Financial Innovation, Technology, Regulation and Public Policy

As the recent financial crisis begins to fade from memory we are starting to see behaviors in the world of financial innovation reverting to old methods and practices. Is it a good thing? Perhaps…

However, misunderstood financial innovations such as securitization, which led to the financial crisis through the sub-prime debacle in the United States, pose an ever present danger to the financial industry. Regulators and supervisors everywhere, as guardians of the various components of the world’s financial system, do still not clearly understand the implications of financial innovation. Often too this is clouded by public policies which as the basis for such oversight are suspect as to which “public” they are intended to benefit. This is especially the case in the uses of technology in the provision of financial services.

The word “innovate” means to bring in novelties or to make changes. Financial innovation extends this simple definition to the financial world. However, here the simplicity ends with a plethora of products, processes and methods that have been applied to the spectrum of the financial world – some good and some bad.

What drives financial innovation? Simply put – self interest, which finds expression through Adam Smith’s “invisible hand”. Financial institutions seek out, through the innovative process, the most efficient cost effective way to maximise their profits either on existing products or potential new ones.

There are two basic drivers of financial innovation which result from the barriers that a bank faces in reaching its financial goals – competition and regulation. To beat these barriers banks engage in completion of two sorts – competitive or circumventive. The first is pretty obvious as all banks seek to maximise their profits and they do this by competing with other players in the market.

The second, circumventive, is a little bit more obscure. In all jurisdictions financial firms are faced by a plethora of rules and regulations, imposed by the banking and regulatory authorities on how they conduct their business. These are the regulatory barriers that a bank faces. These barriers may often be overcome by innovation – hence the term “circumventive innovation”.

The classic illustration of this is the development of the humble Automated Telling Machine (ATM) which was introduced first in the United States as a circumventive innovation, to get past retractions on branch banking. The idea was quickly picked up, first in Europe, and then globally as a competitive innovation. European banks had no restrictions on the number of branches they could have but labour policies created limitations on for example working hours among many other issues. In the ATM the European banks found a new “staff member” who (1) was cheaper than a human teller, (2) could work all day and night, (3) was accurate, (4) did not need a physical branch to support it. There were many other plusses a well, not to mention the ability to widely expand the range of products and services that could be offered.

In essence, one type of innovation (circumventive) morphed into another (competitive). This interaction goes on constantly and is a key feature of the dynamics of a constantly evolving financial system. And technology has been a leading driver of this process. We see this in action all the time in many different ways.

Recently I came across a news item that indicated that Citibank had embarked on a project to make deep inroads to consumer banking in India – a vast market. Notwithstanding the size of the market in India, which is on a par with that of China, anyone trying to establish or expand their business in the worlds largest democracy has a massive hurdle to overcome. For a bank one of these hurdles is very tight regulation and the restrictions placed on banks in growing their branch networks.

The Reserve Bank of India, which is the country’s central bank, tightly controls the number of new branch licenses that are granted to foreign banks. This has a massive restrictive affect on the ability of such banks to grow their distribution networks.

To get past this limit on its physical presence Citibank has begun targeting India’s almost six hundred million mobile users. Now this is the “circumventive innovation” that I spoke of.

Citibank, who is one of the leading foreign banks in India with 42 branches and more than 450 ATMs – recently completed a six-month program in Bangalore to test the appetite of customers to make transactions through phones. The program was called the “Tap and Pay” pilot project.

During the project, the bank sold more than 3,000 phones especially enabled to make transactions over the mobile network. Customers made Rs26m (US$585,000) of purchases from 250 merchants. Citibank is now considering rolling out such services to its wider client base.

This case is a classic illustration of how financial innovations can be used an adapted to achieve other needs.

So, what is the message to bank regulators, supervisors and their policy makers? Well put simply “financial innovation or its implications are not always clearly understood”. These facts are critical to bank supervisors and regulators because innovative actions on behalf of the financial industry are not always benign or made for the general good. Equally so, public policy makers need to understand why some financial innovations take place and review their policies in the light of this. Very often restrictive practices are created for the wrong reasons – protection against genuine competition is often disguised as consumer protection.

