How Financial Technology is Creating Growth Opportunities for Small Businesses

Changing the Way Small Business Are Financed

One of the major problems many economies have had to deal with is that which concerns catering to the needs of small businesses in a changing business environment. The traditional model of new companies turning to banks for finance was limiting for most entrepreneurs.

Small business owners found it unbelievably hard to secure funding through a bank, with loan requests being declined for reasons ranging from insufficient collateral to economic concerns, and everything in-between. This made survival difficult, never mind expansion.

Thanks to new fintech firms, small and medium businesses can now access cheaper alternative financing and grow. The innovative ideas and new developments brought by fintech companies have changed the business sector and made it easier for startups to navigate the financial services landscape through the following ways:

Advances

Fintech enables small businesses to get the funding they need to expand. Peer-to-peer lending sites such as Funding Circle, LendGenius, and Kabbage provide microloans for business owners that often have difficulty finding lending support. This helps make it possible for small businesses to carry on their operations unhindered.

The requirements for getting approved by these companies are less restrictive than commercial banks. Fintech advances also attract lower interest rates, involve little to no paperwork, and do not require collateral. Add the convenience that they offer on top of that, and you will see just how far financial technology has brought us.

Expense Tracking and Electronic Invoicing

Another way that fintech removes the barriers that small businesses encounter when they try to expand is that it provides them with reliable expense monitoring solutions that are flexible enough to allow them to meet their business needs.

Fintech firms like Sage offer tools with which small-sized businesses can monitor all the money coming in and going out of the company’s accounts. This helps business owners to understand how much money is in the business at any point in time, as well as how that money is being spent. When a business can have a clear picture of its finances in this manner, it will find it easier to make informed financial decisions.

Further, fintech enables small businesses to automate invoicing, simplifying the accounting process as a result. This helps entrepreneurs to not only deal with cashflow challenges but also to maximize efficiency.

Provision of Digital Payment Options

Before now, one of the major problems for businesses that operate on a small scale is how to send money across international borders. The procedures for sending funds across borders was long and tedious. As a result, it discouraged clients from buying from overseas businesses. Fortunately, payment solutions like PayPal, Stripe, Venmo, Skrill, etc., now make it easier for small business owners to accept payments globally. This enables businesses to achieve international growth, as any customer can pay for items regardless of their location.

Last Word

Fintech has contributed in no small measure to helping small-sized businesses to drive revenue and grow market share in a tough business environment by addressing the market failures that they encounter.

The ease with which organizations can access funding, track expenses and conduct business have significantly enhanced their ability to keep their finances in check, achieve growth, and measure results effectively.

 

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WannaCry Attack is Actually Good for Cyber Security Stocks

Consumers and companies had a rude awakening recently. They’re all at risk of cyber attacks. One of the biggest cybersecurity developments recently was the WannaCry attack. Now, WannaCry is ransomware, which is a type of malware that blocks users access to their data until a ransom is paid to the hackers to regain access. On May 12, 2017, WannaCry began to infect Windows-based computers across the globe, primarily through phishing email scams and a worm feature in the ransomware.

The WannaCry attack spread to 150 countries, and targeted approximately 200,000 organizations. The WannaCry ransomware exploited a flaw in Microsoft’s Windows software, which was discovered by the U.S. National Security Agency and leaked by hacker. Although WannaCry affected millions of users and hundreds of thousands of organizations, it’s good news for the cyber security industry.

 

Highly Publicized Cyber Attack

Now, when there is a highly publicized cyber attack, it tends to be good news for cyber security companies, and stocks tend to rise off of this news. For example, Sophos Group PLC, which is a UK-based cyber security company, saw its stock rise over 7% and set a record high. This was primarily due to the company’s guidance raise.

In the event of a cyber security attack, traders price these events in, as this could mean more potential business for publicly-traded cybersecurity-related companies. In turn, this should drive revenues and earnings higher, which should cause cybersecurity companies’ stock prices to rise.

According to trader Jason Bond, “We’ve seen cybersecurity stocks run higher following some cyber attacks on companies, such as the attacks on Yahoo, Target and Home Depot. The idea behind is this move is quite simple. When hackers attack companies or users, those companies and users may look to increase their defense against another attack. To defend against cyber attacks, these companies will look to leverage the technology of well-established cybersecurity firms.”

We saw this in some cybersecurity stocks, such as FireEye Inc (NASDAQ: FEYE),  an enterprise cybersecurity company that provides products and services in an attempt to protect against cyber attacks and threats. After the news of the WannaCry attack was released, FEYE closed up over 5% that following day. Here’s a look at FEYE on the 15-minute chart, after it hit a high above $16.

 

Source: TradingView

Now, that wasn’t the only cybersecurity-related security that gained that day. Traders may use HACK as an investment vehicle to gain exposure to the overall industry, rather than just one cybersecurity-related company. The PureFunds ISE Cyber Security ETF ultimately closed up over 3% on the trading day following the WannaCry reports. The PureFunds ISE Cyber Security ETF (NYSEARCA: HACK), the world’s first cybersecurity exchange-traded fund (ETF), shares also saw a rise following the WannaCry attack. The PureFunds ISE Cyber Security ETF offers investors away to gain exposure to the cybersecurity industry, and the fund is comprised of companies offering consulting, software, hardware and services to defend against cyber attacks.

 

Here’s a look at the ETF following the WannaCry reports, on the 15-minute chart.

 

 

                                                              Fight Cyber Crime

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Blockchain databases and what they mean for you

 

Blockchain databases represent the latest technology to fire the collective imaginations in Silicon Valley and tech hubs around the world.

They allow a distributed network of database users to create updates in real time – all without the need for a centralized administrator.

Although the original Blockchain rose to prominence as the technology that made Bitcoin possible, it’s now taking off amongst more conventional financial users, such as banks.

Standard databases, such as those built on top of the popular MySQL technology, are protected from both reading and writing by the general public.

If you call your insurance company, for example, the person at the end of the line updates the company’s database based on the information that you provide.From the security governance perspective, this company is the ‘central authority’ administering the database, and having to relay changes through it naturally slows down the update process.

Distributed Blockchain databases, on the other hand, leverage the power of “the crowd” – the online community as a whole – to make the updating process much faster. This is achieved by creating a large global network made up of a replicating series of nodes that reconcile one another in near real time. Because these nodes all contain the same information, it’s virtually impossible for the entire database to fail, or, just as importantly, be hacked.

The same technology that allowed Bitcoin users near-guaranteed anonymity, while also offering a robust currency independent of any national bank, is now set to transform the E-commerce space.

One of the most promising fields for Blockchain-based firms is smart contracts. These are online agreements where the release of funds is automatically triggered when the necessary conditions are met. They have the potential to eliminate the fraud that can occur when conducting transactions with strangers, and are seen by many as the next stage of the Blockchain revolution.

For years, ‘Blockchain without Bitcoin’ was considered by investors to be a mere pipe dream, but now investment capital has begun to pour into disruptive startups that are proving the ambitious, paradigm-shifting technology is capable of driving broad applications. Haim Toledano and Saar Pilosof are two of the heavy-hitting venture capitalists who have recently backed up-and-coming companies in the sector.

 

“Everyone wants to be able to buy and sell online with total confidence, in terms of the security of their money and their personal information,” explains Toledano. “Now that the technology has finally arrived, we’re about to see an explosion in the overall value of the E-Commerce economy and that’s why the major players of the future will be built on Blockchains.”   

Illustration with word cloud with the word Blockchain.

Security Matters: Improving Customer Safety on Your E-commerce Site

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