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Day: March 12, 2020

What Is Fintech in Banking?

Posted on by Imarticus Learning

Understanding Fintech in General

Fintech can be explained as the use of cutting edge technology to provide solutions in the financial domain to increase customer satisfaction and bring more convenience to the final users.

This evolution within the financial industry aims to introduce new tech-savvy financial products and services most of which helps to automate repetitive processes that earlier required human intervention.

The digital world is fast-paced and the use of the internet has transformed every industry. To cater to the needs of an aggressive customer base, the evolution within the financial domain was indispensable. The collective approach towards problem-solving in the financial services domain using technology has produced a spin-off that has been coined as Fin-tech.

Fintech in the Banking domain

Fintech is totally on the verge of disrupting the consumer banking industry. The disruption is inevitable given the simplicity of services in the traditional form of banking which can now be rendered very conveniently through the use of technology.

If you look closely the technological advancements have also changed the financial procedures and the way these institutions function.

Let’s look contextually into some of the major aspects of banking that the Fintech has redefined.

Credit Services 

Fintech has expanded the horizons when it comes to providing loans. Some of the prominent Fintech companies have taken upon themselves to bring more transparency and ease in the borrowing process by eradicating unnecessary documentation and other loopholes. They aim to simplify the process of obtaining financial aids for businesses and individuals.

Payment Services

Not much long ago, payment transfers and related services was a challenge for the customer. From long queues to limited banking hours and whatnot, it was a painful experience. Today a service or a product is not just limited to providing a solution but providing a memorable experience for the customer.

Keeping the customer experience in mind the Fintech companies have revolutionized the payment services segment totally. Payment using smartphone applications and the internet is the norm today, thanks to the harbingers of the Fintech revolution.

Wealth Management Services

Fintech training has redefined the way people are saving and investing their hard-earned money.

There are companies like Robinhood whose mission is to reduce the income inequality that prevails in society by providing commission-free trading and investing platform.

Today people want what’s best for them and not a general best seller, realizing this gap Fintech companies are catering to customized investment solutions for people looking to invest their money.

How is it changing the banking domain?

Let’s see how the banking sector has been transformed drastically with the advent of Fintech companies in the context of digital & mobile banking services.

Digital Banking

One of the best things about the digital space is that it is not constrained by geographies. This feature alone has helped many banks to expand their customer base in multiple territories without having to invest in building a brick and mortar outlet. Other than this the services are available for the 21st-century consumers who don’t sleep, meaning 24*7 has been the norm.

Mobile Banking

With the proliferation of e-commerce and food-tech companies, the consumers needed a more convenient method to do the transaction. Realizing this need the Fintech companies have designed mobile banking solutions that just require your smartphone and bank details to start a transaction. Problem solved!

Conclusion

Fintech has totally changed the banking industry for good. Mobile banking and digital banking services have mended the follies of traditional banking services. Focusing more on the customer experience aspect the Fintech companies are boosting the customer satisfaction level to new heights making them more loyal and committed to the service providers.

What Is a Financial Modelling Course?

Posted on by Imarticus Learning

In these modern times, there are a lot of tools that a business typically makes use of on a regular basis, but among all of them, one that is crucial to determining its success is financial modelling. As an aspiring financial analyst, it is crucial for you to know the true potential of financial modelling and why it is so important. Thus, in this article, we will explain to you the meaning of financial modelling as well as outline the concepts that encompass a financial modelling course. Let’s get started.

What is A Financial Model?

In the simplest of terms, a financial model can be described as being a tool that is primarily built on Excel and used by companies to predict its future cash flow as well as potential income sources. The most common use of this tool is to predict the future of the company’s financials and how it can prepare itself for future challenges as well as opportunities.

In order to build a financial model or forecast, a number of factors need to be taken into account. This includes the history of the company’s performance and its assumptions for the future of its business among many others. Along with this, an income statement, cash flow statement and balance sheet need to be drafted which make up for the key fundamentals in developing a financial model.

A financial model can be used by a business for several applications including the creation of predictions for mergers and acquisitions, leveraged buyouts as well as discounted cash flow statements.

Uses Of A Financial Model

Now that you know about the basic concept of a financial model, let us quickly understand the main uses of a financial model in a business environment.

1. Raise Capital: One of the most common uses of a financial model is to raise capital from investors as well as take working capital if necessary.
2. Acquisition: Second to raising capital, companies often make use of financial models to acquire new markets, skills as well as shares.
3. Forecasting and Budgeting: Last but not the least, a well defined financial model helps companies forecast the way for the future, as well as decide on the budget for various of its activities.

What is a Financial Modelling Course?

Now that you are aware of what a financial model is, along with its main uses, let us take a look at the various components a financial modelling course encompasses.

