Posts tagged: banking

How Fintech is Transforming Finance

changing financeInnovation has caught up with the rigid and highly lucrative business models used by bankers and insurance companies worldwide for decades. Today these financial models are being challenged by a vast diversity of what is known as “fintech” innovations coming from all sides of the ballpark including, but not limited to, crowdfunding, peer-to-peer lending, mobile payments, bitcoin, robo-advisers and more which offer a wide range of possibilities to consumers seeking credit card relief. .

However, the adoption of new financial technologies doesn’t necessarily mean that the business models of the financial industry will be disrupted, only that more options are available with which to create business transactions using new technologies. In the past, the financial institutions and their financial services have been unscathed by the evolution of technological innovations as was the case during the 90s with direct banks and digicash which never got off the ground. In part, this trend is due to the regulatory nature of traditional finance. Today, there are many options available to consumers looking for lower rates and debt relief.

The latest report published by the World Economic Forum may hold the key to the transformation of the financing industry after interviewing dozens of financial strategists and industry experts from international organizations who discussed the future of the financial sector with top fintech innovators. The results of this research suggest that the bigwigs of financial services might restructure their models and are looking into new ways of rethinking the fundamentals.

The following fintech effects may be the new game-changers in the financial sector:

1. Launching specialized products and services

In the past, innovators focused on replicating the entire banking system. However, these models could only be adopted by consumers who were high-flying new tech adopters or those high-efficiency conscious. This scenario has changed in recent times to allow customers’ needs and industry profitability to meet at a cross section where consumers from multiple devices can access the best and most valuable industry products by consumers from multiple devices. One perfect example of this shows how money transfers can be made across any boundaries in a matter of minutes, where it used to take several days and very high fees. The UK company Tansferwise, which has reached the US market as well, is an industry leader introducing an innovative network between banks that allows transfers to become more readily accessible and at a lower cost to consumers. Transferwise oversees the remittance of more than $600 million each month. In the US, the company Zelle is an example of a money remittance business model by which money transfers within the US can be made from any place using email accounts as its security exchange base through an app.

2. The automation process of commodities

Technical progress has made it possible to automate manual processes that have traditionally been very cost intensive and only available to industry magnate. New customer groups now have access to services once reserved for just a few. The automation of wealth management services has made this possible with robo-advisers for such companies as Wealthfront and Nutmeg who offer investment advice and strategies to reduce taxes through an online portal accessible to anyone who registers with the site. The outcome of this innovation has made it possible for the younger and less wealthy consumer to be informed and acquire knowledge about investment and tax minimization that was once only for the elite consumer with high stakes. Everyday regular consumers can receive the advice and support they need for credit relief and therefore increase their savings and credit efforts to an upper stratum eventually becoming eligible to enter the high-rollers’ game.

3. Big data strategies

Bankers and insurers make decisions based on consumers’ credit scores, driving records, and health conditions before lending money or opening a policy. However, mobile devices are now able to stream real-time data making it possible to access new data to support financial decision-making. For instance, the creditworthiness of a customer is now also based on the social media analyses made by companies like Friendly Score, which provide additional data about businesses and individuals. If a business receives much traffic, or visits to its website, likes on its FB page or has many great reviews, this is an indication that the company is well respected and perceived in the community and industry where it operates. This information may influence the decision-making process of lenders for customers seeking credit relief as they are deemed a lower risk by their outstanding social media presence.

To offer customers better prices and help policyholders make sound decisions, Oscar, a new type of health insurance provider offers its clients a free fitness tracker that rewards them for choosing a lower risk management lifestyle by choosing the treadmill over the couch with monetary incentives in the form of rebates for premium payments.

4. Low-capital-platform-based

By connecting buyers and sellers over a digital platform, companies like Uber and Airbnb have made exponential capital growth while their initial startup costs have been simply flat. Noticing this capital-efficient business model, financial innovators and top US marketplace lenders like the Lending Club and Prosper, have seen their consumer credit and loans originations more than double in the past two to three years. Impressively, the Lending Club alone issued $3.5 billion in loans in 2013, making it the fastest growing consumer lending platform in the marketplace. An estimated $1 trillion in consumer credit relief will be issued globally by 2015 according to Foundation Capital Analysts. What is more outstanding is that these companies have not put forth any of their capital to achieve this exponential growth. Their service provides a setting where lenders and consumers in search of better rates for credit relief meet with a wide range of financial institutions such as hedge funds looking to make investments.

