Fintech Boom is Disrupting the Way Companies are Run

from readwrite

Finance is a central tenet of business and a pillar upon which any successful company stands. After all, the point of capitalism is to create organizations which not only do something useful but those which ultimately monetize their plans and bring value to shareholders.

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  1. I strongly agree that Fintech is disrupting multiple industries. The main industry that it is disrupting is the banking industry. I personally never use cash. I have a Visa credit card and a PayPal and Venmo account so I rarely deposit and leave money in a bank account. If you don’t know already, banks make money off deposits, because they take that money and invest it in securities such as stocks, bonds, etc. If nobody is leaving money in bank accounts the banks are going to have a tough time generating income through investments (trust me, millennials don’t like leaving cash in bank accounts). However, that’s not the only reason banks are being disrupted by Fintech, the LaaS is hurting the banks as well. Lending as a Service is taking a large chunk of banks businesses and the LaaS companies get significantly better margins. Banks make money through investing excess cash, but their main source of income is from generating bonds by lending to originate mortgages or personal loans. The banks give you .05% to keep cash in their bank account then lend that out for 7%, good deal for the banks right? What happens if fintech wipes that out, which they very well can. Fintech uses algorithms that can generate an interest rate by accessing customers data and get back to them within minutes. Much better than going to a bank and talking to someone for an hour and waiting two weeks for them to get back to you. As a double major in computer information systems and finance, I can conclude that fintech’s algorithms propose a severe threat to the banking industry, especially further down the road as they grow. Fintech companies will grow at an exponentially larger rate year over year and will continue to disrupt industries such as the banking industry.

  2. Finance and technology have come together in ways that no has ever imagined. Both of these things are very important towards whether or not a business will either fail in a short period of time or succeed in the long run. The environment of businesses is not the same as it was ten years ago. I know that we have mentioned about the topic of a digital strategy on a number of occasions in class. Everything that was done ten to fifteen years ago was done on pen and paper because technology was not as advanced as it is today. Everything is done online, and that is why businesses have to change the way that do everything with their business. By going online and selling products using technology that we have now, business should be booming. All companies have taken advantage of the technology that has been made available to us and for the most part have succeeded very well. The idea of Fintech is similar to the goal of artificial intelligence, and that is to do more things quickly and efficiently. Fintech, according to the article, wants to make the payment process of purchasing a product easier and more convenient in the minds of the consumer. This would allow the business to solely focus on the development of their products and make their products the best out on the market. I definitely think that it would be useful for companies to attempt to use Fintech to sort of relieve some of the stress from attempting to do a lot more work than needed. Fintech is very similiar to other sorts of technology that help with businesses and keeping track of payments. If I owned my own business, I would consider that Fintech could be something useful. I could use it to keep track of payments that have been made and lots of data from the customers that I would accumulate from using Fintech. I think that consumers would also benefit from something like this. The article mentions that some of the positive effects of using Fintech is that it can reach a more wider customer base and lower costs. This is something that I would not have a problem with using if I were to own my business. We as individuals will have to continue to adapt to the amount of technology that is coming into the economy and the world today at such a rapid rate.

  3. The way that banks have evolved over the years has been incredible. At one point it was gold that was the main monetary value that was used to determine someone’s wealth. Eventually people realized that gold was just too heavy to have to carry around and so the paper dollar was now the new way to determine the value of someone’s wealth. Now, decades later technology has evolved and people no longer want to carry around cash. The problem with cash is that people need to carry around sums of paper that they could potentially lose so the best way to solve this new issue was to create credit and debit cards. This way people only have to worry about carrying around a single piece of plastic instead of a stack of cash. That still was not enough. People do need the burden of carrying around a plastic card and if you forget the card at home and need to purchase something or pay for dinner, forget paying, you just look like the biggest idiot for not having any money or being capable of paying for food. One thing that people never forget is their phones. Now everything can be done through your phone. The banks have created apps for people to use to keep track of purchases and make payments through the phone without having to lift a finger. Apple has created apple pay and this allows for you to pay at the register by only using your phone. The only problem with that is if the apple pay is not working, the employee has to figure out a way for it to work because the customer already has the money, its just the job of the employee to figure out exactly what the problem is and how to fix it. Its amazing to see the ease and convenience of finance and technology the way it has grown over the last century. Not having to use cash anymore is great and always having a credit card allows for those cashless moments to easily be fixed. Although there is always benefit to having extra cash with you: and that is to just to at least make yourself look like you have money.

  4. The financial technology companies are making banking easier and faster with technological advances. They are helping small businesses get started at a cheaper cost than a traditional bank. Plus, everything is digitalized making everything more convenient and easier to operate. Based on the path humanity appears to be headed, I believe these are the banks o the future. Everything in society is increasingly digitalized, so why not our banks? Many banks already have websites, but most things are better managed in person at a location near you, but with fintech banks you can access anytime anywhere and have all your banking needs in the palm of your hands. Another great thing about these banks is they accept all forms of payment. They believe in not turning down and customer, especially because of payment type. So, they made it possible to accept thing like venmo, cashapp, and even some mainstream cryptocurrencies. By allowing these types of payments they also show another look towards the future. In the future who knows what kind of currencies we will be dealing with, so having a platform that already accepts all types of currencies will put you at an advantage as soon as that happens. Another thing that fintech companies do is they can manage your money for you. You can build different stacks on the website to manage payroll, benefits, etc. Having this all on your phone or laptop is almost a god send for small companies. Having the software do it for you makes it so the owner doesn’t have to spend time dealing with it and can better focus on the company. This also eliminates human error which will help the company to be as efficient as possible. This is just one of the features that come with using a fintech company. They also have a software that can find you the exact right type of loan for you/ your business. This process involves computing 20 different points and finding the most compatible loan. This process normally takes a few days or even weeks but with the fintech companies, it can be done in a matter of seconds. To conclude, fintech companies are the banks of the future.

  5. In my opinion I think that financial technologies will be one of the greatest disruptors of our society through a wider range of applications. In a lot of ways the traditional banking system has been inefficient especially in the age of internet optimization. Also in a lot of ways there is consumer distrust in the traditional banking system because of events like the 2008 financial crisis, where the issuance of subprime mortgage bonds created a housing bubble. Fintech offers a solution to this problem by clearing up the asymmetric information between the lenders and borrows. This problem of adverse selection occurred in 2008 when the ones most actively seeking mortgages had the biggest risk of default. Fintech’s new measure of credit and open bank records can clarify the risk of lending to a specific person.
    In addition to more access to information, new technologies and applications have made it possible for the average consumer to collect interest on investments through peer-to-peer lending which could have never been possible before. Similar to the peer-to-peer lending model is the new system of payments that could be made digitally and instantly. The founders of Venmo created the application as a result of the ridiculousness of paying with checks that have processing fees and long wait times. Venmo allows for user transparency which has becoming more and more common with fintech. On the payment platform there is a news feed of the recent payments made or received by a user which creates almost a ledger with the exception that it doesn’t show you the amount. The implementation of blockchain technology which has been developed into digital currency which allows users to make anonymous payments. A huge aspect of the technology is similar to the news feed on Venmo, but the users remain anonymous and instead the transaction amount is displayed. A huge disruption can be made in the banking system with cryptocurrencies because the currency is decentralized and there is only a finite number of coins which dictates value. This differs from a centralized currency that can become inflationary due to printing money. In a lot of ways these new methods could be implemented in the traditional system and businesses, but instead a lot of companies remain complacent with old practices and choose not to evolve. Often this is how major industries become disrupted and the old system is flipped on it’s head.

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