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thefintech.info

FUTURE OF FINANCE – HERE’S WHAT LIES AHEAD

Several important trends that have been going on for a while and have been significantly accelerated by some recent events, including the pandemic, will define the future of banking. To that end, the increased use of mobile banking and electronic wallets and the associated shift away from cash will continue, especially in developing nations with a growing middle class that is likely to outpace the conventional model of the growing middle class leading to an increase in consumers using traditional branch-based banking products before eventually transitioning at a later stage to more mobile-based or e-money banking solutions.

Consumers are increasingly choosing more practical and affordable digital banking options over traditional branches, which has fueled the growth in popularity and market share of companies like Revolut, Wise, and N26 in recent years. Yet the majority of these businesses continue to operate at a loss and require ongoing outside support.

Future predictions indicate that “Neobanks” will gain market share as they serve a customer base that is more diverse and price-conscious. The widespread application of artificial intelligence (AI) and machine learning (ML) for fraud detection as well as user identity and funding source verification is a new trend in this industry. Many financial institutions’ Know Your Customer (KYC) and Anti-Money-Laundering (AML) processes and capacities are effectively becoming digitalized as a result.

Crypto assets

How can crypto assets fit into this future given these developments in the existing centralized financial sector? By providing novel and more effective models, without the requirement for a centralized middleman for the verification or validation of transactions, Blockchain and Distributed Ledger Technology (DLT) fundamentally aim to rewire how our financial systems and processes operate. Despite the years of anticipation and excitement surrounding the technology, there are undoubtedly advantages and disadvantages to this decentralized future vision. Due to the lower transaction throughput afforded by current centralized systems, fully decentralized blockchains like Bitcoin are currently not practical to utilize at scale. This is one of the key barriers to the widespread adoption of crypto assets as a means of payment.

Recent developments have seen centralized systems attempt to incorporate DLT and blockchain components as potential fixes for the scalability issue that has long plagued truly decentralized blockchains. Central Bank Digital Currencies (CBDCs), which are currently being developed by numerous central banks worldwide, are a notable example of this on the payment side. These would have the benefits of DLT and blockchain while allowing governments to preserve some kind of control over their toolbox for issuing currency and maintaining stricter oversight of how these assets are used.

Disruptive potential

The disruptive potential of decentralized finance has recently attracted a lot of promise and curiosity (DeFi). Smart contracts, which were first presented by the Ethereum blockchain, have served as the underlying technology and trusted framework for the development and deployment of DeFi protocols. The disintermediation of procedures in the conventional banking industry is one of the main benefits of DeFi protocols. Decentralized exchanges, stablecoins, lending, insurance protocols, and other forms of this technology exist alongside the family of applications known collectively as DeFi, which aims to challenge established financial institutions.

With the recent algorithmic stablecoin shakedown, we saw a historically large amount of cryptocurrency wealth go in a matter of days, losing more than $40 billion in value. The fallout from this stablecoin collapse was felt widely across the asset class, and while the price of cryptocurrencies immediately corrected sharply, the DeFi ecosystem lost its reputation as a reliable technology that could compete effectively with centralized financial institutions. Since the start of the year, the Total Value Locked (TVL) in DeFi protocols, a crucial metric for evaluating the volume of activity and overall worth of DeFi protocols, has dropped precipitously. More than $230 billion in value was locked into all DeFi protocols at the beginning of the year, compared to less than $100 billion at the moment, more than half since then.

We regard recent events as a constructive recalibration of risk/return in this area, even though we think it will take some time for the wounds from the recent stablecoin shakedown to heal. We continue to believe that once peace returns, traders may return to the DeFi market in an effort to profit from reduced, more sustainable, yet nonetheless alluring rewards from DeFi operations.

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thefintech.info

ELEVEN WAYS TO ADDRESS RISING FUEL COSTS

Companies all throughout the world, particularly retailers, wholesalers, transporters, and logistics service providers, are experiencing the effects of increased fuel prices. Diesel prices increased by 65% in the US, 58% in Canada, 28% in Germany, and 36% in the UK in May 2022 compared to the same month last year.

Few businesses have made major attempts to solve the issue, despite the difficulties that increasing fuel costs provide for these industries. Fuel prices typically fluctuate, but the current situation is unlikely to change anytime soon.