A similar landscape is seen in the crowdfunding platforms that have topped the digital marketplace of possibilities for businesses looking for seed capital. In these platforms an array of investors and start-ups looking to match their goals allow the crowd to help them make the funding decisions that will, in turn, give investors a piece of the pie.

5. Collaboration between the old and new

Innovators are usually perceived as disruptors of an industry instead of complementary of it. However, this is not the case with fintech innovations. Fintech investors are seeing how they can compete with industry leaders in specific areas using different strategies while being backed up by the scale and infrastructure of traditional financial institutions. On their part, conventional financial institutions realize the advantage of collaborating with new technologies in their industry. New developments and research offer a broader perspective on how the two can work together for a better customer service experience and lower risks. An example of this synergistic relationship is ApplePay which became a top fintech innovation in recent times working with Visa and MasterCard through a payment network. Likewise, regional banks are joining forces with marketplace lenders to meet their customers’ needs when they can’t provide loans for them, and thus, lower the risk of losing customers to other financial institutions.

While fintech innovators are more than just industry disruptors, only time will tell how they will force the traditional banking and financial services industry to change. As a result, consumers will be the ones to benefit as their needs are met at a higher pace and their knowledge base and accessibility of services increases. However, the brand names we are accustomed to won’t necessarily disappear, especially when they embrace change and learn to collaborate with the intruders.

Why you should Fintechs instead of Private Banks for your credit requirements

banking servicePrivate Banks have always been the leaders as far as offering credit products are concerned. This has however, changed in recent times, thanks to the emergence of Fintech companies. Popular surveys have indicated that Fintechs command a larger market share in the lending space, and this has occurred due to a lot of reasons. While we look at these reasons, we’ll go on to determine why Fintechs are a better option than traditional lenders for instant personal loans.

Turnaround time for loans from Fintechs vs turnaround times of banks

The equation is quite simple and straightforward actually. While traditional lenders take at least 7-8 business days to complete the processing and subsequent disbursal of your loan amount, Fintech companies boast ridiculously low turnaround times of 24-48 hours.

Eligibility Parameters – Fintechs vs Traditional Lenders

Traditional lenders generally have stringent eligibility parameters as far as the credit score, income and other parameters are concerned. For starters, applicants need to have a minimum credit score of 750 to qualify for a personal loan with a traditional lender. However, most Fintechs allow individuals with low credit scores to apply for loan, with the more popular ones such as Fintechs requiring scores of as low as 575 to become eligible. As far as the income parameter is concerned, top private banks require applicants to have minimum monthly income levels of at least Rs. 30,000 to qualify, while on the other hand, Fintechs allow for income levels starting at Rs. 20,000 per month.

Processing of application – Fintechs vs Traditional lenders

Fintechs are literally the reason why instant personal loans have evolved. Unlike traditional banks that haven’t shifted completely to paperless and digital processing, Fintechs have made the transition to a digital and paperless application, thereby saving a lot of time and resources. Moreover, applicants can get instant approval when the apply for a loan based on their credit assessment – which is performed by a credit assessment algorithm – allowing them to choose a different lender if they face rejection.

Different Cash Management Services, Fees Charged by Banks in India

cash management servicesCash management primarily means the proper collection and disbursement of funds. This is an important task because it is beneficial in maintaining the cash flows for any company. Conventionally, it was a paper-based system and entailed several risks like higher processing costs and security.

The cash management services have undergone significant changes. Banks think from the point of view of their customers and offer doorstep facilities for their customers’ benefits. Efficient services ensure effective collection and payment as well as accurate disbursals of cash.

An efficient cash management system has the following four benefits.

1. Reduces transaction time
2. Helps companies to increase their net profits
3. Decreases losses for businesses
4. Saves idle time for banking customers

Meaning of cash management system

An efficient cash management service is a process where the bank makes collections and payments on behalf of the customers. The entire procedure is quick and streamlined because of the banks’ wide network. Furthermore, the robust clearing infrastructure, specialised technology to provide timely and efficient management, and tie-ups with other banks are beneficial for customers.

Basic cash management services

• Receivables and collections management
• Advanced information technology (IT) solutions for providing customization
• Post-dated cheque management services
• Collection of cheques in bulk
• Multiple electronic funds transfer mechanisms
• Cheque purchasing facility

Management of payables

Under the cash management system, banks also offer the following payment management services.