Free Debt Settlement Advice – How to Take Advantage of Loopholes in the Financial System

Financial advisors say that these programs for debt settlement are just like a dodge in the financial system to eliminate debt. Thousands of people have been mesmerized in the ferocious clutches of unsecured credit card culpabilities. We have to find out ways to get rid of the vicious circle of debt. By each passing day, the collection agencies are approaching defaulters and creating difficulties for them for the repayments of their liabilities.

The good thing about these programs is the fact that they try to cope to eliminate the debt without lowering the credit score. If you find yourself in deep debt, then you should definitely take advantage of these programs which are permissible to eliminate debt.

Because of the increased number of the defaulters, the whole economy is travailing in agony. It is also observed that many of the investors are pulling out their investments because of this uncertain situation. It is getting essential day by day to get out of them at any cost if we need to live a stress free life. Through the web, we can have a slice of advice about these programs. There are many opportunities out there that are full of valuable and reliable information which are willing to aid everyone out there.

Recent financial turmoil in the economy has really put people in torture and compelled people to become bankrupt. These chances are increasing economy instability because of the defaulters. If we look at the income level of people, it is not in boom because of the downfall of the economy. The economic situation is draining because of huge debts and people of the society are unable to meet up the expenses and most of all the repayments of the unsecured debts. A ray of light with a hope to settle down these debts is only possible with the help of debt settlement companies.

By following this program you can easily evade your debts as they are legitimate and the people who are handling these matters are skilled and specialized. By using them you can sit back and enjoy your imminent life.

If you have over $10k in unsecured debt it could be a wise financial decision to consider debt negotiation. Due to the recession and overwhelming amount of people in debt, creditors are more than willing to negotiate your debt balance. There are also other debt relief options. Check out the following link to speak with a debt relief counselor for a free consultation.

21st Century Global Financial System of Market Economy

In the 21st Century currently existing Global Financial System lead by US and other Most Developed Nations (incl. China) and managed by the Parish Club, WTO, IMF and the World Bank must change their approaches to apprehend the most recent developments of chronically becoming indebted World, in which except for a very few countries and market as China and India, most of the rest Most Developed Economies as US and GB, Developing Countries as Spain, Portugal and Greece, and Undeveloped Countries as Bulgaria, Rumania and many South American Countries, Asian and African Countries are greatly indebted or very underdeveloped. A Central Banking System is needed to control the global “demand-to-supply” balance by being able to issue capital, instead of the current global financial system which performs more as a “lender”.

There have been many indications that the process of running fiscal shortages for many countries cannot be reverse by using current Economics of Production based “trickle-down” Capitalism, because the Production based Economics is generally founded on industrial production that adds the highest percentage to any country GDP (General Domestic Product) and the consequential fiscal reserves for a country or a market to develop most definitely such country following the economics of production must industrialize, or for an industrialized country such must keep being Globally competitive in industrial production to maintain intact its deficit. The Globalization of the market place propelled by the great Capitalization and the rising Productivity have boosted the economies of China and now India to industrialize rapidly, that industrial power added greatly to the current industrialized economies of Japan, Germany, US capacity by how the Global industrial production capacity overall is coming to a point of great concentration of such industrial production into a very few industrialized economies. The possibilities for other small or even big countries to become competitive in industrial production and maintain their fiscal policies and reserves in tact are diminishing.

From the Most Industrialized Economies US is particularly vulnerable under these new Global developments of ongoing exodus of industrial production and capital investment to the Far East. The Capitalism of US Economics is very inept in distributing and redistributing Wealth so to speak the “demand” side of Capitalism correlates the “supply” and works well in a close marketplace in size of US market when “trickle-down” capital first “trickle-up” to concentrate wealth then comes “down” to create industrial production, but than when such “trickle-down” does not go to the US market but to elsewhere the shortage of consumption cannot be avoided, following in not properly balancing “demand-to-supply”, thus, to avoid economic catastrophes US Government steps up with infusing capital into the system: exactly what happen at the last Great Recession of 2007-2009.

