at the same time applying technology in ways that facilitate faster and safer processes.
Financial Institution's role in Digital Transformation:
Now that most finance processes are automated, the finance industry will provide more business insights and services. Of course, success is not a certainty, but digital marketing for financial services can get more focused and accurate.
In essence, FinTech technology will improve financial management and help production. It can do this by rethinking procedures, breaking formats (finance is a chaotic environment), streamlining reporting, and endorsing transactions with a better data set. As a result, businesses may find themselves better placed to make long-term decisions and do not require immediate cash flows. The key question is whether financial technology can deliver on these promises in a way that provides real benefits for customers and shareholders while being price-insensitive enough to be affordable for all.
The way for financial teams to be agile:
Although digital transformation is a competency within finance, most bankers still focus on software development and hopping from platform to platform. One of the biggest problems in overcoming this difficulty is the lack of a common language. An effective digital transformation strategy requires the sharing of data - including between departments. Sharing information enables agility because it allows each team to understand their strengths and weaknesses more clearly. It also enables cross-functional teams that can reach out to business partners outside their core business functions when necessary or to solve problems outside their domain of specialty. The transformation can also help in creating compelling promotions and creating persuasive advertisements for your financial services.
"As workplaces start to open, a hybrid model—seems to be a new norm that provides flexibility for people to operate both from their homes and offices, as we emerge out of the pandemic period."
-Vishal Srivastava, Vice President (Model Validation) at Citi
A more adaptable future in digital transformation for FinTech
Several banks and financial institutions are making it a point to associate themselves with technological innovation. Recent data shows that nearly half of financial institutions worldwide have made some sort of digital transformation in the past five years – from transaction processing to customer relationship management. Increasingly, these institutions are looking to the future and thinking about using technology to transform how they do business. Digital transformation of finance is just one of the many buzzwords we're hearing from financial institutions right now. Financial institutions need to stay connected and relevant in an increasingly competitive marketplace by designing financial products and services that meet their changing demands.
Cloud computing for a more agile future
What's more, the shift means businesses can scale faster using the cloud--perhaps even more effectively--than before. The momentum behind the online collaboration, instant messaging, and Web browsing has only accelerated in the past few years -- threatening to upend the very foundations on which many large companies have built their business models. This shift means banks will need to find new ways to stay competitive and fast. Tech giants such as Amazon, Microsoft, and Google make significant inroads with cloud technology into innovative services and products into the bank space. We'll see if they also can help shake up the way work gets done -- either here or in offices around the world, as migrating infrastructure to the cloud enhances access, flexibility, and scalability for both FinTechs and banking giants.
The current financial crisis has led to a re-examination of traditional finance models and ways of working. One area that has gained particular attention is the digital transformation of finance teams. The potential impact of digital transformation on finance is intense. If well-timed, it may help finance organizations attract and retain talented employees while reducing operating costs and enhancing returns on investment in core operations.
What are the four main areas of digital transformation?
Digital transformation is a broad term that generally refers to an increase in efficiency across many business functions using technologies such as software applications, data analysis techniques, networks, and infrastructure. To achieve digital transformation, the organization needs to rethink many core processes while integrating new technologies. In addition, there are challenges associated with changing from an existing model and overcoming internal resistance.
What is the future of finance?
The future of finance is in changing the way companies raise money for new ventures and how financiers themselves manage their portfolios. Fundamental changes include using technology that helps investors access data and choose more suitable investments, better deals, and structures for companies that now seek to raise money from multiple sources rather than just raising an individual round.
What are the top technologies for finance?
Technologies used in the financial services sector have become so integrated that it is difficult to understand their impact on a business or industry. Nevertheless, here are some of the emerging technologies that are in use right now:
Hybrid Cloud Servers
Robotic Process Automation
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"text": "Digital transformation is a broad term that generally refers to an increase in efficiency across many business functions using technologies such as software applications, data analysis techniques, networks, and infrastructure. To achieve digital transformation, the organization needs to rethink many core processes while integrating new technologies. In addition, there are challenges associated with changing from an existing model and overcoming internal resistance"
"name": "What is the future of finance?",
"text": "The future of finance is in changing the way companies raise money for new ventures and how financiers themselves manage their portfolios. Fundamental changes include using technology that helps investors access data and choose more suitable investments, better deals, and structures for companies that now seek to raise money from multiple sources rather than just raising an individual round."
"name": "What are the top technologies for finance?",
"text": "Technologies used in the financial services sector have become so integrated that it is difficult to understand their impact on a business or industry. Nevertheless, here are some of the emerging technologies that are in use right now:
Hybrid Cloud Servers
Robotic Process Automation
Article | April 15, 2020
Soon after, the World Health Organization declared the Novel Coronavirus outbreak an official pandemic, a sudden pandemonium busted across the globe. The COVID-19 crisis carries with it the potential equally disruptive economic fallout. It has brought a dominant shift in reality; in addition to the effects that the virus has had on our private lives, businesses in every industry are being forced to find innovative ways of operating on every level and the world of Fintech is no exception.