• Refunds of investments made in Initial Public Offerings (IPOs)
• Interest and dividend warrants
• Issuance of bulk demand drafts for the bank as well as network banks
• Remote printing of various instruments like pay order or demand draft
• Writing cheques for network banks as well as home bank

Escrow services

Banks also offer escrow services for their customers. Some of these are as follows:

• Availability of escrow depository accounts facility
• Structuring transactions and deals with investment banks, clients, and lawyers
• Customised reporting and management information system (MIS) as per client requirements
• Dedicated team for completing complicated transactions, which includes legal officers and product managers

Modes of delivery

Banks provide cash management services to customers through the following two modes.

• Own personnel
The banks recruit personnel for providing these services to their customers

• Agents
Under this mode, banks outsource the services to external agents

Electronic fund transfers

• National Electronic Fund Transfer (NEFT)

Such transactions occur between the destination and transferring banks. These transfers may be done on all days except Sundays. The transactions are completed in twelve batches (between 8am and 7pm) on weekdays and six batches (between 8am and 1pm) on Saturdays.

Fees payable per transaction are as follows:

o Up to Rs. 10,000: Rs. 2.50
o Above Rs. 10,000up to Rs.1lakh: RS. 5
o Above Rs. 1 lakh up to Rs. 2 lakh
o Above Rs. 2 lakh: Rs. 25

• Real Time Gross Settlement (RTGS)

Such fund transfers are executed in real time without any waiting period. There is no limit on the amount that may be transferred through RTGS. However, users need to transfer at least INR 2 lakh (with no maximum limit) through this mode.

Fees payable per transaction are as follows:

o Above Rs. 2 lakh to Rs. 5 lakh: Rs. 25
o Over Rs. 5 lakh: Rs. 50

• Immediate Payment Services (IMPS)

Most electronic fund transfers occur through NEFT or RTGS services. However, these occur in batches, which may result in delays. To overcome this, the National Payments Corporation of India (NPCI) introduced the Immediate Payment Services (IMPS). This service is available to Indians and allows users to transfer funds through their mobile handsets. This inter-bank transfer service is available on all days for 24 hours.

Fees payable per transaction are as follows:

o Up to Rs. 1 lakh: Rs. 5
o From Rs. 1 lakh to Rs. 2 lakh: Rs. 15

Banks are focusing on providing better services to their customers. Cash management system helps customers reduce their risks and manage cash flows more accurately.

77 Features of Mobile Banking

money in mobileSmartphone usage is on the rise across India and this has revolutionized banking, as phone users can use several mobile banking apps that improve convenience and efficiency. Banking institutions adopt new technology and increase their product offerings to retain and expand their customer base.

Mobile banking services are experiencing rapid growth and innovation, with the aim to incorporate cutting-edge technology in financial services. Opting for these services gives users different benefits, such as convenience, time saving, and flexibility.

Mobile banking applications have several interesting features that allow users to view information, perform transactions, and enjoy other value added services. Some of the features include:

Viewing

  • Bank account overview and transaction history
  • Track term deposits
  • Scheduled payments
  • Statement request
  • Credit card statement
  • Demat account overview
  • Investment details

Transaction

  • Fund transfer through NEFT, RTGS, One-time transfer without adding beneficiary or message money
  • IMPS money transfer
  • Payments for mobile bills, utility services, direct-to- home recharge, and credit card
  • Service requests for debit card, credit card, or cheque books
  • Bookings for flights, hotels, and other services

Applications

  • In My Kotak you can customize and personalize your home screen
  • Modify different settings for your account

Benefits of Mobile Banking

  • Convenient – Users do not have to visit bank branches, travel agents, or utility-service providers. You can do more than just transfer funds, with some mobile banking apps even allowing you to recharge your mobile or DTH connection, make flight and hotel bookings, and lots more, all through your smartphone.
  • Flexibility – Mobile banking in India has grown so rapidly, increasing versatility, allowing users to perform a wide variety of transactions that were previously unheard of. The message money feature, in Kotak Bank’s mobile banking app, even allows you to send funds to friends, relatives, and associates through a messaging service!
  • Safe – Almost every transaction done through your mobile phone requires authentication. Moreover, the bank will usually send you an SMS whenever a transaction happens in your account. Any mobile banking apps require 2-level authentication to prevent mobile fraud. Users need the login password (MPIN) and the activation code for authentication.

