The Fintech Transformation is Determined by Enthusiasts

There are around 4,000 registered fintech-related companies globally and their number keeps growing.

The fintech transformation stimulates the appearance of new payment providers, peer-to-peer lenders, innovative crowdfunding and trading platforms. According to Fortune magazine, $19 billion were invested into finance startups in 2015, which is a significant increase from $2 billion in 2010. These companies are changing the future of finance.

Fintech vs. Traditional Banking

Banks did not face any competition for centuries, which removed their stimulus to innovate and be transparent. Traditional banks have usually out-of-date, yet well-established IT infrastructures. This is an additional deterrent for incumbents to implementing new technologies, adapting to new customer demands and providing clients with the apps they expect to have.

Banks do not change quickly. Their established reputations force them to consider and reconsider lots of issues before moving one inch forward. If clients’ funds, or worse, their personal data (!) gets lost due to a new system, serious consequences will follow.

Even though the fintech transformation is happening quickly, banks are trying to adjust as well. Some of them are running accelerators such as the Barclays TechStars, others are opening separate divisions, for example Citigroup established its own Fintech unit. Thanks to this department that is focused on rapid prototyping, Citi plans to release a mobile-banking app with a cool facial recognition feature by the fourth quarter of 2016.

Fintechs are making it really easy and cheap to:

1. Transfer money;
2. Keep one informed about all account updates across devices;
3. Make better financial decisions through analytics, accounting, budgeting, prediction, and decision-making software.

Forbes gathered a list of the most successful fintech startups of 2015. It contains companies that deal with trading and investing, lending, payments, personal finance, currency exchange, you name it! They all stand out thanks to their brand new idea or approach that brings value to their clients. Here are some of the fintech areas in which you can open a startup:

1. B2B payments;
2. Mobile apps development for the unbanked and underbanked population;
3. Creation of social media platforms with integrated financial options;
4. Sales platforms for fintech products, etc.

It is today’s digital customers and their high expectations who push the fintech transformation on, while the trends toward the Internet of Things and Augmented Reality will only spur innovation in finance. One must only identify the areas which have been neglected and find a niche where more value can be brought. Can you think of some other areas which you feel could use a healthy dose of disruption?

Blockchain business

How to Make Money in the Blockchain Business?

Blockchain business is getting more attention than bitcoin and that is because blockchain can be used in a multitude of areas. By being an early adopter of the technology one can make good money out of the blockchain business.

What is blockchain?

Blockchain is a shared database technology – a digital ledger of transactions, agreements, or contracts. The ledger is not stored in one place, on the contrary, it is stored on a network made up of thousands of nodes (computers) from around the world. Blockchain keeps track of every transaction, which gets recorded in “blocks”. These blocks provide proof of who owns what at any given point in time. Each node on the network must approve a transaction before it is recorded in a new block and added to all previous blocks, forming a “chain” of computer code. If one node does not approve the transaction, it does not take place. This makes it virtually impossible for anyone to interfere with the system unnoticed. Security makes the blockchain so appealing for many businesses.

Since all transactions are seen by everyone in the network, transparency is another appealing feature of blockchain. Blockchain allows for faster transactions that are not processed manually, which leads to efficiency and thus lower costs.

No wonder why banks such as Barclays, J.P. Morgan, UBS, Citi, Societe Generale and others are investing in the development of decentralized ledgers.

Where can it be used?

As it was originally designed for bitcoin, blockchain can be primarily used in the financial sector to make money transfers. The technology is used in trading platforms. For example, platform is based on the blockchain.

It is used by companies in the file sharing industry. Storj is a blockchain based cloud storage where one can rent a drive for a competitive price.

The health industry can benefit as well. Pharmaceutical companies could tag drugs with identification numbers on a blockchain, to track goods through the supply chain and cut theft and counterfeiting. Block Verify has recently completed the first stage of a pilot programme to test its system on pharmaceuticals produced by a Swiss manufacturer.

Painters and interpreters can use the technology to verify art pieces and to prevent piracy.

More importantly, distributed ledgers can be used by governmental institutions. The Estonian government is using a form of blockchain technology for the system known as Keyless Signature Infrastructure (KSI). Its aim is to provide digital signature-based authentication for electronic data. It allows citizens to verify their records in governmental databases. KSI has helped launch the E-business register and e-tax, which have contributed to the reduction of queues and stress levels, and to the acceleration and automation of processes.

These examples demonstrate how blockchain technology can be used efficiently on a large scale.

Who can earn money out of a blockchain business and how?

There are currently five categories of people who are making money for working in the blockchain business:

  1. Software developers and architects who specialize in cryptocurrencies and decentralized ledgers.
  2. Blockchain experts who offer their consultancy services to businesses.
  3. Project/Product managers who can develop and execute a distributed ledger technology strategy and coordinate the resources.
  4. Fintech content creators who have a deep understanding of the industry and can shed light on the current situation and its probable evolution.
  5. Blockchain interns who are learning about the field are the future of tomorrow’s blockchain business.