Also in time of narrowing ROI (Return Of Investment) particularly for the SME (Small & Medium Enterprises) and from the SMI (Small & Medium Investors), in time of Governmental policies promoting and tolerating pro Big Business and Big Investors deregulated “trickle-down” Capitalism which were mostly the only ones benefiting from the ongoing Globalization, the possibilities in such times for occurrences of Economic Bubbles are quite common. The 1999 Stock Exchange Bubble and the 2007 Great Recession are products of appointed lack of Wealth Distribution. Thus become obvious that the Government in situations like that step into actions by infusing capital, save even individual businesses and prompt social distribution: The Healthcare Reform, the Finance Reform, and the US SME Tax Reform are good examples how the system in distress works, though the consequences are up to be seen. It is hard to believe that the US Government could constantly manage the Economy and create business. In the Next Recession the Government will appropriate more function in financing and business that overall is a scary preposition having in mind how inflexible and inept a Government could be.

Environmental pollution and Earth exhaustion of resources under the current production economics based on industrial production mainly is unavoidable, because when even most developed industrialized nations could introduce and follow policies of protecting the environment, or even the developing nations of China and India follow up which is highly doubtful, there are many countries that will try to manage their fiscal shortages by compromising the rules for Environmental protection thus they can bring to their soil industrial production. In the World of ROI mostly from Industrial Production the prices of Environmental protection technologies are making businesses hardly competitive to others that do not implement these. Pollution comes also from cutting and burning woods to farm or from heating with coal, or from driving old autos, or from dispose sewers into open rivers. So to speak, without curbing on the Global poverty can not be ways to curbing on pollution. But to curb on poverty industrialization cannot be used thus the possibilities for saving the World from Environmental disaster by using industrial production are highly unlike.

To avoid multiple economic crashes and upheaval, to avoid The Government take over when next recessions, to avoid fiscal shortages and deficit, unemployment and poverty, to avoid Environmental destruction a new system of economics is needed, one that will allow countries to develop without being industrialized.

Is it possible to manage Global development without using current production based economics system?

Well the most recent US and any Governments’ infusion of monetary quantities, business involvement and social distribution of wealth is not based on production economics.
The Chinese approaches in handling Economy is not production based only economics: their interference in the ways “trickle-down” capital works in the marketplace does not follow Capitalism but is more-like “artificial” flexible usage of economic “tools’.
The Greece bailout by the EU and IMF is not “trickle-down” economics; it is an interference with the powers of the Capitalism.
There are many more examples of how Governments and organization interfere with freely flowing Capital and therefore using “artificial” methods of economics.

At the moment he mounting debt accumulated by almost any country in the World horrify economists and they predict imminent bust-and-doom (there was a suggestion by some German politicians to Greece to sell some Greek islands, but then funds has been appropriated help Greece). Though economists should be horrified only from high imbalance of “demand-to-supply” ratios, which imbalance provokes inflations and deflations; thus should be the biggest concern to the Global Financial Institutions instead these are fighting deficit and debt: these institution as mentioned above are acting more-like a “lender” then a “controller” these should be. If the Global marketplace is seen in its vastness as a common marketplace a mass industrialization should not be expected and cannot be achieved therefore. Thus, for balancing “demand-to-supply” ratios, the Monetary Policies should be used instead industrializing the entire Earth. Comprehensive Monetary Policies by Global Financial Institutions flexibly using Monetary Quantities as Economic “tools” and Business and Financial Regulations as enhancing business “security” are “the way to Rome” only.

Less Governmental involvement in business, more business laws and regulations on business contracting, business and project bonding, intellectual properties’ laws, risk management personal liability laws, and etc, these the supplements to an appropriate Monetary Policies: because these “regulatory” actions will enhance SME and SMI “security” and make these much more adequate to be financed.

