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The roller coaster of financial conditions over the past few years caught most of us off guard. Small businesses, in particular, have been hit hard and hit the hardest during the COVID-19 pandemic. Now, inflation and recession fears are looming again, taking their toll on both individuals and organizations.
In this environment, fintech companies are deploying technologies such as investing, accounting, payments, etc., aimed at helping their customers through the difficult times. For example, fintechs are saving businesses time and money by automating manual invoicing and payment processes. By offering alternative investment options, fintech companies are offering investors cautious about stocks an opportunity to increase their capital.
Fintech has long been touted as a pioneer of innovation and disruption. In fact, their business model is based on disrupting traditional financial services. But in recent years, fintechs have become more than just disruptors—they’re also enablers.
The trio of rising accounting fraud, record fines and a shortage of accountants is making it difficult for small businesses to keep up. For example, an article by Bloomberg Tax describes an accounting shortage and a “crisis” in turnover.
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The WSJ also noted that “sanctions related to auditing and accounting errors have nearly tripled” and that companies have been forced to pay ever-increasing fines for inaccurate reporting. If that wasn’t enough, a recent study highlights that accounting fraud is on the rise. Businesses are being hit from all directions.
However, fintech companies are using blockchain and AI technology to automate many of the manual tasks involved in accounting — from payroll to invoicing to fraud detection. Not only does this save businesses time and money, it also allows accountants to focus on more strategic tasks.
For example, a recent Hacker Noon article pointed out how NFTs can be “used to create tamper-proof and verifiable invoices.” Not only does this make it easier to detect fraud, it also makes invoicing faster and simpler. With the help of an automated digital ledger — the blockchain — businesses can ensure their invoices are accurate and up-to-date. One startup, Bulla Network, even uses blockchain for its entire invoicing, payroll, and accounting process.
From the dot-com bust of the early 2000s and the Great Recession of 2008 to the COVID-19 pandemic and the latest technical recession, investors today face some tough times.
The future doesn’t look bright, with The Economist noting that Gen Z’s investments could see “dismal returns.” In times like these, it’s no wonder that many people are wary of investing in the stock market. But fintechs are offering alternatives to diversify portfolios and grow wealth.
For example, Gridline is a digital wealth platform that enables access to professionally managed alternative investments with low minimum capital. By pooling capital, individual investors can, for the first time, gain access to traditional exclusive investments, such as venture capital funds and hedge funds.
There’s a veritable arms race between cybersecurity experts and fraudsters, with hackers always coming up with new ways to scam people out of money. In response, fintech companies are using cutting-edge technologies such as biometrics to prevent fraud.
For example, FIS Global offers a product called 3DS Flex that uses biometric authentication to confirm the identity of online shoppers. This helps prevent fraudsters from using stolen credit card information to make unauthorized purchases.
An AI-driven example is Akkio, which enables financial institutions to build their own fraud prevention applications. As a no-code platform, Akkio makes it easier for businesses to create custom fraud detection models without the need for expensive data science resources.
the way forward
A volatile macroeconomic environment can pose challenges for businesses of all sizes. But fintech companies are using innovative technologies to persevere—and even thrive. From using blockchain to automate accounting to using artificial intelligence to detect fraud, fintech companies are surviving 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 access to alternative investments, they can protect their finances and grow their wealth.
However, these technologies are not a panacea. As the world becomes increasingly digital, we must be vigilant in protecting our data and money. But with the right precautions, we can get through this together.
Valerias Bangert is a strategy and innovation consultant, founder of three media agencies and published author.
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