1. Educate you on the basics of financial modelling and the skills you need to acquire in order to successfully create a financial model.
2. Analyse real-life case studies of companies that actively make use of financial models and how it has helped them grow.
3. Various skills in software that are used to create financial models, including Excel among others.
4. Educate you on the various types of financial models that can be created, those that are being actively used by businesses and their most common applications.

One of the most important pointers you need to take note of as a future financial analyst is the fact that in order to create sustainable models that provide solutions, one aspect that trumps others is regular practice and implementation.

Job Roles And Career Opportunities

Last but not the least, it is important for you to know the main job roles or designations that are responsible for creating financial models. This includes but is not limited to:

1. Investment Bankers
2. Financial Analysts
3. Accountants
4. Corporate Executives

Conclusion

Financial modelling as a skill is becoming more and more important to acquire on a regular basis and thus in order to better equip yourself for the future, it is necessary that you undertake a financial modelling course today.

 

 

Introduction

 Finance is gaining immense importance in recent times. Various tools have now come into the market that Finance professionals in their job can use. If you check out the financial analytics course syllabus, you will realize that some tools are essential for financial analysis. There are several online finance courses that you can take up to understand the application of financial modelling and its techniques.

Courses on Financial Modelling

There are specialized courses for financial analysts that offer an in-depth understanding of financial decision-making elements. You can pick an excellent financial analyst course from the online finance courses that are available out there. People who want to make a career in investment banking also opt-in for a chartered financial analyst course to understand the subject’s intricacies and make a successful career.

Strategy analysisThe online finance courses on Financial modeling teach you the basics of finance and the various tools and techniques involved in financial modelling.

The financial analytics course syllabus also includes the application of Excel in managing and working with finance. There are several courses for financial analysts online. You can pick one based on the requirement and the level of expertise needed.

Use of Financial modeling

 Financial modeling is used for efficient decision-making and to analyze the company’s economic performance. A financial analyst course will discuss various models and methodologies required to conduct an economic analysis of companies. Some uses of these models are:

  • Raising capital for the company
  • Acquiring or merging with new or existing companies
  • Asset management
  • Growth of business
  • Decisions on divesting or selling the existing assets and purchase of new assets
  • Budgeting
  • Financial forecasting
  • Allocation of Capital
  • Valuation of Businesses and their verticals
  • Analysis of financial statements and key financial ratios
  • Management accounting

A chartered financial analyst course will also give you similar insights, but the level of learning would be a notch higher. The chartered financial analyst course syllabus is more comprehensive compared to the financial analytics course syllabus. Therefore, you can pick one depending on the job you want to pursue.

Career Prospects

Financial modeling has a lot of applications. The financial analytics course syllabus covers all the significant financial modelling aspects that will prepare you for the job market. There are several industries where you can look for an appropriate job. Some of these popular industries or sectors are:

  1. Banks
  2. Institutions
  3. Corporates
  4. Public Accounting

You can get into several domains in a company after doing a course on financial modelling. Some of these popular domains or job functions are:

  1. Equity Research
  2. Sales and Trading
  3. Investment Banking
  4. Commercial Banking
  5. Due Diligence
  6. Transaction advisory
  7. Valuations
  8. FP&A
  9. Treasury
  10. Investor Relations
  11. Corporate Development
  12. Research
  13. Portfolio management
  14. Private Equity

A financial modelling course will help you in building various financial models that any company can use. These courses will lay down a solid foundation for your career in finance. You can also come up with a go-to model using the learnings of the financial modelling course.

What is Excel Data Financial Analysis?

Posted on by Imarticus Learning

Stakeholders bank on Excel to perform technical calculations or yield basic accounting ratios. Companies, on the other hand, can leverage Excel to perform risk analysis, capital budgeting analysis or discount cash flows. Moreover, options traders generally utilize Excel to perform Black-Scholes pricing. There are myriads of standard financial analysis frameworks that could be done via Excel. Also, there are some courses for financial analysis certification that can aid use Excel for various finance-related purposes.

Excel for Finance Experts

For those pursuing a career in financial analysis, extensive working knowledge of Excel and proficiency in general Excel features are quite worthwhile. Data, of any kind, can be entered and processed, as far as it is calculable.

While it can be unfeasible to have a firm grip on every function of Excel, it is important to know the approach to do functions that are essential for a particular analyst job. You can go for a technique similar to the 80-20 rule to your Excel purposes, that is, 80% of your outcome might be a result of 20% of your Excel shortcuts and functions.
Some of the common financial analysis features are pivot tables, data manipulation, lookup, formatting, and valuation equations.

Excel for Stakeholders

Stakeholders run financial analysis in either of the two major methods. The first method relies on data received from the financial statements (fundamental analysis) of an organization that can deliver Excel with the core elements for advanced equations. The second method emphasizes on probabilities, charting, and if-then analysis, which is the technical analysis.

For fundamental analysts, excel has proved to be more fruitful. Technical analyses usually depend significantly on interactive charts that are simpler to utilize and keep up-to-date swiftly via actual technical charting software in lieu of Excel.

