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The breakneck pace of the financial situation over the past few years has caught many of us off guard. Small businesses have been particularly hard hit suffered the most During the COVID-19 pandemic. Now fears of inflation and recession are once again hurting individuals and organizations.
In this environment, fintechs deploy technologies in investments, accounting, payments and more designed to help their clients weather the storm. For example, by automating manual invoicing and payment processes, fintechs save businesses time and money. By providing access to alternative investment options, fintechs give equity investors a chance to grow their money.
Fintechs have long been heralded as harbingers of innovation and disruption. Indeed, their business model is built on disrupting traditional financial services. But in recent years, fintechs have become more than just disruptors—they’re also enablers.
The trifecta of rising accounting fraud, record fines and a shortage of accountants has left small businesses struggling to keep up. For example, the Bloomberg Tax article “crisis” accounting deficiencies and turnover.
The Wall Street Journal also notes that “sanctions related to audit and accounting errors has increased nearly three times,” companies are forced to pay increasingly large fines for inaccurate reporting. If that’s not enough, a recent study highlights it accounting fraud is on the rise. Businesses are being attacked from all sides.
However, fintechs are using blockchain and artificial intelligence technologies to automate many of the manual tasks involved in accounting—from payroll to invoicing to fraud detection. Not only does this save the business time and money, it also frees up accountants to focus on more strategic tasks.
For example, a recent Hacker Noon article points out how NFTs “can be used to create falsifiable and verifiable invoices.” This not only makes fraud detection easier, but also makes invoicing faster and simpler. With an automated digital ledger — blockchain — businesses can be sure their invoices are accurate and up-to-date. A start, Bulla Networkit even uses blockchain for its entire invoicing, payroll and accounting process.
Democratization of investments
From the dotcom crash of the early 2000s and the Great Recession of 2008 to the COVID-19 pandemic and the most recent technical meltdown, today’s investors have faced some tough times.
The future doesn’t look brighter, The Economist notes that Generation Z can wait “returns sad” about investments. It is not surprising that many people are wary of investing in the stock market in times like these. But fintechs provide alternative options for diversifying portfolios and increasing wealth.
For example, Gridline is a digital wealth platform that provides access to professionally managed alternative investments with low capital minimums. By pooling capital, individual investors can gain access to traditionally exclusive investments such as venture capital and hedge funds for the first time.
There’s a veritable arms race between cyber security experts and fraudsters, with hackers always finding new ways to scam people out of their money. In response, fintechs are using advanced technologies such as biometrics to prevent fraud.
For example, FIS offers a product called Global 3DS Flex uses biometric authentication to verify the identities of online shoppers. This prevents fraudsters from using stolen credit card information to make unauthorized purchases.
An example powered by artificial intelligence Akio, allows financial institutions to build their own fraud prevention programs. As a no-code platform, Akkio makes it easy for businesses to build custom fraud detection models without expensive data science resources.
The way forward
A turbulent macroeconomic environment can be challenging for businesses of all sizes. But fintechs use innovative technologies to survive and even thrive. From accounting automation with blockchain to fraud detection with artificial intelligence, fintechs are weathering the storm and driving change in the process.
Everyday investors can also benefit from the power of fintech. By using technology to diversify their portfolios and gain exposure to alternative investments, they can protect their finances and grow their wealth.
Still, these technologies are not a panacea. As the world becomes increasingly digital, we need to be vigilant about protecting our data and money. But with the right precautions, we can all weather the storm together.
Valerias Bangert is a strategy and innovation consultant, founder of three media outlets and a published author.
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