CFI.co Blog - Page 12 of 47 - Business, Finance, Economics

Are you struggling with your finances?

A study shows that 6 out of 10 young people lack financial education. This leads many youths to make poor financial choices, credit, and investment decisions. This is why it’s crucial to learn basic financial knowledge early in your life.

Doing so allows you to make better financial decisions and apply effective management. Moreover, it can guarantee a stable, stress-free, and better future. Read on to discover some budgeting tips and start building wealth at a young age.

1. Set Your Financial Goals

Setting financial goals is essential when you plan to build wealth. It allows you to create a plan, track your progress, and stay motivated. Moreover, you make effective management that can boost financial health.

Keep note of your monthly income, expenditures, and other monetary activities. It must show that your finances can reach the target goal.

First, set a definite amount and time frame for reaching your goal. For example, you must save $15,000 by the end of the year. With this, you can determine the amount you to save from your monthly income until the year ends.

Next, assess the effectiveness of the saving system you follow. Then, adjust if you find it hard to stick with it. Consider categorizing your goals into short-term and long-term for easy tracking.

2. Budget Your Finances

Create a budget for your finances when building wealth. It ensures you earn more, spend less, and make wise investments. Budgeting allows you to track expenses and follow a plan that results in financial order.

Create a budget plan based on your income and expenditure. It determines the distribution of your finances in categories. You must identify and rank expenses depending on your priorities, too.

The budgeting techniques you can try are the cash system and the 50/30/20 rule. Each method offers ways to distribute and spend your money.

The cash system makes use of cash and disallows credit cards. It allows easy financial tracking. Moreover, the cash system makes you spend less.

Distribute your finances into 3 categories for the 50/30/20 rule. Allot 50% of your income to needs, 30% to wants, and 20% to savings.

3. Start Saving Now

Growing old does not mean you’ll eventually build wealth over time. You need to be proactive in saving to see substantial results.

First, identify the things that need funding. Ensure to categorize them into short-term and long-term goals. Then, estimate the amount of money you need and the time to reach your goal.

What are things you need to save for as a young adult?

Saving for retirement is vital to guarantee a comfortable life in the future. With this, open an Individual Savings Account or contribute to a retirement plan. You can ask your company if they offer company-sponsored plans.

Unforeseen events, such as unemployment, can exhaust your finances. Thus, consider opening an emergency fund to cover the expenses. Many experts recommend saving up at least 3 months or 6 months’ worth of living expenses.

4. Take Risks

A survey shows that only 23% of respondents consider investing in the stock market. Many hesitate to invest because of fluctuating stocks. With this, they lose opportunities that can boost financial worth.

Note that a declining market provides benefits, too. It’s the best time to invest and buy more shares because of their low value. You can expect a high return and portfolio growth once the market recovers.

Don’t be afraid to consider investing in the stock market. Keep note that you can earn more if you invest earlier. You can ask for financial advice from a Registered Investment Advisor, too.

5. Pay and Avoid Debts

Unpaid debt can build up and exhaust all your available funds. Most of them demand monthly instalment payments and carry high-interest rates. You must pay your debts to prevent using all your money as payment and save more.

Moreover, financial responsibilities increase as you grow older. It makes it hard to manage your finances. Borrowing small amounts when you need it is okay, but try not to fall into a pit of debt.

Stick to your budget, prioritize your needs, and only pay using cash. Being debt-free gives you financial freedom and security.

6. Keep Expenses Low

You can categorize expenses into fixed and variable costs. Fixed costs refer to predictable expenses incurred, such as rent, subscriptions, and insurance. In contrast, groceries and repair fees are variable expenses that can change.

Reduce costs to allot more into your savings and investments. First, categorize expenses and rank them based on their relevance. Then, decide on the items to remove.

For example, you pay a fixed rate for your internet connection and music subscription. The internet connection is a necessity while the latter is a want.

7. Note Your Expenses

Noting every expense is one practice that helps in building wealth. It reflects spending habits that you can use to develop effective financial management. Moreover, it can determine your progress.

You can create a system using a spreadsheet or use a logbook to note expenses. Ask and keep receipts for every transaction. Spare at least 10 minutes of your time at night to input everything.

Check your list every week to assess your spending habits. You must determine if there are changes in prices, too. Adjust your budget, if necessary, based on your notes.

8. Explore More

Never rely on one source of income if you plan to build wealth. Try exploring other streams to generate more finances. Turn your interest or hobby into another source of livelihood.

