new day business finance

new day business finance

The Impact of New Technologies on Business Finance

1. Introduction to Business Finance in the Digital Age

These developments, originating changes in basic financial concepts, practical developments, and computer applications, have a strong impact on the decision processes of managers who nowadays are responsible for the companies’ financial structure and financial planning, but also for the selection of the best strategies and policies for each cash flow generated in their activities and those of its employees. They have been living and working within a roller coaster, operating in an ever-changing financial environment.

In addition, modernization and new technologies of information, communication, and data processing have provided the basis for profound changes in several financial operations and services and also have paved the way for new areas of financial research.

Several causes have contributed to this change. The trends towards liberalization, innovation, and globalization in recent years have modified the general financial environment. In particular, significant regulatory changes have altered financial services and enabled the emergence of a wide range of new products, trading venues, and market participants.

The financial environment has changed constantly over time. Today, firms operate under a much more complex financial environment than a few decades ago. However, at no time has the rate of change been faster than today.

2. Emerging Technologies Transforming Business Finance

From mobile money and e-wallets to commercial crowdfunding, and from robo-planning to financial marketplaces and real-time trade finance and supply chain finance products utilizing distributed ledgers, and so-called insurtech and regtech applications, these new technologies are offering alternatives to the most underserved, costly, and complex aspects of current systems. And they are increasingly doing so, not just offered by tech companies to tech companies or by small businesses who cannot offer wage benefits to tech people, but as elements of the digitization taking place throughout the economy. Providing financial products and services in the digital age should not look the same. Our long institutional experience tells us that those new technologies which result from large investments with uncertain returns interact with institutional constraints and uncertainties in the financial world even if the new technologies were not primarily designed as finance-specific, regulatory elections, and insider-specialization in the traditional financial industries.

New technologies are reshaping the financial services sector. They hold the promise of improving financial inclusion and offering new alternatives to the most underserved, costly, and complex aspects of current systems. This chapter discusses the implications of technology diffusion for business finance. It argues that the most transformative effect of the fintech phenomenon is likely to occur in the domain of data, especially the analytics and artificial intelligence products emerging from the convergence of cloud, mobile, and smart network technologies with distributed-ledger technologies. Enabling technologies are only the first link in a long and unpredictable chain that aims to produce final products and systems able to meet all the regulatory, market, and social standards and constraints. Even so, and given their capacity to turn data into financial services and do so globally from day one, these innovative ventures appear to be taking a radical new approach to financial services, one that is much more likely to have a strong effect than the previous ones that focused on providing solutions in the better-targeted and lower-risk consumer diverse and niche segments of the market.

3. Challenges and Opportunities for Businesses in Adopting New Financial Technologies

From the business owner’s point of view, new financial technologies hold promise for reshaping business finance. Sympathetic observers welcome this, implying that adoption of such technologies is likely to remove what has been a persistent bottleneck, constraining business performance. For some observers, the promise seems so large that the potential for such technology to solve financial bottlenecks faced by business is revolutionary. Small wonder then that entrepreneurs have been developing so many different models of new business finance. But what are the concrete obstacles to business? This chapter briefly reviews some of the most important recent technical innovations and how these innovations are starting to change the fabric of business transactions. It then describes a number of other challenges inherent in adopting such innovations, in order to understand better whether these technologies are likely to have their intended effects.

It is often said that one of the most consistent factors that affect business is also one that changes most rapidly – new technology. Over the long sweep of the capitalist era, it has been a challenge for business to adapt to such major technological shifts as the train and steamship, the electric motor and the internal combustion engine, and, today, electronic technologies. Among the most fascinating aspects of the recent wave of technological innovation is its role in revolutionizing business finance. With the possible exception of the rise of the internet, developments like cryptographic and smartcard technologies and the development of the euro mark the first real changes in the mechanics of business finance since the days of double entry bookkeeping in the late Middle Ages.

4. Case Studies: Successful Implementation of Innovative Financial Solutions

The best practices and business success stories in high-technology sectors tapping a variety of risk-related financial instruments can indeed mitigate the effects of similarly unfair perceptions and the real, but manageable, risks associated with applying such tools. As a result, good practice examples and case studies of industrial application may become a necessary building block for a comprehensive methodology of the financial engineering of innovative technology. Good practice examples of what particular financial instruments or even entire financial systems, deployed and implemented inside real corporate environments, can afford addressing risk-related tasks in innovative technology projects have been compiled in the present part.

When designing and implementing new innovative financial solutions, there is always an uncertainty about possible financial implications, time of return on investment or even a destructive impact of a new invention on the financial model of a company. It takes a long time for hidden costs or financial outcomes of a new project to appear on P&L. The majority of the companies prefer not to be the first mover, investing later at a higher price. The financial director’s aversion to the radical innovation is justified. Moreover, there is a big gap between the innovation leaders and the laggards who often feel uncomfortable while adopting the radical innovations and build fully fledged financial models upon them. The pilot testing, good practice implementation cases or case studies on industrial applications may fill this gap and encourage top-managers or corporate financial specialists to design and deploy ambitious financial models and technological projects within their companies.

5. Future Trends in Business Finance and Technology

From this starting point, the task is to suggest what are likely to be the future paths relating to the nature of business, consumer and bank banking and money holding activities, driven by the need for reducing costs and the regulatory and technological opportunities. The limitations noted above are for payment media other than paper currency deals only in a qualitative and descriptive manner, so our approach to this topic is thereby its very lack of specificity bifurcated development of finance. Our analysis in this chapter of business finance as being through the use of unlimited; financial scope reflects the bank transactions technologies of the past, the present, and the near future. It has been noted that the e-money protocols that allow transactions with consumers are coming on stream, but similar protocols are not yet being for most of them nonexistent. It is our hypothesis that e-money’s development will be much faster than its paper currency deficiency and will swiftly evolve into a state where it can truly act as a transaction technology alternative.

The advances that have occurred so far in modern thought and technological development suggest a number of future trends that are likely to affect up dimensions of business finance. The first of these concerns the boundary limitations of the firm in production and the impact that these limitations might have on the source of development of financing institutions and money markets. Secondly, by following through the audit trail of business transactions, the requirements for long-term as well as short-term finance can be identified and the bases different divisions within banking and other financial intermediaries and the services that they themselves, a firm and its competition, will be factors affecting the long-term requirements. Finally, predictions are made about the likely directions technological development will, in turn, precede the boundary more likely run into financial limitations. Useful insights into such topics can be gleaned from the emergence of the e-money market and the investigation of the payment medium properties of paper currency.