Financial Technology (Fintech)

Financial Technology, also known as Fintech, is an umbrella term that encompasses any technologies, products, or business models that apply to finance. It is an innovative and rapidly evolving sector encompassing a broad range of applications that aim to streamline, simplify, and ultimately improve financial services. From banking and insurance to cryptocurrency and investment platforms, FinTech is effectively democratising and transforming how people and businesses handle their finances. 

In the UK, in the past decade, Fintechs have experienced remarkable amounts of growth, with London alone now considered a global Fintech hub. The sector’s impact can be seen in its role in job creation – with an approximated 40% of the workforce in the City of London being engaged in financial and technology services. 

As of April 2019 stats there were 76,500 individuals employed in FinTech across the UK with estimates predicting an increase to 105,500 by 2030, international talent also makes up at least 42% of the UK’s Fintech workforce, highlighting the sectors global appeal, and possibly why it is so innovative with so many viewpoints and concepts being brought to the forefront. 

For SMEs in particular, the emergence of Fintech has brought an enormous range of advantages such as improved access to financial services and superior operational efficiencies. This is achieved by businesses being empowered by sophisticated yet easy to use analytical tools that help to make more informed decisions, and typically leads to growth and expansion, regardless of industry. 

Platforms like our own – Pulse – are leading this change by offering Artificial Intelligence (AI) and Machine Learning (ML) driven insights that seamlessly integrate with Open Accounting and Open Banking systems, with the aim of giving SMEs a view of their financial well being in real time. Below we will take a deeper look at all the benefits that Fintechs can bring to business owners and their financial advisors, and whether you are a startup or established firm, offer some insights into what leveraging tools like Pulse can provide in today’s competitive market. 

AI and Machine Learning in FinTech 

AI and ML continue to be transformative in reshaping the finance sector, with AI being able to mimic human intelligence, often to far superior ends, and ML being capable of using algorithms to learn from data sources and make decisions autonomously. When applied by Fintech tools, it is possible to extract actionable insights from financial data sets of any size, then apply them to business strategies. 

Applications in Financial Insights and Analysis 

• Predictive Analytics: Fintech tools for accountants and business owners leverage past data to forecast future trends, and in finance, this could mean anything from consumer spending and loan default rates, to stock market volatility. 
• Risk Management: We have touched on it, but ML models can quickly assess the risk associated with loans or investments by analysing datasets that include market dynamics and customer behaviour. 
• Personalised Financial Services: Through AI analysis of individual spending habits, investment preferences and financial objectives can be used to generate tailored financial advice or products, these can then be offered to users. 
• Fraud Detection: ML algorithms excel at identifying irregular transaction patterns that could indicate fraudulent activities much faster and more accurately than manual checks. 

Benefits of AI-driven Insights for Financial Decision-Making 

• Enhanced Accuracy: AI and ML algorithms enhance their accuracy over time as they analyse more and more data. This inevitably results in better outcomes for tasks like assessing credit risk and detecting fraud. 
• Operational Efficiency: Reliances on manual interventions are nullified by using AI to automate data analysis. This then speeds up the processes of things like loan approvals and financial audits. 

• Cost Reduction: Automating tasks using AI also comes with the benefit of cutting costs through both decreases in labour expenses and minimisation of human errors, the latter of which has historically been the root cause of many failed endeavours. 
• Scalability: One of the biggest strengths of AI is that regardless of how large a workload becomes, or how much a company expands, it is capable of working just as quickly and efficiently, far exceeding human capabilities. 

By leveraging powerful Fintech tools like Pulse, SMEs and their financial advisors can gain a powerful advantage over competing brands. 

Real-Time Financial Insights 

Fintech is capable of providing its users with the latest financial information by aggregating data and essentially producing actionable financial insights from it. It is important for businesses or accountants to have access to this information as it means they can make quick decisions and keep up with changes in fast paced markets. 

How Pulse Delivers Real-Time Insights: 

Pulse will integrate with your Open Accounting and Open Banking software to access advanced AI driven insights, turning the raw data it aggregates into a clear picture of a business’s financial health. We say it is like ‘x-ray vision’, because Pulse is capable of identifying financial advantages, drawbacks, chances and risks, aiming to help businesses reshape the boundaries of what can be achieved in financial management and strategic planning. 