You can find freelancing jobs on the web that fit your skills. Try opening a small business in your local community, too. Venturing into another job protects you from losses and boosts your financial health.

Building Wealth at a Young Age

Building wealth can seem like a daunting task, but it’s not impossible. The number of expenses increases as you grow older. Create a plan to manage your finances early to enjoy a stress-free and better life in the future.

Be smart with your money and invest in your future. You can contact us here for queries on finance, wealth management, and investments.

Digital Banking

What Is Digital Banking?

ByCFI.co

There are now 14 million people in the UK who have a digital-only bank account. 76% of citizens have also used an online banking service in the last 12 months. But, do you know what these services are?

Both digital and online banking have some major differences. Read on as we answer the question “What is digital banking?”

What Is a Digital Bank?

A digital bank is a financial institution that has all of its operations online. Services that were previously available at physical branches can be undertaken in browsers, mobile applications and digital environments.

They do not have brick-and-mortar premises but exist solely through digital means.

What Is Digital Banking?

Digital banking involves transforming all activities, processes and banking products into digital transactions. This allows them to be done anywhere with internet access, making banking much easier for the consumer. Most services are 24 hours and do not require a staff member to be present in a bank.

Obtaining Records and Statements

Transferring Funds

Withdrawing Cash

Bill Payments

Account Management

Monitoring of Transactions

There are also many advantages for the bank itself. As many processes can be automated, it reduces human error and the labour required for repetitive tasks.

What Is the Difference Between Digital and Online Banking?

These two terms may seem interchangeable. However, there are two key differences between them.

Online banking works through internet access. It has several basic banking products and functions. However, the system has limitations and it can not expand to add further services to consumers.

You would find this in use with traditional institutions that have added internet banking as an additional service. It works alongside their other operations.

Digital banking is more in-depth and flexible. It has API, automation and web-based service at its core. This means it can provide more security and cost-efficiency.

A digital bank exists solely online. You don’t have branches you can walk into to make deposits and consult staff face to face.

If you want the ability to expand and add extra features, then digital banking is key. Metrics and analytics taken from it can help improve the customer journey.

There is a third option: Mobile Banking. This is when banks create a designated application so that customers can perform services on their mobile devices.

Benefits of Digital Banking

Digital banking has several benefits. It is changing at a rapid rate bringing advantages for consumers, business owners and the banks themselves.

Increased Accessibility

Digital banking means residential customers, businesses and their employees can access banking anytime. All they need is a device and internet access. They can approve expenses, make purchases and transfer balances.

This can take place anywhere. It may be in the office, on a commute or on a business trip. With the addition of mobile banking, it becomes even easier.

Improved Customer Experience

A well designed digital banking system also creates a better user experience. Chatbots are often available to assist customers with any problems or queries. This improves customer service while minimizing the workload of staff in the bank themselves.

Not only can tasks like scheduled bill payments be set up, but tools for financial management are also provided. Statistics on spending and saving along with financial planning are available.

Central Account Management

With digital banking, all departments can be accessed from one location. This means you don’t have to deal with different representatives. With mobile banking, you can even download multiple apps to represent your different accounts.

Lower Costs

Fully digital banks operate with lower overheads as they have less staff and no physical premises to operate from. They can offer higher yields on savings, lower interest rates on loans and reduced fees as a result. This is often done to attract customers who may normally get put off by the absence of a physical store.

Benefits to Employees

From small businesses to large corporations, digital banking can provide a huge opportunity for employees. With digital banking for businesses, you can assign several corporate cards to employees who may need access to faster means of purchasing to do their job.

With real-time metrics and analytics monitoring, business spending also becomes easier. Reviewing spending by category and approving purchases or expenses instantly is an advantage. Policies can be created and individual thresholds set for individual employees on spending.

By providing financial autonomy, you empower your individuals. At the same time, you also retain control over the finances of the business.

Limits of Digital Banking

While it has many advantages, digital banking should be viewed as a bridge. It can never replace the interaction you get at a branch and some transactions, such as deposits of cash and withdrawals, can not be performed.

To get around this, digital banks usually allow cash deposits in designated partner retail outlets. However, this can often incur a larger fee.

Future of Digital Banking

Digital banking provides flexibility, but customer needs are bound to change. This means a modular infrastructure needs to change with them. What works now may not do in one or two years.

Many banks are now starting to adapt and incorporate digital asset transactions and management into their infrastructure. This includes digital payment wallets and transfers. All of this is provided alongside the standard services for fiat currencies that people need.

Starting with Digital Banking

Now you can answer the question “What is digital banking?”, you just need to find the services that fit your needs. Not all banks will have the same offers. Make sure you look to see what you need and who can make the best provisions.

