The Introduction Of Fintech: Opportunities And Risks
Fintech can be considered as an introduction of tools of digitalization in business for pro-vision companies with qualitative service, lower costs and prosperity. These tools can be applied in different areas of business, like payments, banking, investment, insurance, wealth, security, currency and Forex, lending and funding (including crowdfunding).
It has changed the way people make everyday operations like banking, shop-ping, book-keeping, the way people file their tax returns. For the majority of organizations, in each sector Fintech allows them to introduce accounting software, which helps to automate repetitive processes and control payments for employees, reduce risk of human error and provide with immediate access to detailed reports, and, therefore save the time because this operation would take several hours or days. These basic principles of management with the use of Fintech can also be used in companies connected with oil and gas industry.
Despite these advantages, the usage of Fintech in business has the possibility of several risks:
- Infrastructure (or market) risks. Fintech services are sensitive to market changes, which has an influence of consumer interest. Another aspect of infrastructure risk is the scale of the consequences when an error occurs in automated processes.
- Economic risks. One of the main aspect is a risk of increased ‘debt overburden’ population and business that in the case of a reduction in real income may lead to increased debt bur-den, defaults, lower living standards population and weakening economy generally.
- Social risks Fintech companies, like any other technology companies are providing significant impact on transformation labor market. Thus, the automatization of processes may reduce the number of personnel and reduce the career possibility for senior population age group.
In oil and gas economy, Fintech also allows to solve several tasks and simplify some processes. Due to large number and volumes of supplies in oil and gas industry Fintech can help settlement departments in companies to deal with large amount of cash flow, credit exposure and risk management. Thus, there are different payment systems based on Fintech, which provide companies with fast and reliable finance operations in business. Digital payment systems have become the most convenient for making transactions in large companies. Due to this fact, hundreds of cryptocurrency exchanges, online banks, payment systems, hedge funds are created. This allows accomplishing transfers between individuals or legal entities, business lending, crowdfunding. Another type of Fintech for business is money management, which includes robotic advising, financial planning programs and applications, social trading, algorithmic exchange trading, target savings services. In energy companies, number of clients and therefore the amount of information is significant. As a result, energy companies have to identify exceptions and reconcile ever-larger volumes of transactions immediately. Moreover, the process for scheduling supply and demand should be automated to help with sorting through the large amounts of spreadsheets and piles of paperwork, along with PDFs and emails. For these purposes, the introduction of Fintech in organizations could be the most effective method
From another point of view oil and companies have certain set of compliance requirements: legal, financial, operational, human resources and other laws and regulations, which companies should follow. Thus, compliance obligations according to set of laws and regulations include data from different areas like licensing, labor and environmental safety, regulations with landowner and joint venture requirements. All these compliance obligations consist of a large number of codices, regulations and standards. Moreover, all the requirements are connected with certain activity, event and time. In this case, Fintech can simplify legal part of operations in oil and gas industry by means of introducing software for management regulatory processes.
