How Technology Is Improving Finance – And How It Could Ruin It Too
Technology is not what it used to be.
Of course, it still keeps with the promise of making life easier and better, but it has been modified to do so with almost any industry it lays hands on. That is ensuring a more global approach to the workings of tech than its former, limited usage.
Working together with the finance industry in a marriage dubbed ‘fintech,’ we look at the various ways by which tech is transforming this scene, and possible concerns to look out for.
The Place of Technology in Finance
It is easy to think of technology in terms of the things we can see – better automobiles, improved computers, faster smartphones, and so on. When it comes to the services it renders, though, the impact can be seen to be even bigger than what we have on other fronts.
Without beating about the bush, some of the ways by which technology is seriously disrupting the financial model are:
1 Convenience
Paying for stuff used to be a hassle in one form or the other. While cash payments are still supported in some places, there is a limit to what can be paid for in cash. That brought about the innovating of credit and debit cards – and how they eliminated the stress, hassles and clamor for change from the buying process.
Today, fintech has taken that to new levels, and in more ways than one.
These cards can now be linked to apps (like PayPal, Payoneer, etc.) which enable making faster payments to vendors, friends and family over the web.
In fact, that is not as impressive as the in-built payment system which comes with most devices today (Apple Pay for Apple smartphones, Samsung Pay for select Samsung devices, Android Pay for select Android phones, etc.). With them, convenience becomes a relatable concept – not just a word.
2 Big Data
Big data, as the name implies, refers to a huge mound of data collected from just about any source, usually online. The thing about big data is that it might contain a lot of noise – depending on the industry handling it and what they are looking for – but it does bring some actionable trends to the table too.
Analysis of big data shows various customer patterns, behaviors and traits which could be used to map out courses of action for financial and banking institutions. By ‘course of action,’ we mean implementing changes that will suit the customer, developing value-added services tailored to their specific needs, and much more.
3 Anonymity
Different people need to make anonymous payments for different reasons. Undercover journalists abroad, refugees or political activists, among others, might need to receive/ make sensitive payments without blowing their covers.
This becomes almost impossible with the current tracking measures of banking institutions today.
Technology solves that problem by introducing cryptocurrencies (such as bitcoin) into the loop. Not only do they allow for anonymous account setups, but transactions also can almost never be traced to the source that made them.
That solves a big problem which technology has always been after – freedom – and it does so in class too.
4 Speed
If we have not already mentioned this, speed is perhaps one of the biggest advantages of fintech for both the banking institutions and the customers too.
A ton of banking and financial operations which would have required the presence of a customer at a physical bank branch can now be resolved online: all of making complaints, depositing funds into other accounts, opening an account, getting investment advice, etc.
This not only makes banking operations faster, but ensures financial institutions can allocate their resources better. Members of staff get allocated to more serious projects rather than having to worry about routine tasks, giving them even more job satisfaction.
The Ugly Side of Fintech
For all the promises that fintech brings on board – and which it is already delivering on – technology does bring some flaws to the table. Given that these disruptions will leverage an internet framework to operate, the possibility of internet attacks and cyber breaches can simply not be ruled out.
One of the most notable cases that comes to mind is that of the Carbanak gang. Over the course of two (2) years, they succeeded in robbing more than 100 different banks of about $1 billion. That’s billion with a ‘b,’ and these banks were based in 30 different countries of the world.
If banks can be targeted, and to the tune of such amounts, users of fintech protocols need to protect themselves against these attacks. Fortunately, you don’t have to pay through your nose to have a security protocol around your money. Simply:
- Set secure passwords for your accounts – and never share them with anyone.
- Always access your financial accounts using an encrypted network In the same vein, never access sensitive financial data over a public/ free Wi-Fi network.
- Enable two-factor authentication on your accounts for improved security
- Beware of phishing emails. They already account for over 90% of all social engineering hacks, so they are a truly serious threat to avoid.
- Never open your financial accounts on untrusted computers.
- Keep your credit/ debit cards and other financial details as safe as can be.
- Check your activity log (if available) frequently to see if unusual activity (such as logins) has occurred on your account.
Article written by Chris Jones @TurnOnVPN