If you found this article helpful, CFI.CO blog has many more to help. From banking to finance, we can get the most from your money. Click here to see all our business articles and let us help your business boom in the coming year.

Technology

Best Cryptocurrency to Invest In 2022

ByCFI.co Blogger

Although cryptocurrency has become trendy in the past few years and the highest interest has been noticed among younger investors. There are different reasons why this currency has that much interest. After Bitcoin, which become the most popular cryptocurrency, there are Shiba Inu and Dogecoin that buyers have loved the most. For those who have started with investing in the first crypto coins, it was the payable investment.

crypto

What affects the cryptocurrency market?

Unfortunately, the crypto market is not as stable as we expect from fiat currency, equities, or real estate assets. Since it is a young type of investment, there are surprising drops in value. Some experts describe it as a new Wild West of the financial world.

According to experts, there are more than 17,700 different cryptocurrencies, and each of them has value and buyers that invest in them. It is questionable how much currencies are regulated by governments in different countries. On the other hand, in a bunch of misleading information, it is hard to define what is right news and information and what is just propaganda.

How to choose the best cryptocurrency to invest in 2022?

There are a few steps that you can make to choose the most valuable and safe cryptocurrency to invest in. Keep in mind that the crypto market is fragile and extremely volatile. In less than four months it has fallen 42%, meaning that investing in it led to losing half your money.

However, do not be that pessimistic. There are ways to avoid these terrifying mistakes. Invest money that you will not need for the next five years. Do never borrow money for investing in cryptocurrency, because it represents a high risk.

In this market there are different rules than in any other place. You, as an investor, must have a trustworthy portfolio that will open doors that common buyers and newbies cannot pass through. A well-diversified portfolio is an asset that you can own as an investment, too.

The most important thing is to do your research, on the internet, or similar networks. Always check on different sites what experts say about the currency. There are predictions and expectations worth mentioning, too. Do not hesitate to look for help in investing.

Where to buy the best cryptocurrency to invest in 2022?

There are a lot of places where you can invest your money. Some of them have a long tradition in this field, existing from the beginning of the crypto money on the market. Other ones are worthy of mentioning, but still not that good for new currencies and investors without experience. It is not a shame to look for help finding the best crypto exchange on the internet, though.

Which are the best cryptocurrencies to invest in 2022?

Choosing the most affordable, safe, and payable currency is much harder than you may think. Even the most clever and experienced traders make mistakes when buying crypto money. Nobody can predict what will happen with the currency in months to come, even harder to predict years to come. So, always be prepared to withdraw your money and invest small amounts of money at the beginning. We listed the most popular and favorable cryptocurrencies worth investing in 2022.

Bitcoin

It is hard to find a person in the world who does not know what Bitcoin is. As the matter of fact, most of us have entered the world of crypto coins thanks to this currency. Created in 2009. by a mysterious investor hidden under the pseudonym Satoshi Nakamoto, this currency has grown to the most popular and the highest money transaction in the network. The way of mining is still questionable, but its value is constantly growing.

Ethereum

It is not only a cryptocurrency but also a blockchain platform, which facilitates trading and holding of the currency in virtual wallets. As the opposite of most technologies and platforms, Ethereum blockchain is also programmable because it is more than a system of record. You can use it as a potential application like so-called smart contracts used when conditions are met and non-fungible tokens like NFT. It means that you can use it to run self-executing computer programs called smart contracts, which are the heart of decentralized applications (dApps) and decentralized finance (DeFi) services. The growth from the starting price in 2016 until now is more than 27,000%. Good enough to consider it as a stable currency to invest in.

Tether

There is a very important difference between Tether and other currencies. It is a special form of stablecoin, which stands for a currency that is backed by fiat currencies like US dollars or euros. It should be enough for keeping the stability and value of the currency and supporting the currency at the place of the most consistent currencies on the market. This should help buyers who are afraid of the extreme volatility of other coins. Buyers confirmed that it is good enough for investing in years to come so the market cap of the currency is $79 billion.

Binance Coin

This should be a currency that you can use to trade on a special platform called Binance, one of the largest crypto exchanges in the world. Maybe it is a reason why the currency is that popular among buyers and investors, and valuable and stable even after five years of existence. Not only that you can use it for purchasing crypto coins, but there are also other usages of the currency. You can use it for payment processing, trading and even booking travel arrangements. Thanks to the fact that you can trade it for other forms of currencies, like Bitcoin and Ethereum, Binance Coin represents an interesting currency for investing. The growth of the currency from releasing is 410,000%.