Fortunately, there are methods to lessen the worst consequences of the financial load, and the steps businesses take today to lessen the impact of gasoline costs may even pay them later when prices start to decline.

Although the demand is a significant element in driving oil prices, it is by no means the sole one. Oil prices are determined by the whole market, not always by a particular nation. The location of the oil’s extraction and refinement as well as the fact that numerous grades need particular processing are additional factors.

The invasion of Ukraine by Russia and the ensuing government sanctions have irreparably damaged the world’s supply lines. Even in the event of an end to hostilities, sanctions are not likely to be lifted very soon. Thus, the price of oil will keep rising, as will the price of fuel.

The entire organization, not just the transportation division, must be involved in the solution to the problem of excessive fuel prices. Here are 11 steps you may do to lessen the effects of rising fuel prices.

  • Implement a surcharge for incremental fuel costs.

Often companies will have fuel surcharges already built into customer contracts. Don’t be afraid to use them. Apply surcharges to new purchases or renegotiate existing agreements. Customers may push back, but even a percentage of what was originally requested can make a big difference.

  • Implement dynamic service pricing.

Customers who don’t want to pay more may be willing to accept slower delivery estimates if it keeps their costs low. If they’re given a range of delivery pricing at the point of purchase, they can determine whether they want to choose premium delivery times or slower, lower-cost options. For those who want to pay less, choose slower transportation modes and longer delivery lead times. Delay shipments to consolidate multiple orders from the same customer or from several customers in the same region. Change TMS or route planning system optimization parameters to prioritize slower modes and shorter distances. This approach will make the delivery operation more productive, driving down fuel costs and driver hours.

  • Focus on driver performance.

Drivers can use more fuel when idling or driving too fast. To reduce the fuel each trip takes, encourage drivers to reduce their speed, keep idling to a minimum and stay on well-paved roads when possible.

  • Optimize vehicle performance.

Conduct regular vehicle inspections to ensure that engines are tuned and tires are at the proper pressure to lower fuel consumption. Telematics solutions can also monitor the health of the vehicle as well as driving behavior. They can help fleet operations catch declining vehicle performance early and facilitate driver coaching to help drivers reduce their fuel consumption.

  • Challenge carrier fuel surcharges.

Ensure that increases in carrier fuel charges are a direct result of their own increased fuel costs. Ask them to share the details behind the proposed increases so you can confirm the additional fees are necessary.

  • Collaborate with your carriers and customers.

Increased fuel costs present an excellent opportunity to collaborate with other members of the supply chain. Together, you can identify practices, policies, and operational conditions that decrease your collective fuel consumption. Ask for input from both your carriers and customers about how your business can reduce fuel consumption and lessen the burden of the increased costs.

  • Optimize your network.

Over time, logistics networks can become suboptimal. This can happen when customers come and go, buying patterns change and new products join the market. Network optimization can take those changes and rebalance the logistics network to reduce fuel consumption. Focus on service policies, operational strategies, and other “soft” considerations as opposed to bricks-and-mortar to deliver results more quickly—then go back and look at “hard” stuff for greater benefits.

  • Rebid carrier contracts with a focus on fuel cost reduction.

In your existing contracts, you may not have given as much consideration to fuel costs, because they were written when prices were much lower. Now, with costs rising, those contracts can significantly penalize the organization. Softness in various modes of transportation and geographies presents an opportunity to rebid contracts.

  • Update route planning solutions.

Far too many companies still don’t use optimization technologies that could yield significant savings. Compare the capabilities of your legacy solution with its more modern counterpart. Not only are older systems less capable, but they’re also harder to use and often require manual workarounds that are less effective at reducing fuel costs.

  • Promote delivery density with customer steering.

Poor delivery planning can make a fleet less fuel efficient. Provide customers with delivery appointment options that increase delivery density. This can reduce the distance traveled per stop and lower fuel costs.

  • Prioritize eco-friendly deliveries.

More customers want delivery options that cause minimal harm to the environment. Eco-friendly deliveries reduce carbon footprints and result in lower fuel consumption. Customers are happy, the environment benefits and the seller saves on fuel.

