With all the new products and services being inspired by the technological revolution, one might be tempted to overlook how the new tools and processes available to business is affecting the basic infrastructure of finance. Finding a better way to do things has the potential to help all businesses rather than just those who come up with the proverbial better mousetrap.
Finances are the most prominent focus for these new ideas because it is the area where advancement has the highest potential for quick and lasting success. Here are some ways technology is having a profound effect on business finance.
Prototyping
Because of the rapid communications capabilities of both the Internet and mobile devices, businesses are now able to field prototypes of products very quickly, obtain customer reactions and improve their products before they ever reach the market.
As recently as ten to twenty years ago, the ability to get a product to market was so capital-intensive and so clumsy the idea of trying to do a test roll-out was out of the question. But now, where use of the right technology helps avoid financial pitfalls, it’s a practical necessity for any company interested in saving capital to try and build interest in a new category or product type using these techniques.
Crowdfunding
Capitalism itself has been transformed by the process of simply asking future customers for funding to build and distribute a new product. This process has been used for new enterprises selling everything from comic books to autonomous flying machines and so far, more than $800 million has been raised in pursuit of new businesses and new products.
Once again, when technology is combined with a natural financial process, the result is lower costs and less time to market.
Money Transfers
When most people think of a money transfer service, they usually think of wiring money with something like Western Union. However, one of the most popular uses of money transfer services is in business to business transactions. Debit and credit cards or traditional wire transfers are sometimes not suitable for certain kinds of transactions either due to the amounts involved or the scheduling.
Technology based money transfer systems solve many of these problems for small businesses in particular, as they are designed to rapidly and effortlessly move funds both domestically and internationally and take care of many of the back-office functions like currency conversion automatically. In many cases, these transfer services make certain kinds of small businesses possible that would otherwise not be practical.
Automation
Profitable transactions that have roughly the same range of criteria for approval shouldn’t require human intervention in order to clear. So, many of these transactions are being automated in order to reduce costs and improve margins. Areas like risk evaluation for credit card transactions and asset reallocation for value investment firms are being transformed by narrow logic systems designed to choose a course of action based on predetermined conditions.
Data Warehousing
The tremendous cost efficiencies of modern data storage makes it possible for even the smallest business to accumulate customer data formerly reserved for only the largest companies. As a result, almost every business is able to make strategic decisions now based on hard numbers and analysis, which improves results and adds to profitability.
This trend is expected to accelerate as better tools are invented to manage large data sets.
Technology and finance go together like money and politics. Combining the efficiency of quality systems with more profitable business models leads to better outcomes and faster growth for enterprises of every kind.