Excel for Consultants and Accountants

At times, financial analysis is associated with repeating existing data rather than forecasting future data. For consultants and accountants, Excel can manage functions for amortization, depreciation, budgeting, and taxes.
Excel, by nature, offers itself to cost accounting owing to its excellent flexibility quotient. In contrast to financial accounting, which contains strict rules and a relatively standard approach, cost accounting must be adjusted to align with the individual requirements of the company.

In addition to this, Excel can monitor, upgrade and deliver information in a way that permits enhanced business decision making.

Using Excel Efficiently

Preparing a number of financial documents for various clients for various reasons is a time-prohibitive process. The actual issue is not creating multiple financial reports, but the approach of financial documentation and the technique utilized, which is burdensome and outdated.

A majority of organizations still rely on Excel spreadsheets. It is a surprising fact that organizations with multi-million or billion-dollar returns depend on Excel spreadsheets for their financial analysis & reporting.

Although Excel can be used to create financial budgets or reports or forecasts, their accuracy remains a question. It is easy to commit mistakes while creating reports using Excel and equally hard to check them.

The situation achieves another level of toughness when a larger number of people enter data into the same spreadsheet as this exposes you to problems like if someone by mistake entered incorrect data or on which version everyone did their updates on.

This problem is again intensified when you have to extract data that is required for report generation and later maintain all these Excel spreadsheets. Eventually, you end up spending a considerable amount of time in verifying the numbers to make sure it follows the correct data as well as to ensure the links and formulas are accurate.

In such a situation, going for cloud-based budgeting, reporting and planning software would be a great fit to make Excel perform financial analysis & reporting efficiently. It is an approach which business professionals are aware of and implies that when they login to the software tool, they can either enter their inputs on the web or via Excel add-in.

What Is Credit Risk In Investment Banking?

Posted on by Imarticus Learning

Investment banking is focused on generating capital. An investment bank helps its clients from facilitating mergers and acquisitions to providing guidance on all the issues. But besides all the prevailing issues and risks, there is a risk called credit risk. A good investment banker should know ways to manage and identify credit risk. We will know more about credit risk in this article in detail.

Understanding Credit Risk In Investment Banking

Credit risk is defined as the loss and vulnerability generated by the borrower failing in repaying the taken loans due to respective conditions. This results in a lot of imbalance in cash flow. So, a good investment tries to find out the possibility of credit risk in its clients and be prepared on how to cope up when such situations arrive. These types of clients are not good for business and lack accountability.

Such clients often end up giving higher interest rates on their base amount due to late payments and unaccountability. It is hard to know who will turn up as defaulter in advance, but then again, a good investment bank must know ways to manage the information of its clients and discover the credit risk.

How Bankers Calculate Credit Risk?

Customers failing to return loans, mortgages, credit card payments create a loss for the lender. The financial institutions have people assigned specially to determine credit risk. To determine credit risk, you have to look at the five Cs which are credit history of the client, capital, capacity to repay, conditions of the loan and collateral associated with the loan transfer and processing.

If we talk in terms of bonds, then the investor analyses these 5 Cs of the issuer and if the credit rating is high, then it can be considered as a safe investment. If you borrow loans, then make sure your credit rating is high, so you don’t turn up in the list of defaulters. Technology has also offered a lending hand to detect credit risk. Smart data analysis techniques help in finding meaningful information.

The Formula Of Credit Risk

There are many types of credit risks like concentration risk, country risk, etc. But in terms of investment banking sometimes the investor wants to know the credit risk values mathematically. The formula which is calculated based on 5 aforementioned Cs and some more attributes are:

Expected loss or credit risk = probability of default (PD)* exposure at default (EAD)* (1 – loss given default (LGD)).
Where,

EAD is defined as the credit extended to the client.
PD is defined as the low rating and hindrances generating the probability of credit risk. If the loss is to be calculated assuming the company is in default then PD would be 100%.
LGD is also calculated by the loss encountered by the company.

Some Good Practices To Lower Your Chance Of Credit Risk

• Know your customer thoroughly including his past credit records and current credit ratings.

• Keep track of those risks too which are not financially related but can generate situations of loss such as health and capital of a client.

• The deal with a client should be conducted in a structured manner with full paperwork and professionalism.

• Monitor your relationship with the client and try not to lose contact during the entire credit cycle.

• Be updated with modern information analytics tools and techniques. This will help the financial institution to save their time, money and service.

Conclusion

Credit risk can come in all types of debts generated due to loan defaulters. A company can also fail to return the initial investment provided by any financial institution. To avoid these types of risks a bank should identify such clients in advance and as we know ‘Prevention is better than cure’. This article was all about understanding credit risk in investment banking and some ways to cope up with it. I hope it helps!

Also Read: What is Credit Risk For Banks