Rising fuel prices can be a heavy burden for businesses trying to keep up with a volatile supply chain. But with these resources, firms may take advantage of the current scenario to their advantage and position themselves for long-term success.

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thefintech.info

FINTECH IS CHANGING SUPPLIER MARKETPLACES FOR THE BETTER

Moving boxes across nations is only one aspect of the supply chain, and there are other factors at play in the current global issue than just capacity and driver shortages.

Participants in international trade must deal with dozens of vendors and the difficulties that come with them, including moving and storing products, passing customs, navigating different legal systems and currencies, paying and receiving money from across borders, and fleet finance. Due to the fact that capital might become immobilized for months as a product goes through the supply chain, industry participants frequently face cash constraints. Companies can accelerate access to working cash by implementing financial services technology at each stage of the cycle.

Fintech-enabled markets are those “with tech-enabled financial services incorporated directly into the platform,” according to NFX, who coined the term. In general, markets serve as a way to address certain demands within a particular industry or niche. They eliminate the hassles associated with managing numerous vendors when used in the supply chain because all pertinent services are provided via a single platform. DealRoom estimates that this sort of marketplace has an enterprise value-to-sales (EV/sales) ratio of 6.7x, which is higher than the EV/sales ratios of 5.3x and 4.6x for financial services and other marketplaces, respectively.

In markets, a “virtuous cycle” is created. They can be used by businesses to locate vendors who can assist in shipping goods worldwide. More suppliers are interested in taking on new business as a result of increased demand, and as there are more suppliers available, more customers can find the ideal match for their requirements. Higher service quality benefits both sides of the market as demand and supply are better matched. Small and large businesses alike may compete and expand on their own terms thanks to better access to vital payment infrastructure and funding.

On the other hand, suppliers can grow their clientele. They are able to offer more solutions by gaining a greater understanding of their customer’s demands, and as a result, customers are more eager to divulge useful information. Making better business decisions is aided by the data layer for financial goods. Fintech-enabled markets also provide a better customer experience because more of their problems are handled in a single encounter, which reduces their pain points.

Companies get a competitive advantage by being given the freedom to concentrate on what they do best while someone else handles the logistics. If not, they would have to engage someone to oversee each vendor they work with and each logistics-related task. Instead of waiting for payment cycles of two to three times per year, small to medium-sized firms can invest their limited money in technology and processes that support growth.

The existence of an effective supply chain is insufficient. Fintech application to the process promotes progress for all stakeholders involved. It provides a means of addressing urgent problems with the flow of commodities, but it also opens the way to true supply chain business transformation. Marketplaces supported by fintech enable businesses of all sizes to scale and endure over time.

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thefintech.info

ACCOUNTING VS ECONOMICS: KNOW THE DIFFERENCES

The first question a student has when taking these disciplines is, “What are the similarities and differences between accounting and economics?” Both fields mostly work with numbers. However, accounting is concerned with gathering, evaluating, and disclosing income and costs. The production, consumption, and transportation of goods are the main topics of economics, a subfield of social science.

Accounting deals with monitoring the movement of money for both businesspeople and private citizens. The major monetary and economic trends are monitored by economists.

Both words are useful when making financial decisions, establishing economic policies, and making long-term plans for businesses and governments.

Economics is more on the theoretical side, while accounting is more on the numerical side. Students, therefore, find accounting more challenging than the latter. For them to succeed in the course, they occasionally need assistance with their accounting assignments.

It’s sometimes simple to believe that accounting and economics are the same things. If you hold the same viewpoint, the subsequent piece will persuade you to adopt a different perspective on accounting and economics.

Accounting vs Economics: Key Differences 

Definition 

What is accounting?

All of a person’s or government’s financial records are kept in accounting. All of the data are kept in tabular form in accounting. There are rules for how we should record the completed transactions as well. Debit or credit, asset or liability, income, and expenses are the types of transactions that are accomplished in accounting.

What is economics?

The best approach to define economics is to say that it is the study of how society makes use of the finite resources at its disposal. It is the primary area of social science and concentrates on how products and services are produced, distributed, and consumed.

The two most often used economic statistics are GDP (Gross Domestic Product) and CPI (Consumer Price Index).