Benefits of Real-Time Data Analysis: 

1. Financial Health Monitoring: Businesses can constantly monitor their health to identify and address issues promptly. 

1. Identifying Trends: Real time data empowers companies to recognise and respond to emerging trends immediately, while this was priorly achieved by relying on outdated reports. 

1. Proactive Decision Making: Instant insights enable businesses to make decisions promptly and might be relevant to any area of operations, from managing unexpected stock expenses to capitalising on new expansion opportunities. 

Impact on Business Strategy: 

Through the use of analytics, companies can foresee shifts in market dynamics or customer behaviour, and this enables them to adjust their strategies preemptively. This responsiveness is crucial for managing risks and capturing potential gains making it an essential element in the financial arsenal of any forward thinking business. 

Understanding Key Financial Metrics: 

Financial metrics like cash flow, profitability, liquidity, and solvency are pivotal for assessing a business’s financial health, with each metric serving a distinct purpose – for the purpose of their links to our product, Pulse, we will focus on these four KPIs in particular: 

• Understanding Cash Flow: Pulse tracks the net amount of cash being transferred into and out of a business. 
• Profitability: Pulse measures the degree to which a company is making a profit from its operations. 
• Liquidity: Pulse indicates a company’s ability to meet short-term obligations without raising external capital. 
• Solvency: Pulse assesses a company’s capacity to meet its long-term debts and financial commitments. 

Pulse’s Role in Monitoring Financial Metrics: 

Using Pulse will drastically improve your ability to monitor these key financial indicators by bringing together real time data from Open Banking and Accounting software, effectively allowing businesses to: 

• View up-to-date cash flow analysis trends. 
• Analyse profitability through various financial ratios. 
• Assess liquidity to ensure they can cover short-term liabilities. 
• Monitor solvency to gauge long-term financial viability. 

Importance in Financial Planning and Analysis: 

Understanding and tracking these metrics is vital for financial planning and analysis, offering the data that businesses require to: 

• Make informed strategic decisions. 
• Plan for future growth. 
• Manage financial risks effectively. 
• Ensure they have enough resources to operate and expand. 

Our vision at Pulse is to give small and medium enterprises the ability to keep a clear view of their financial situation. We want to aid them to make the correct changes and take advantage of opportunities as and when they arise, instilling them with the small business financial intelligence that they need. 

Intuitive Dashboards 

Most Fintech products will come with a dashboard where all of its users’ financial data or numbers of their key metrics are displayed, essentially providing a centralised platform where businesses can visualise complex data sets and turn them into valuable actionable insights. Utilised correctly, the real-time breakdowns of finances that Fintech dashboards offer enables businesses to react more quickly and effectively to financial changes. 

Features of the Pulse Dashboard: 

We designed Pulse’s dashboard for simplicity and functionality, with our user’s experience in mind. The key features SMEs and other users can expect include: 

• Real time updates reflecting the financial information to facilitate prompt decision making. 
• Simple financial displays in the form of bar charts and line graphs that focus on the most relevant business metrics. 
• Management accounts which allow business owners and their financial advisors to delve deeper into the numbers and understand the underlying causes of financial trends. 
• Analytics to deliver actionable insights for forecasting financial scenarios based on historical data. 

Enhancing Business Decision-Making: 

By having the ability to visualise complex financial data in easy to understand formats, businesses gain a powerful tool for improving their decision making processes. To illustrate, users can identify performing products or services and adjust their marketing strategies to capitalise on them, or alternatively might see a particular service is underperforming and use the data to apply a strategy that can solve the issues. 

Pulse is so effective it aggregates from both banking and accounting to generate a holistic view of its users’ most important financial metrics, and by turning these complex data sets into accessible and actionable insights, Pulse can help businesses make the best decisions for growth. 

Try Pulse Today! 

Pulse is designed for SMEs and their financial advisors, and we have a track record of turning complex financial data sets directly into easy to understand small business financial insights. Start getting all of the benefits of our advanced data dashboard, and sign up to Pulse today!