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A rollercoaster of financial conditions over the past few years has caught most of us off guard. Small businesses, in particular, have been hit hard and have suffered the worst during the COVID-19 pandemic. Now, inflation and recession fears are looming again, harming individuals and organizations alike.
In this environment, fintechs are deploying technologies for investing, accounting, payments and more that are designed to help their customers weather the storm. For example, by automating manual invoicing and payments processes, fintechs are saving businesses time and money. And by providing access to alternative investing options, fintechs are giving stock-wary investors a chance to grow their money.
Fintechs have long been touted as harbingers of innovation and disruption. Indeed, their very business model is built on shaking up traditional financial services. But in recent years, fintechs have become more than just disruptors — they’re enablers, too.
A trifecta of rising accounting fraud, record fines, and accountant shortages has left small businesses struggling to keep up. A Bloomberg Tax article, for instance, describes a “crisis” of shortages and turnover in accounting.
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The Wall Street Journal also notes that “sanctions related to audit and accounting missteps increased nearly threefold,” with businesses being forced to pay increasingly hefty penalties for inaccurate reporting. If that weren’t enough, a recent study highlights that accounting fraud is increasing. Businesses are being hit from all sides.
Fintechs, however, are using blockchain and AI technologies to automate many of the manual tasks involved in accounting — from payroll to invoicing to fraud detection. This not only saves businesses time and money, it frees up accountants to focus on more strategic tasks.
For instance, a recent Hacker Noon article points to how NFTs “can be used to create invoices that are tamper-proof and verifiable.” Not only does this make it easier to detect fraud, it makes invoicing quicker and simpler. With an automated digital ledger — the blockchain — businesses can be sure that their invoices are accurate and up-to-date. One startup, Bulla Network, is even using blockchain for the entire invoicing, payroll and accounting process.
From the dotcom crash in the early 2000s and the Great Recession in 2008 to the COVID-19 pandemic and the latest technical recession, today’s investors have faced some tough times.
The future isn’t looking any brighter, with The Economist noting that Gen Z can expect “dismal returns” on their investments. In times like these, it’s no wonder that many people are cautious about investing in the stock market. But fintechs are providing alternative options to diversify portfolios and grow wealth.
For example, Gridline is a digital wealth platform that enables access to professionally managed alternative investments with lower capital minimums. By aggregating capital, individual investors can enter traditionally exclusive investments, such as venture capital funds and hedge funds, for the first time.
There’s a veritable arms race between cybersecurity experts and fraudsters, with hackers always coming up with new ways to dupe people out of their money. In response, fintechs are using cutting-edge technologies like biometrics to prevent fraud.
For example, FIS Global offers a product called 3DS Flex that uses biometric authentication to confirm online shoppers’ identities. This helps prevent fraudsters from using stolen credit card information to make unauthorized purchases.
One AI-powered 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 expensive data science resources.
The way forward
A turbulent macroeconomic environment can be challenging for businesses of all sizes. But fintechs are using 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.
Everyday investors, too, can 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 must be vigilant about safeguarding our data, and our money. But with the right precautions in place, we can all weather the storm, together.
Valerias Bangert is a strategy and innovation consultant, founder of three media outlets and published author.