Types

There are mainly three types of accounting.

  • Financial Accounting
  • Cost Accounting
  • Forensic Accounting

Financial Accounting

a methodical procedure that individuals follow to produce results for a company.

Cost accounting

Any firm can use cost accounting to assist them to decide how much a product will cost. Everyone is aware of how crucial it is for any business to calculate the cost of producing a product. They use it to determine the price at which to sell their goods.

Forensic Accounting

It is a crucial area of accounting since it supports the inquiry process. It assists with gathering, retrieving, and restoring financial data. The construction of a framework is being expanded in scope.

Economics is further divided into two parts.

  • Microeconomics
  • Macroeconomics

Microeconomics

Microeconomics is used on a tiny scale. Microeconomics is the study of economic indicators for a specific business or industry. It might incorporate supply, demand, or macroeconomic factors that solely have an impact on one industry, for instance.

Macroeconomics

It functions on a bigger scale. The economic indicators like politics or the legal system of the government appear in this. For instance, only those factors that influence a company’s business operations fall under the category of macroeconomics.

Field of Study

You acquire the knowledge necessary to record and report a business’s transactions through accounting. They research important accounting topics like transactional rules and global accounting norms. You can obtain an accounting degree from any college to work as an accountant in a company.

You primarily study the various economic theories in economics, including supply and demand networks, various market systems, etc. It also involves examining the setting in which the company conducts its financial activities. To pursue a career as an economist, you can earn a bachelor’s or master’s degree in the subject.

Economics versus Accounting In these domains, various subjects are being researched.

Primary focus

Accounting is a crucial component of company. It deals with the examination and documentation of various commercial transactions. The primary function of accounting in business is to produce accurate financial reporting.

On the other hand, supply and demand chains for any form of good or service are the focus of economics. Analysis of business indicators for any business is the other major emphasis of this.

Applications

Making investment decisions and creating efficient control settings in a business are only two of the many other uses of accounting. Accounting is also used to make decisions about budgets and future projections.

In any company, supply and demand-related factors can be found using economics. It aids in explaining a company’s offerings as well as the key variables that affect its resources.

Utilization of data

Accounting makes use of the information and data gathered by using a few concepts and principles. When discussing accounting, these ideas and principles are crucial. Any accounting theory becomes creative accounting when management abuses it to shape results.

To produce any conclusion, economics needs facts gathered via research and assumptions. Whether or not the assumption is accurate is irrelevant. This occurs as a result of shifting business conditions for various companies.

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thefintech.info

HOW CAN BANKS SAFEGUARD THE LATEST GENERATION OF SCAM VICTIMS?

With everything from online banking and buy now, pay later (BNPL) services to cashless and contactless payments increasing in popularity, the days of going into a branch for our daily banking needs are long gone. Customers utilized one or more digital payment methods in 93 percent of cases last year alone, and BNPL services were used to make $100 billion worth of purchases.

Customers’ life could become more convenient as a result of the rise in internet banking. However, it also increases their vulnerability to deception.

The concept of the usual “weak consumer” has changed as a result of significant events around the globe and the development of scamming techniques. Scammers now have a much wider variety of potential victims, finding new victims and taking advantage of the weaknesses of various groups.

Covering a customer’s cash losses in the event of fraud is one thing, but if the consumer’s faith has been lost and they believe their data is not appropriately protected, reputational damage may be nearly impossible to repair. Adding more layers of security to websites and applications may have the unintended effect of degrading the user experience and leading users to switch providers.

Financial institutions, both old and emerging, are searching for novel ways to safeguard those who are susceptible to assaults. Behavioral biometrics, for example, is positioned to play a significant role in increasing digital trust and safety.

Cybercriminals are around every digital corner

There are cybercriminals everywhere in the digital world.
The methods used by internet fraudsters are always changing. Even if the universal implementation of two-factor authentication is an important step for online banking, scammers are starting to evade and undermine these security measures and are coming up with increasingly cunning ways to approach their targets.

The intended victim determines the type of fraud used. For instance, social engineering schemes have developed to comprehend human inclinations and patterns where victims are emotionally and psychologically persuaded to get money or personal information. Our analysis reveals that in 2021, these scams surged by 57 percent, with an average loss of $1,029 per victim. They prey on consumers just when they are most vulnerable, tempting them with offers of friendship or romance.

