Financial Management: Using Social Media to Know Your Innovation Opportunities
Financial innovation is a specific type of financial aid, the aim of which is to better the financial well-being of people and provide better financial opportunities for them. In recent years various financial management innovations have been developed.
Not so long ago, the ATM was the biggest financial innovation that ordinary customers could access. Now the economy is bursting with financial innovations that need to be tried out. Below find financial innovation methods that showed the best results in profit.
So far, equity capital, mobile banking, and remittances are the major sphere where financial innovation development has taken place lately.
The financial innovation method that made the most progress in equity capital is investment crowdfunding. So long ago investing in “young” and development-state companies have been a privilege for only institutional investors. Now, however, every individual retail investor who wants to support a project can invest in it. Those individuals then get shares of the new company according to the sum of money they put in.
SeedInvest and FundersClub have been the most popular platforms for crowdfunding investment. A branch of this field, such as crowdfunded debt financing, is represented with LendingClub and Prosper these days. Here the investor will not own a part of the company but will become a creditor who receives regular payments from the interest on the loan until it’s been fully repaired.
Remittances are also a lucrative option for investors. Remittances are assets that are owned by expatriates. This investment branch is under transformation today. Expatriates send back remittances to their native country. Remittances had been only tracked by Western Union and Moneygram before start-ups like Transferwise and Wave have created great competition for them.
In addition to widely-known mobile means of banking, some new features are gaining popularity. Inclusive apps with features for deposit checks, merchandise payments, money transferring, or locating an ATM have been made possible.
Lawrence Summers, an ex-deputy Treasury secretary, motivated the government to create an investment opportunity to help consumers deal with the risk of rising consumer processes. TIPS in general provides protection against inflation. In accordance with the Consumer Price Index and depending on inflation or deflation, the TIPS either increases or decreases. The TIPS matures, the investor is paid the adjusted principal or original principal.
TIPS investors are paid interest twice a year. The interest rate is fixed.
You can purchase TIPS at TreasuryDirect, a bank, or a broker. Investors can utilize TIPS to diversify their investment portfolio and as a supplement to their whole income.
The Usage of Financial Innovation Showed Remarkable Results in Kenya
A few smallholders created the DrumNet. DrumNet was originally a growing network that allowed agriculture extension credit and marketing services for smallholder horticultural farmers. It originated in Kenya. The aim of the technology was to increase farm productivity and improve the efficiency of the overall business chain. During a relatively small term, DrumNet enabled the production of high value-added export-oriented crops.
The initial aim of the DrumNet was to create a cashless micro-credit program that connected commercial banks, smallholder farmers, and retail providers of farm inputs.
Farmers started participating when they opened a personal savings account at a local bank and made the first cash contribution to the Transaction Insurance Fund which acted as collateral for the line of credit. By doing so they created a guaranteed solidarity group with suppliers. The suppliers, who knew DrumNet record-keeping submitted receipts to DrumNet were paid once every two weeks. Since DrumNet also sold the product, it deducted principal and interest payments from farmer net returns at the time of harvest and kept track of credit history.
As a result, DrumNet showed success in marketing high-value, export quality products and hope for expanding inter-regional selling operations.
As the example with DrumNet showed, financial innovations can even be seen in the relationships between lenders and borrowers. Aspired investors can find out more about ways to get loans for bad credit and then step onto a more lucrative path of investment.
More Finance Innovations
Robin Chase founded Zipcar in 2000. She didn’t want to borrow a neighbor’s car anymore and renting a car was rather pricey. The service made it possible for people to book cars and then use them with the help of a special card. This is only one of the many car-sharing opportunities which help save money on the drive.
In order to enroll new workers in retirement savings plans faster private employers now use The Automatic 401(k). The workers can also boost their contributions to the plan automatically. 401(k) automation is one of the most popular default investment options of age-appropriate target-date funds.
83% of respondents of the survey conducted by Finextra Research claimed that their bank’s current technology was no longer able to support their needs. The need for faster and safer ways of banking operations has created room for finance innovations in this area.
CapitalBank was one of the first who offered its customers to conduct banking transactions with the help of Amazon Alexa. All that the customers need to do is to voice their requests to their mobile devices.
Kasisto is also offering a digital assistant KAI for banks to create their own chatbots and virtual assistants.
Contactless Authentication and Payments
In order to keep social distance bank customers can use facial and voice recognition technologies and wearable devices to conduct their payment tasks. Customer experience this way isn’t neutralized but enhanced. Among other features, this technology allows merchant payments, business correspondence, and ATM transactions.
Interesting fact: A bank in Russia is already implementing the technology of facial recognition to perform contactless payments with facial recognition. The analysis showed that the time of the payment finalization decreased by 75%.
A bank in Australia launched an AR application used for car loans. The app can give details about the vehicle by just pointing the phone camera towards it. The loan qualification process has also been simplified since the customers already know what car they can afford and the customer’s feedback is also easily accessible through the app.
Innovative Models of Business
Financing of ecosystems. Financial institutions can create partnerships with corporates if they integrate APIs and offer financing of the supply chain, lending of the marketplace, and POS-based lending products to their MSME partners. This can increase the customers’ cash inflows. The benefits are also the underwriting, pricing, and collections improvement.
A lot of financial innovations have been created during the COVID-19 pandemic when contactless banking was necessary more than ever. This particular finance innovation is obviously trending these days. However, more finance innovations are being discovered daily and an aspiring investor should look for investment opportunities daily.