Investors began drawing out their money. The stock markets of the world collapsed. Central banks made off-cycle rate cuts and inserted liquidity to keep the economy running. The financial services are currently confronting challenges on multiple fronts: banks have reduced their opening hours serving a few customers at a time due to social distancing rules, putting additional stress on channels like telephone service, online banking, and social media.
Simultaneously, numbers of consumers are desperately trying to contact their bank with questions, concerns, issues, or to request appropriate solutions for their finances impacted by the fallout from the coronavirus. This is not the first or last global crisis. FinTech and banking companies of the 21st century need to be programmed to operate in such circumstances.
Being a fairly new sector, fintech companies are already well-positioned to adapt to a world that suddenly exists primarily online; most fintech platforms now exist in online formats anyhow. Still, the paradigm shift brought to the world by coronavirus is forcing the fintech sector to come up with creative solutions when it comes to supporting customers, building relationships, boosting company morale, and planning for the future in this unprecedented situation.
The behaviors that people can execute from their living room or from their den are going to grow, and behaviors that require face-to-face interaction or getting out into the community are going to diminish. What does that mean? You should have greater mobile apps and digital adoption in general. If I had been holding off on signing up for PayPal, for instance, I might just do that.
Nigel Morris, Managing Partner of QED Investors, Co-Founder of Capital One
“Fintech companies are probably some of the best-equipped organizations to take on this crisis.”
If you’re a Fintech, you’re probably no more than 10 years old and as a result, have built your backend and developmental stacks on cloud environments allowing for operations to continue anywhere. Also, many business-to-business (b2b) communication tools that FinTech companies have naturally adopted and made available to employees such as Slack, Teams, Skype have been more heavily leveraged. Legacy financial brands are more than likely finding this time to be a bit more difficult.
Paul Geiger, President, and Co-founder of Post-Trade Asset Management Firm Theorem Technologies
The coronavirus pandemic could be destructive for multiple companies, but it's also flashing a spotlight on the potential of fintech. It has the potential to revolutionize how consumers and businesses handle financial transactions. There will surely be hits and knocks along the way, but fintech can manage to make this transition a lot easier. Here’s how.
Table of Content:
- Moving Back to the Digital Infrastructure
- Utilizing Robotic Process Automation Software in Banking (Robo-Advisory)
- Acceleration of Cashless and Contactless Payment Methods
- Artificial Intelligence and Block chain Technology
- Fintech Firms Providing Free Technology During the Coronavirus Crisis
Moving Back to the Digital Infrastructure
As the number of cases ticks up in the U.S., many are choosing to go cashless to circumvent potential hygiene concerns around handling banknotes. Almost half of the world’s population is now practicing self-quarantine. Interaction between humans is limited. All the public gathering places are closed down. Businesses that rely on people coming in or the shops that are commonly crowded are now starting to close down.
The prevailing crisis will change our mindset and habits and make us re-evaluate our current way of doing things. All thanks to fintech, giving smaller communities a chance to keep their business open and operating. With digital payment options and online transactions, you can pretty much order any service, any product. You can even access your favorite types of entertainment online and all that without breaking the rules of self-isolation. Social distancing is the only effective method to fight the spread of coronavirus, and fintech has made this practice much more natural. Online services that we can pay for through fintech are now substantially covering every industry.
These digital services have become such an essential part of our lives, and we should be appreciative of how easy it is to quarantine these days. Ordering groceries, favorite food, watching the newest movies, stuffs delivered right to our door, all this is only possible, because of different financial technologies and digital payments that have made money transfer easy and secure.
Learn more: https://www.euronews.com/2020/03/19/next-day-delivery-the-challenges-for-retailers-during-the-coronavirus-pandemic
Utilizing Robotic Process Automation Software in Banking (Robo-Advisory)
Robo advisors, without human interference, provide automated support for all financial advisory services, such as trading, investment, portfolio rebalancing, and tax saving. It works with a pre-defined algorithm and analytics, calculating the best returns and plans for each individual as per his/her requirements and preferences.
The need for no-touch and low touch investment solutions, which can deliver more informed intelligent analytics back to the user, will be more important than ever. Robo advisors are the next level in the evolution of asset management and financial advice. For the banking industry, robotics outlines a unique and underutilized way to increase productivity while minimizing traditional repetitive and manual-labor-intensive processes. The growth of Robo advisory services is attributable to the fact that it enables low-cost services, scalability, cognitive advice, and next-generation user experience.
Though, for the next generation, virtual agents may be an acceptable help for financial matters. It is a fact that client advisors must fit with Robo-Advisors and artificial agents and a human-led technology-enabled model to a technology-led human-enabled business model in financial services.
Acceleration of Cashless and Contactless Payment Methods
The new coronavirus fears could be enough to introduce mobile and cashless payments to those who otherwise didn’t see the appeal.