The threats continue as con artists use a multi-layer hybrid approach to mislead gullible victims. Fraudsters frequently reach thousands of victims in minutes by combining smishing or SMS phishing, voice scams, and remote access scams. They then employ bots to intercept one-time passcodes from the victims’ devices and get past bank security measures.

The evolution of the ‘vulnerable customer’

Cybercriminals are taking advantage of both historically non-susceptible people and those who are vulnerable in the current economic climate. Four factors—health, life events, resilience, and capability—are responsible for this. Never in our experience has the ability for all circumstances to change abruptly and profoundly been more apparent than it was during the pandemic.

Customers over the age of 65 continue to be a target for fraud, with an estimated $3 billion being stolen from them each year as a result of their higher credit ratings, ample resources, trusting attitude, and lack of technological expertise. Romance scams, impostor scams, lottery, and sweepstake scams are the most common techniques used on people in this age range, with victims of identity theft fraud who are over 60 accounting for 40% of all victims.

Gen Z, however, has emerged as a fresh target for financial crimes, mostly due to social media. In their direct messages, so-called “mule herders” are increasingly preying on younger clients who value convenience over privacy by enticing them with the promise of quick and cheap money.

Since the scammer uses this technique to trick users rather than interacting with the banking platform directly, it can be very difficult to identify. Mobile malware is a crucial component of Gen Z fraud as well; con artists intercept multi-factor authentication and take control of the target’s operating system via bogus apps.

All customers need protection

Financial service providers should be able to offer the security that customers require because they demand convenience. Customers will switch to a provider who doesn’t place the burden of security on them if you keep making them jump through hoops.

Because cybercrime is dynamic, controlling fraud risk is a significant and ever-changing task. Customers are vulnerable to assault because authentication mechanisms haven’t changed as scammers have become more sophisticated. Financial institutions must acknowledge the weakness of knowledge-based authentication and one-time passcodes and search for solutions that go beyond the device, IP, and network-based approaches in order to provide comprehensive protection. To catch criminals before they commit a crime, they must examine user behavior.

The use of behavioral biometrics technology ensures that clients continue to have the seamless banking experience they want while identifying scammers through their interactions with online platforms. This system monitors thousands of characteristics, such as the amount of pressure used when typing, how online forms are utilized, and if multiple fields are copied and pasted, passively in the background of a user’s web or mobile experience.

To limit the risk of account takeover, behavioral biometrics can, for instance, in practice look for irregularities in digital interactions and detect “mule identities” on social media to find possible mule herders. It can also spot any social engineering fraud by checking for signs of foul play in the length of sessions and hesitancy in typing.

Scammers frequently change their strategies and targets. It has become obvious that new solutions are required to protect susceptible customers because hackers are equipped with the technology to trick financial institutions and circumvent two-step authentication.

The best approach to capture fraudsters is to watch and recognize their online behavior, whether it’s Gen Z falling for mule herders in their DMs or elderly victims of social engineering scams. Financial institutions may defend their clients from evolving dangers by using behavioral biometrics technology to provide seamless yet safe banking.

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HOW TO ATTRACT MORE CUSTOMERS TO YOUR ACCOUNTING FIRM ?

If you own an accounting firm, you’ll probably need a regular flow of new clients each year to maintain the health of your company and to take the place of any current clients who decide to part ways. However, since the majority of accounting firm owners are focused on running their businesses during the day, there may not be much time left over to concentrate on new business initiatives.

Additionally, it is common for the cost of acquiring new clients to go toward marketing expenses as well as other internal or external resources, such as a specialized agency. Your existing client turnover rate and any future ambitions, such as a desire to grow, will probably affect how much time and money you invest in acquiring new customers.

We’ve provided some fundamental guidance for accounting firm owners below, which should help them make better-informed decisions regarding the resources they should devote to new business ventures.

1) Improve Your Website

The public face of your company is its website. Making your website expert, beneficial, and appealing can help you attract (and keep) more customers.

