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A rollercoaster of financial circumstances in recent years has caught most of us by surprise. Small businesses in particular have been hit hard and have the worst ago during the COVID-19 pandemic. Now fears of inflation and recession are looming again, hurting individuals and organizations alike.
In this environment, fintechs are deploying technologies for investments, accounting, payments and more designed to help their customers weather the storm. For example, by automating manual billing and payment processes, fintechs save companies time and money. And by providing access to alternative investment options, fintechs are giving wary investors a chance to grow their money.
Fintechs have long been touted as harbingers of innovation and disruption. Indeed, their business model is based on shaking up traditional financial services. But in recent years, fintechs have become more than just disruptors – they are also enablers.
A trifecta of rising accounting fraud, record fines and accountant shortages is making small businesses struggle to keep up. For example, a Bloomberg Tax article describes a “crisisof accounting deficits and revenue.
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The Wall Street Journal also notes that “sanctions related to audit and accounting errors” almost tripled”, with companies having to pay increasing fines for inaccurate reporting. As if that weren’t enough, a recent study highlights that: accounting fraud on the rise. Companies are being hit from all sides.
However, fintechs use blockchain and AI technologies to automate many of the manual tasks associated with accounting – from payroll to invoicing to fraud detection. Not only does this save companies time and money, it also gives accountants time to focus on more strategic tasks.
For example, a recent Hacker Noon article points out how NFTs “can be used to invoices that are fraud-resistant and verifiable.” Not only does this make it easier to detect fraud, it also makes billing faster and easier. With an automated digital ledger – the blockchain – companies can rest assured that their invoices are accurate and up-to-date. a startup, Bulla Networkeven uses blockchain for the entire billing, payroll and accounting process.
From the dotcom crash of the early 2000s and the Great Recession in 2008 to the COVID-19 pandemic and the latest technical recession, today’s investors have been going through tough times.
The future doesn’t look brighter, with The Economist noting that Gen Z can expect”gloomy returnon their investments. In times like these, it’s no wonder that many people are reluctant to invest in the stock market. But fintechs offer alternative options to diversify portfolios and increase wealth.
For example, Gridline is a digital wealth platform that provides access to professionally managed alternative investments with lower capital minimums. By aggregating capital, individual investors can for the first time engage in traditionally exclusive investments, such as venture capital funds and hedge funds.
There is a veritable arms race between cybersecurity experts and fraudsters, with hackers always coming up with new ways to take people’s money. In response, fintechs are using advanced technologies such as biometrics to prevent fraud.
For example, FIS Global offers a product called: 3DS Flex which 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-powered example is: Akkio, which allows financial institutions to build their own fraud prevention applications. As a no-code platform, Akkio makes it easier for companies to create custom fraud detection models without expensive data science resources.
The way forward
A turbulent macroeconomic environment can be challenging for companies of all sizes. But fintechs use innovative technologies to persevere — and even thrive. From automating accounting with blockchain to detecting fraud with AI, fintechs are weathering the storm and driving change in the process.
Ordinary 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.
However, these technologies are not a panacea. As the world becomes more 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 published author.
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