Almost every private and public sector bank in India provides mobile banking services to customers, but the services offered by some banking apps are exemplary. The app from Kotak Mahindra Bank is notable in this regard. Some of the innovations give users the ability to customize settings, setup transactions and view information. This adds several benefits to the user experience.

Settings

Certain mobile banking apps allow users to even customize their banking settings. This means that users can:

  • Add or delete multiple customer relationship numbers
  • Personalize the Home Screen

Transactions

Banking transactions are redefined with mobile banking, as they are no longer restricted to fund transfers or payments. Users can perform the following actions:

  • Money transfer – Through RTGS and NEFT
  • IMPS fund transfers – generating one-time password for IMPS2M
  • Customer can view/modify the MMID
  • Bill payments – utility services, mobile or DTH services, redemption requests, balance transfer, purchase, cancel request
  • Service requests – request add-on card, auto debit for credit card payments, report lost or damaged cards
  • mStore – Book flights, buses and hotels

View

Users can also track their financial activities, not just in terms of transfers executed via the app. You can access and update information related to the following:

  • Activity – bank account, Demat account, investments, and credit card
  • You can also create or modify your profile, if you’re the primary CRN, go to Settings> Mange Profile and change the CRN, the same goes for modifying one. This is only applicable if you’re the primary CRN.
  • Financial History – Credit card summary, bank account summary, My investments, bill pay, mobile recharge, JIFI

Technological innovations are driving rapid growth across all sectors and banks are taking the lead by offering new and improved services to customers. The scope of mobile banking is only likely to grow in the coming years.

Online Resources That Can Help You Swiftly Organise Your Finances

online resource to earn financeOur finances are our bread and butter, the feature of our lives that makes everything tick. With taxes, cheques, loans, credit and mortgages, the whole thing can become slightly overwhelming. So, just what can you do to help yourself help your money?

The online space is a wonderful tool with many assets. This means there are no shortage of ways to pull your money organisation together, and here are but a few of them.

1. Online and mobile banking

It’s surprising to learn that so many people still aren’t banking online. In fact, in a relatively recent survey, it was revealed that only 51 percent of adults bank online regularly. What about that other 49 percent?!

There are certain stigmas surrounding online banking, and they’re understandable. They are generally believed by the older generations, and most of them are concerned with security risks. And while it’s true that online banking is as safe as you make it, it’s far more beneficial that just using a branch.

You can send and receive payments, check statements and open new bank accounts in minutes. In fact, it takes mere minutes to open a brand new bank account from the comfort of your laptop – I can attest to that. So, if you aren’t banking online or on the go yet, consider it. It could be the solution you need to better organise your money.

2. Receive financial supplies with the click of a mouse

The rise of online shopping and giants like Amazon has made it pretty easy to find a wide range of commodities on the internet. You can now order cheques online, buy bank books and even browse for credit and bank cards, to arrive within days. It sure beats the old-fashioned method of strolling down to your local vault and requesting some documents.

Part of the solution to organised financials is saving time. Just like online banking in point number one, you don’t have to lift a finger with the online space. You can order everything you need and check your bank statement within two minutes, while watching Game of Thrones.

3. Tracking income and expenses with ease

As many self-employed contractors and business owners will attest to, tracking finances is difficult. With the latest news that could see the introduction of a quarterly tax return, it’s never been more important to watch our money.

Luckily, it’s simple to do so. A service such as Google Sheets is a cloud-based spreadsheet creator, that can tot up your daily, weekly and yearly earnings with ease. What’s more, you can access it anywhere that has an internet connection, from the airport to the library.

4. Send invoices quickly and hassle-free

Jumping back into self-employment, businesses around the world will have heard of the dreaded invoice. If you forget to send it, you don’t get paid. It can be a hard document to organise, especially if you’re owed a lot of different amounts of cash. If your business wants to make money, you’ll need to use these documents every week – but how to do so efficiently?

Well, luckily, the internet is here to help. Using an online invoicing tool you can even schedule invoices to go out on certain dates. You could even line up your invoices for the next month, or two months. Additionally, like Google Sheets, many of these systems are cloud-based, so you can update them and send from anywhere.

Hopefully these tips have helped you somewhat. Our money is our most precious commodity, so give it the attention it deserves!