There are systems like WordPress that are free to use and may assist you in creating professional-looking themes that are device responsive and search engine friendly if you have a very small budget. Make sure pages aren’t overloaded with unclear or irrelevant material in addition to having a professional template. On every page, you should also include a clear call to action (CTA), such as “schedule a consultation” or “contact us.”

Positive reviews and testimonials are one method to make your website stand out. Prospective clients will be inspired to learn more about your accounting firm after reading the good testimonials of your present clients. These potential customers will learn more about you and think more highly of you if you also add an “about us” section. Last but not least, ensure that the site loads quickly—ideally in less than two seconds—as slow-loading websites have been shown to boost bounce rates.

2) Use Software Tools to Improve Your Efficiency

It goes without saying that potential customers want to collaborate with an accounting business that completes jobs precisely, effectively, and promptly. Therefore, you must demonstrate to potential clients that you follow these fundamental principles if you want to acquire additional clients. Additionally, prospective customers will be much more willing to collaborate with an accounting firm that can assist them in automating activities and boosting productivity.

For instance, building a client self-service portal would not only save you time but will also be more effective and convenient for the client. Additionally, by collaborating with a trusted cloud-based accounting software vendor (s), your clients will have access to their data around-the-clock and from any place. Being more effective has the overall effect of giving you more time to focus on new business prospects while allowing prospective clients to recognize the advantages of working with you.

3) Focus on Digital Marketing

One of the most crucial and efficient ways to attract more customers is to increase your internet presence. The alternatives for doing this, however, are numerous, so you must ensure that you have a clear plan for what you want to do and how you are going to do it. Again, this will be determined by your objectives and financial constraints.

There are free hobbies you may attempt if you just want to dangle your toes in the water, like creating informative, helpful material for your blog. If done right, this can establish your accounting firm as a leading voice in the field, considerably enhancing your reputation and assisting you in gaining new clients.

Examine social media as a further low-cost option, and make sure your company is present on all pertinent social media networks (e.g., Facebook, Twitter, and in particular LinkedIn). To keep viewers interested and expand your audience, try to post frequently. An excellent strategy to develop the brand and reputation of your company is to post your content on social media.

4) Obtain Referrals

Many clients still prefer to locate an accounting firm through recommendations from friends, family members, suppliers, business acquaintances, etc., despite the clear influence of marketing. As a result of being explicitly recommended by someone they know and trust, referrals are typically simpler to “close” as a new client.

If your company is good and provides outstanding service, you should eventually start receiving organic referrals. Attending networking events, some of which are created particularly for business referrals like the BNI, may help you encourage this process.

5) Target High-Value Clients

Quality might occasionally outweigh numbers when it comes to gaining new clients for your accounting firm. You might want to concentrate on securing a select number of very valuable clients who are more likely to stick around over the long run rather than acquiring a large number of new clients who don’t each bring much financial worth.

It could be helpful to define your specialization and the areas in which your business actually excels if you want to attract these high-value clients. You’ll probably have a much better notion of which clients would be the best long-term fit for your accounting company once you’ve done this, and you’ll be able to start focusing your marketing efforts on these specific prospects. Additional excellent advice on how to get higher-value clients is provided in this eBook.

The majority of small business owners, as noted in the beginning, favor working on the day job above marketing and bringing in new clients. However, it’s also true that ignoring these two tasks for an extended period of time could eventually put your accounting firm at grave risk, so it’s crucial to have a plan in place based on your goals.

There are various lower-cost activities to assist you to get started, as mentioned above, so doing this doesn’t necessarily require spending thousands of pounds on additional employees, advertising, or agency costs. There is always the alternative to invest more resources to try and accomplish the objectives you have set out in case these do not produce the number of new clients you require.

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RISING STAGFLATION RISKS ARE CHANGING THE INVESTMENT PLAYBOOK

For decades, investors have relied on a 60/40 portfolio — a mix of 60% stocks and 40% bonds — for steady growth and income. But rising stagflation risks are raising the possibility of a “lost decade” of returns for investors in these balanced portfolios while changing the playbook for portfolio construction, according to Christian Mueller-Glissmann, head of asset allocation research in Goldman Sachs Research, and Maria Vassalou, a co-chief investment officer of Multi-Asset Solutions in the Asset Management Division, in the latest episode of Exchanges at Goldman Sachs.

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