Learn more: https://capital.report/blogs/how-open-banking-is-catalyzing-payments-change/8262
Before the outbreak, mobile payments in the U.S. had not come close to global adoption rates. In China, by contrast, more than 80% of consumers used mobile payments in 2019, according to management consultancy Bain. In the U.S., major mobile payments apps had adoption rates of less than 10%.
Major payment companies have already warned of the virus hitting U.S. spending. Visa, Mastercard, and PayPal have all cut guidance due to the coronavirus.
I think this is an opportunity for a move to digital. Zelle, PayPal, and online banking could see a boost. I believe this crisis will accelerate and move people to utilize all forms of digital financial services.
Peter Gordon, Executive Vice President and Head of Emerging Payments at U.S. Bank,
The mobile fintech payment service that facilitates easy online and oﬀ-line payments are reaching millions of people and can truly capture the under banked population.
The coronavirus crisis represents a huge opportunity to accelerate cashless and contactless payments. Retail and consumer payments are leading the way in the adoption of innovative payment capabilities aided by the growth in e-commerce and increased penetration of mobile phones. B2B opportunities are also gaining increased traction as a result of being more efficient and cost-effective. Some key trends in digital payments are:
This includes Near Field Communication (NFC) adoption, host card emulation and QR code generation for electronic interactions between consumers and retailers.
Adoption of payment hubs.
Banks are getting interested in looking at investing in harmonizing their payment infrastructure by moving to payment hubs. These hubs can process any form of payments irrespective of the origination channel.
This is transforming the retail funds' transfer process by providing electronic cash to anyone in the span of a few minutes. Peer to peer money transfers has been around for a while and have witnessed high growth.
Built on blockchain infrastructure this offers greater speed and efficiency of the transaction.
Rise of marketplace banks.
Challenger banks are being supported across geographies and given licenses to operate freely. Banks, by adopting open banking, has started exposing their APIs to third parties for large scale payments.
Omni channel offerings.
The framework of digital payments provides a seamless customer experience across channels leading to better transaction experience.
The future of payments was already revolutionizing with new entrants such as contactless payment, NFC enabled smart phones, cloud-based PoS, and digital wallets. The crisis will merely accelerate the desire to tackle the issues with these new banking technologies.
Artificial Intelligence and Block chain Technology
Artificial intelligence and machine learning built upon distributed datasets and shared information are used for dynamic and psychographic client segmentation based on behavior and automated investment services. The adoption of such technology will become pivotal for large financial institutions to manage their client base and investment portfolios efficiently. In fintech, blockchain finds application in areas like digital ID, customer authentication, insurance, to name a few.
Blockchain practitioners are experimenting with this technology to bring out new use cases and applications to solve the complicated issues in the fintech industry.
PWC’s study of financial services and fintech shows that about 77 percent of the financial services industry is planning to adopt blockchain by 2020. The blockchain sector in fintech has been intended to provide banking with a more seamless and efficient experience. We will soon see the process of cash to crypto and vice versa to become ubiquitous.
Blockchain asset management solutions are an alternative to offshore banking because there are substantial efficiency gains for cross-border transactions, for both private clients and businesses. Traditional banking and blockchain solutions will converge over the next decade with blockchain to become a commonly used technology in financial services.
Learn more: https://www.forbes.com/sites/jeffkauflin/2019/12/26/five-fintech-predictions-for-2020-according-to-kleiner-perkins/#40c46b7d3d5a
So, when we look at these phases of development in the fintech sector, we understand that it’s not just about inserting technology into banking, there is a larger shift here. Part of the shift is around trust and the utility of the bank.
Fintech Firms Providing Free Technology during the Coronavirus Crisis
Right now, you will be feeling the need for more reliability in software and information. Luckily, some fintech companies and teams are there to alleviate these issues. To help banks help their customers through these difficult times, many fintech providers are extending free, discounted, or accelerated deployment offers to financial institutions.
Business downturns are not uncommon. Sometimes there are unexpected circumstances. During these periods of change, the winners and losers will be defined by those firms able to make quick and decisive transformation reflecting the new environment. This is not just true in banking but in every industry. Fintech companies from across the world are all-in when it comes to coping with the current global health crisis.
The progressions in digital technology are making the crisis more bearable and are empowering businesses to keep working with access to key services (communication, payments, credit, collaboration, etc.) while enabling social distancing and helping to fight COVID-19. We expect digital technology to experience another boost during and after the crisis.
Article | July 1, 2020
According to a recent CNBC study, only half of American workers report having a mentor, and those who do enjoy greater job satisfaction than their peers who are doing it alone. In fact, 91% of U.S. employees who have mentors say they are satisfied with their jobs. Mentorship is especially important for young financial advisors who are just starting out, trying to get a foothold into the world of wealth management. There’s a lot to learn, and not a lot of room for trial and error. As a result, many would-be advisors give up when things get tough. That’s where mentorship can really make a difference.