Considering that big players in the financial market are interested in the blockchain technology, it is going to mature in the future. Once institutions reach a point where they have created proprietary decentralized ledgers they will want to connect with other organizations. This creates new business opportunities to design connecting solutions among institutions that are not using the same distributed ledger. The blockchain business will need more professionals who can facilitate its development, because it has a tremendous potential to spread to a wide range of industries.

Did we miss anything? Do you have other ideas on how to use blockchain for profit?

How to Use Mobile Banking Apps Securely?

While the amount of people who are using secure mobile banking apps increases every year, customers of online banking set themselves up for security threats, frauds, and other forms of cybercrime when using their smartphone.
According to a 2014 Deloitte report cited by Tripwire, 61% of people who do not use mobile banking apps said that security is their primary concern. So how big are the chances that someone can break into your bank account really?

In 2014 a malware called Svpeng has been detected in the U.S., the U.K, Switzerland, Germany, Russia and India. In the States the malware blocked the user’s phone and asked for $200 to unlock the smartphone. Once Svpeng got into the phone it began to look for applications from a range of financial institutions. The Trojan did not steal money or credentials, but rather it looked as if it was gathering statistics on mobile banking apps usage.

In Australia and New Zealand, a malware called Android/Spy.Agent.SI has been detected on Android devices this year. This time, the malicious software was able to steal a person’s bank details and even knew how to bypass 2-step authentication procedures. With all information in hand, fraudsters could easily transfer funds to a different account. Most importantly, the malware had not come from Google Play. The user would have had to deliberately install the application from other sources online, which means that security options had been changed by the phone owner so that applications from unknown sources could be installed. The takeaway: Don’t root your device and then install banking apps on it!

It is useful to know that iOS or Android smartphones don’t allow users to make admin-level modifications natively. Additionally, a verified market is available for downloading applications such as the App Store or Google Play. Mobile banking apps should also be secured by SSL security technology . Many large companies put their applications through source code obfuscation. This means that it will be more difficult for an intruder to figure out the source code.

Even though a lot of security features are currently in place in many apps, mobile banking applications still have security challenges that must be tackled. Security is one of the main concerns for financial institutions. People who wish to use mobile banking also need to keep security in mind. Finally, here are some useful security tips:

1. Don’t use mobile banking apps on a rooted or jailbroken device
2. Don’t download apps that did not undergo a vetting process (by either the App Store or Google Play)
3. Use secure Wi-Fi connections whenever possible
4. Put a password on your smartphone.

By following these recommendations, you will minimize security risks and diminish the odds of falling prey to cybercrime.

Voice recognition banking system

Is a Voice Recognition Banking System the Future of Online Banking?

With a voice recognition banking system you will finally be able to forget passwords, card verification numbers and PINs. Latest biometric technologies now allow you to use your voice to log in to your bank account.

Today customers are using web or mobile banking applications to check their bank accounts. The financial brand has conducted a research during the last 5 years and examined the analytics data from over 100 banks, financial institutions and credit unions. They found that over 85% of customers log in to online banking, check their accounts, spend 2-3 minutes on the platform, and log out.

Recent innovations in voice recognition banking systems provide secure access to both information centers and accounts within seconds. In such a system the customer’s voice is verified against prerecorded and stored voiceprints, solving the problem of forgotten passwords once and for all. Also a voice recognition banking system brings more accessibility to blind or partially sighted people, which is a significant benefit in itself.

Barclays introduced a voice recognition banking system in 2013 for some of its customers. The solution reduced the authentication process by an average 20 seconds. At the same time, it minimized identification and authentication issues on the customer support side. As a result, customer satisfaction levels increased.

Banks will soon be able to give their customers the possibility to check accounts and make transfers by talking into a device. This has its advantages and disadvantages. For example, customers will be more focused with a voice recognition banking system in place. It  may be more difficult to attract customers with ads as customers likely won’t check their bank’s online banking system as often as they do these days.

A voice recognition banking system will provide a lot of data for analysis that hasn’t been available previously. For example, data on the customer’s voice tone, location, or average speech tempo will now be available. Based on this knowledge, banks and financial institutions will be able to sell more high-end products such as financial planning tools, loans or consultancy services. When the customer is in a good mood they might be more willing to discuss an offer.

Dan Miller, a senior analyst at Opus Research, notes that in the long run, other industries such as insurance companies and telecom companies (but also government agencies or even retailers) will take advantage of a voice-based authentication system to serve customers in the most personal and efficient way. This is probably the best time to make a decision and offer your customers an innovative tool to log in to your system.

What do you think about voice-based authentication systems? Can you think of other benefits of such a platform? Share in the comments!