Undeniably, the finance industry has been super quick to adjust to the rapidly evolving business landscape – all thanks to financial technology. From blockchain technologies, digital currencies to Robo-advisors – the new tech seeks to automate the delivery of financial services. Accountants and finance managers can utilize algorithms to manage records and financial data. Applying FinTech to the back-end systems can improve internal operations and boost efficiency.
Additionally, FinTech includes the development of cryptocurrencies. Instead of conventional stocks and bonds, the company can invest in digital currencies and enjoy massive returns. Besides this, FinTech regulates various accounting activities. You can deposit checks with smartphones, raise money through smart contracts, and apply for credit online. Now, a crucial question that arises is, what does this all mean for business owners?
Although FinTech isn’t the same for every business, it provides ways to automate work and scale financial operations. Hence, hop onto this trend and start integrating FinTech. Here we are highlighting six advantages of FinTech for businesses in today’s era.
Automates Accounting
Believe it or not, a robust financial standing provides the foundation for a successful business. Therefore, you must develop a clear understanding of your business finances to make more apt decisions. The FinTech applications streamline the financial workloads and unfold rich data insights. Likewise, it provides excellent financial solutions, automating invoices, accounts payable, payroll, and expenses. However, working on these applications is not everyone’s cup of tea.
Bookkeepers and managers require expert number-crunching skills and financial know-how to manage these applications. If you don’t possess these skills, opt for online masters of accounting to learn the ropes. In addition to accounting automation, you will develop a keen understanding of financial software. Thus, you can forecast cash flows, calculate payrolls, and send invoices by tapping fingers on the application. It will ensure effective financial management while eliminating the likelihood of errors.
Reduces Overall Costs
Despite living in a fully digitalized world, incurring cross-country transactions is super challenging. Many banks don’t facilitate foreign transactions, while those who do, charge hefty transactional fees. These technicalities are creating an obstacle for international trade. Even the companies that import raw material and equipment have to spend a lot of money on additional charges. To overcome this problem, the FinTech solution providers are giving access to a decentralized ledger – blockchain.
It is a peer-to-peer platform where two parties can exchange funds without a financial intermediary. The absence of a third party reduces all foreign exchange spreads, transactional charges, and cancellation fees. Likewise, people can send and receive money into their accounts across multiple currencies without any conversion fee. Alongside promoting international trade, these modern solutions can reduce overall costs, allowing companies to enjoy higher profits.
Unfolds Investment Opportunities
Previously, entrepreneurs used to hire financial analysts to assist with investment decisions but not anymore. Now, AI-enabled Robo advisors powered by FinTech can create personalized investment plans for companies. They ask user-specific questions from entrepreneurs and evaluate financial data to measure the risk tolerance level. Likewise, they use algorithms to find investments that best fit the business’s risk portfolio.
You can also unfold your investment objectives to the Robo advisors. For instance, if you inform the advisor that you can’t put a lot of money at stake, it will look for low-cost investments. Also, you can automate the buying and selling process. If you want to sell the petroleum share as soon as it touches $450, the Robo advisor will perform this function on your behalf. As a result, you can take advantage of markets highs and lows while focusing on work.
Apart from this, the Robo advisors can also handle asset allocation and rebalancing, avoiding the problems with revaluation. Upon the accountants’ approval, they will check the value of the assets and inform about the loss or gain on revaluation. Hence, it can save ample time that accountants would have spent researching the asset’s value.
Enables Digital Payments
Lately, payment solutions have proven to be crucial for businesses. After all, people no longer prefer shopping through sites that don’t accept payments through cards and wallets. Luckily, financial technology has revolutionized payment modes by making it possible for any business to accept digital payments. Alongside debit and credit cards, you can accept payments through Venmo, PayPal, Apple Pay, and mobile phone wallets.
Moreover, companies have an opportunity to integrate modern digital payments on their eCommerce sites. Perhaps, you can take some inspiration from Tesla’s owner – Elon Musk, who has decided to accept payments in crypto. You can also enable people to shop from cryptocurrencies and expand the revenue streams. You can convert the cryptos into cash through a regulated exchange or grow your investments in the blockchain industry.
Ensures Compliance
Unsurprisingly, the financial laws have always varied from country to country. The United States of America follows Generally Accepted Accounting Principles (GAAP). In contrast, the United Kingdom prepares financials as per the international financial reporting standards (IFRS). Hence, ensuring compliance while running the business across borders can be pretty overwhelming, but FinTech provides a solution for everything.
It can navigate the differences in regional laws and regulations, making sure the company isn’t breaking the law. Likewise, FinTech software can keep up with changing tax regulations. It checks the prevailing tax rate from the income tax bracket, ensuring accurate return filing. Also, it tracks tax deductions accurately, saving the company from IRS audits.
Enhances Security
The Next-Gen tech solutions are significantly improving the security protocols. The high-tech tools and applications can detect anomalies in the system and inform authorities beforehand. For instance, if there has been any unusual activity in the business bank accounts, FinTech software will send notifications. It also provides reliable access to biometric authorization. Thus, employees and customers will have to use fingerprints to authorize payments and transactions, eliminating the risk of fraud.
Furthermore, Fintech is ensuring optimal security in data storage solutions. The development of blockchain allows companies to store data on thousands of servers with end-to-end encrypted servers. In addition to keeping the data safe, these security measures can save businesses from substantial losses.
Final Thoughts
The FinTech boom will continue to expand a new world of opportunities for companies. Business owners can integrate digital payment solutions to eliminate the tedious tasks of manually recording cash. Likewise, they can enhance security protocols to avoid any compromise on data. From automating accounting processes to providing data-driven investment insights, every business can greatly benefit from financial technologies. Therefore, keep pace with the latest developments in FinTech to succeed in today’s competitive marketplace.