Financial Management: Use social media to understand your innovation opportunities

Financial innovation is a special type of financial aid that aims to improve people’s financial well-being and provide them with better financial opportunities. Various innovations in financial management have been developed in recent years.

Not so long ago, the ATM was the greatest financial innovation that ordinary customers could access. Now the economy is bursting with financial innovations that need to be tried. Below are methods for financial innovation that have produced the best results in terms of profits.

So far, equity, mobile banking, and remittances are the main areas in which the development of financial innovations has recently taken place.

Investment crowdfunding

The financial innovation method that has made the greatest advances in equity is by crowdfunding investments. Investing in “young” and developing companies was long ago only a privilege for institutional investors. Now, however, every single private investor who wants to support a project can invest in it. These people will then receive shares in the new company based on the amount of money they bring in.

SeedInvest and FundersClub were the most popular platforms for crowdfunding investing. A branch of this area, like crowdfunded debt financing, is represented these days with LendingClub and Prosper. Here the investor will not own part of the business, but rather a creditor who will receive regular payments of the interest on the loan until it is fully repaired.

Transfers

Wire transfers are also a lucrative option for investors. Remittances are assets that belong to expatriates. This investment industry is changing today. Expatriates send bank transfers back to their home country. Transfers were only tracked by Western Union and Moneygram before startups like Transferwise and Wave created a major competition for them.

In addition to the well-known mobile banking funds, some new features are becoming increasingly popular. Inclusive apps with functions for deposit checks, goods payments, money transfers or finding an ATM were made possible.

TIPS

Lawrence Summers, a former assistant secretary of the Treasury, motivated the government to create an investment opportunity to help consumers deal with the risk of rising consumer processes. TIPS generally offer inflation protection. TIPS go up or down in accordance with the consumer price index and depending on inflation or deflation. When the TIPS become due, the investor will receive the adjusted capital or the original capital.

TIPPS investors earn interest twice a year. The interest rate is fixed.

You can purchase TIPS from TreasuryDirect, a bank or a broker. Investors can use TIPS to diversify their investment portfolio and supplement their overall income.

The use of financial innovation has shown remarkable results in Kenya

Some smallholders have created the DrumNet. DrumNet was originally a growing network providing loan construction and marketing services to smallholders in the agricultural sector. It originated in Kenya. The aim of the technology was to increase farm productivity and improve the efficiency of the entire business chain. DrumNet enabled the production of export-oriented plants with high added value at relatively short notice.

The original goal of DrumNet was to create a cashless microcredit program that linked commercial banks, smallholders and retailers of agricultural supplies.

Farmers began participating when they opened a personal savings account with a local bank and made the first cash contribution to the transaction insurance fund, which served as collateral for the line of credit. In this way they have created a guaranteed solidarity group with suppliers. Suppliers who knew DrumNet was delivering records to DrumNet were paid every two weeks. Since DrumNet was also selling the product, principal and interest payments were deducted from the farmers’ net returns at harvest time and credit history was tracked.

As a result, DrumNet showed success in marketing high quality products in export quality and hoped to expand interregional sales activities.

As the DrumNet example demonstrated, financial innovation can even be seen in the relationships between lenders and borrowers. Aspiring investors can learn more about ways to get credit for bad credit and then embark on a more lucrative investment route.

More financial innovations

Zipcar

Robin Chase founded Zipcar in 2000. She no longer wanted to borrow a neighbor’s car and renting a car was quite expensive. The service allowed people to book cars and then use them with the help of a special card. This is just one of the many car sharing options that can save you money on the way.

401 (k) automation

To help new employees join retirement plans faster, private employers are now using The Automatic 401 (k). Employees can also automatically increase their contributions to the plan. 401 (k) automation is one of the most popular standard investment options for age-appropriate deadline funds.

83% of respondents in the survey carried out by Finextra Research said that their bank’s current technology can no longer meet their needs. The need for faster and safer banking has created space for financial innovation in this area.

Digital assistants

CapitalBank was one of the first to offer its customers the option of doing banking with the help of Amazon Alexa. All customers have to do is direct their requests to their mobile devices.

Kasisto also offers banks a digital assistant KAI, with which they can create their own chatbots and virtual assistants.

Contactless authentication and payments

To maintain social distance, bank customers can use facial and speech recognition technology, as well as wearable devices, to complete their payment tasks. The customer experience in this way is not neutralized, but improved. This technology enables merchant payments, business correspondence and ATM transactions, among other things.

Interesting fact: a bank in Russia is already implementing facial recognition technology to make contactless payments with facial recognition. The analysis showed that the time to complete the payment was reduced by 75%.

A bank in Australia has launched an AR application for car loans. The app can show details about the vehicle by simply pointing the phone camera at it. The credit qualification process has also been simplified as customers already know which car they can afford and customer feedback is easily accessible through the app too.

Innovative business models

Financing ecosystems. Financial institutions can partner with businesses by integrating APIs and offering their MSME partners supply chain financing, in-market lending, and POS-based lending products. This can increase the inflow of funds from customers. The benefits are also improvements in underwriting, pricing, and collections.

Many financial innovations were created during the COVID-19 pandemic when contactless banking was necessary more than ever. This particular financial innovation is obviously trending these days. However, more financial innovations are being discovered every day, and an aspiring investor should look for investment opportunities on a daily basis.