Low interest rate financing and subsidizing are economic “tools” to be used by a Global Financial System in promoting environmentally friendly renewable energies and agriculture, environmental tourism and sustained growth. This new financial system must use commercial banks to invest in countries on project by project basis on set matrix and low margin.

The Global Financial System Is on Life Support

This is something that came over the radio today. Because the systems are breaking down as the truth flows over the world the economy is doomed. People are angry and they loathe to vote for the incumbent governments representatives who have failed to put them first ahead of the multi-national companies that are ripping everyone off. Scandals involving large corporations and individuals are proving their deceit and lies as they hide billions in wealth within tax-free havens.

Why should a company executive be paid in millions of dollars per annum while the staff barely scrape together enough to feed, house, and clothe their families? This is just one of the questions people are asking. As many now reside on the streets while investment homes remain empty as their owners hang onto them for profit it is more than anger that is causing the wave of resentment.

The situation in America right now as people are turn away from their normally preferred party to vote for an outsider who has never held a government position says it all. Trump has tapped into the anger and resentment and is promising the things people most want to here. They are making him their preference even if, as some claim, he can’t possibly deliver on most of them.

The same thing may be occurring elsewhere as other countries face people power and some governments have already been forced to quit, such as in Thailand in recent months. There is a strong tide that has started and may never cease until the world faces an enormous upheaval.

These things are predicted in the Old Testament prophecies as a signal that we are in the last days. This is the time when the ears are now unblocked and the eyes are seeing the reality for possibly the first time. It’s happening because of the Internet that was promised for this time when all people will flow to it for answers (Micah 4:1).

After my reincarnation and strong link to the Spirit of the Universe, which controls all things, it commissioned me to take down the wall of deceit that was put up and strengthened by the work of the 2 beasts of Revelation. Knowledge was then given to me to bring this about and everyone is back to hear the truth and be judged according to their deeds throughout a period called the day of the lord.

The second beast, Constantine, established the financial system (Revelation 13:17,18) and his number is 666. His time is up and now the facts are turning his systems upside down. That is why the financial world is in turmoil.

Economic Development Through the Initiatives of Banking and Financial Institutions

The vitality of sound financial systems to economic vicinity has become even more prominent in recent years. Financial systems are driven by the banking and investment institutions and they craft policies for industrial sectors for all round development. Their policies, financial products and flexible banking operations are the forces that encourage business owners to act more vibrantly. In fact, these forces act as premises for the business sectors to exhibit their capabilities and serve people. Today, banking and financial institutions are successfully bridging the gaps and vacuum developed over the last decades. They are also taking center stage due to slowing economic marathon.

Banking and financial institutions are thoroughly undertaking and advocating hyperactive initiatives that directionally aim to provide business leaders and policy-makers with a strong framework for identifying and bringing them forth the key factors in the development of industrial market. They are also encouraging business houses to focus their bottlenecks so that they can highlight them in their policies and bring sure shot resolutions for them. It will help banks to create new opportunities and reduce as much bottlenecks as possible for unmatched growth and trouble-free operations.

These fiscal bodies and investment firms are continuously measuring the performances of the industries on the benchmarks and revolutionizing their resources so that businesses with lower capitals & innovative sustainable ideas can get advantages offered by the financial institutions.

Banks are also revolutionizing banking technology for bringing more advancement in the system. Their advanced technologies are bringing fundamental shift in their overall functioning. It has strengthened their internal functioning & operation and enabled them to better serve their customers. With the adoption of empirical technologies, banks are adding worthy business propositions.

In addition to that, banks are also restructuring insurance sector and its associated technology. They are educating, luring and persuading communities to cover themselves with proper insurance programs and policies. They are even penetrating at the deeper levels to get maximum results. They are innovating new products with insurance agencies to place their insurance products in the proper segment for immense growth. They are subsequently encouraging them to develop more pliable and worth investing products.

Banking and financial agencies are also gathering support from the top economists, fiscal activists and taking their views and perspectives in global meets and conferences. They are regularly arranging banking technology conferences, insurance technology conferences, capital market meets and monetary fund meets for better business environment, better economic development and sparkling tomorrow.