Which are the best cryptocurrency to invest in 2022?

In the end, it is still not concluded which currency is the best cryptocurrency to invest in 2022. Depending on your interest, the amount that you want to invest, and the information you have, you should make your own decision. Crypto exchanges are similar to brokerage platforms, so they will provide the tools you need when buying and selling currencies. Before buying always check for support assets, security, fees, and payment methods.

Banking

Banking Tips :7 Reasons to Open a Bank Account For Your Small Business

ByCFI.co

Did you know that over 20% of small businesses in the U.K. don’t make it past the first year? One of the biggest contributors to this is using the same account for their business and personal finances.

When you’re just starting as an entrepreneur, it can be tough to figure out the best way to manage your finances. Do you keep everything separate? Do you combine your personal and business money?

While there’s no one right answer, most small business owners find it best to open a bank account specifically for their business. This is one of the most essential business banking tips to consider.

Here are seven reasons why you should consider doing the same:

1. Makes Tax Preparation Easier HMRC

Separating your business and personal accounting makes tax preparation easier because it helps you differentiate what is and isn’t taxable income. This can save you a lot of time and money when it comes time to file your taxes.

It also helps you automate your tax preparation process. With separate finances, it’s easier for your accountant to link all business-related transactions on your account to your tax preparation software.

With a separate account, you don’t have to spend countless hours sorting through different expenses, trying to figure out which are personal and business-related. This makes it easier to determine deductions come tax season.

And a bonus benefit is that it minimizes your risk of being audited. The HMRC is more likely to audit business owners who mix their personal and business finances.

2. Automates Your Bookkeeping

Keeping track of your business finances can be a daunting task. But when everything is in one place, and all transactions are automatically recorded, it makes the process of bookkeeping much simpler.

Bookkeeping automation also means you have a more accurate record of your business finances. This information can help you make informed business decisions to improve your financial health.

3. It’s Easier to Get Business Loans

When you have a business bank account, lenders know that you’re serious about your business. It also shows that you’re taking the necessary steps to protect your finances. This makes it easier to get a business loan to expand or grow your business.

Having a business bank account also shows that you’re able to handle money responsibly. This is an important trait for any business owner looking for additional financing. The last thing a lender wants is to risk their money on a business that may not be able to repay the loan.

4. Helps You Manage Your Expenses

When you have a business account, all your business transactions will be organized in one place. This makes it simpler to keep track of your spending. It can also help you stay on budget and make informed business decisions.

When you have a business bank account, you’re also able to receive payments from customers. This makes it easy for them to pay and reduces the chances of them forgetting. It’s also a great way to build customer loyalty.

When you’re looking for a business bank account, it’s important to find one that fits your needs. Make sure to compare interest rates, fees and other features. Don’t forget to ask about the bank’s lending capabilities.

5. Protect Yourself from Business Debt Liability

When running a company, it’s important to protect yourself from business debt liability. By opening a business bank account, you can help ensure that your personal finances are not liable for any business debts.

Business debt liability is the legal responsibility of a business owner for the debts of their company. This can include personal credit cards, lines of credit, and loans taken out in the name of the business.

If the business goes bankrupt or defaults on its payments, the creditors can go after the business owner’s personal assets to cover the debt.

A business bank account helps to protect your personal assets by keeping your business and personal finances separate. This way, if the business goes bankrupt, the creditors can only go after the assets of the company, not your personal belongings.

6. Show the HMRC That Your Business Is Not a Hobby

A business bank account provides a clear separation between your personal and business finances, making it easier to track your business expenses and income. When you file your taxes, having a business bank account can help prove that your company is a legitimate business and not just a hobby.

If you are self-employed, it’s important to have a business bank account to track your business income and expenses. A business bank account can also help you save money on taxes.

By deducting your business expenses from your business income, you can lower your taxable income.

7. Helps You Establish Business Credibility

When you’re starting a small business, it’s important to establish credibility with your customers and vendors. One way to do that is by having a business bank account. A commercial bank will take you more seriously when you’re doing transactions and may be more likely to give you a loan if you need one.

Having a business banking relationship also shows that you’re a professional and are serious about your business. Additionally, a business bank account helps you look more professional.

It looks much more professional to have all of your transactions taking place through a dedicated business bank account instead of mixing your personal and professional finances together.

Follow the Above Banking Tips

When launching your first business, it can be tempting to mix your personal and business finances. After all, starting a business is a lot of work and opening a business account isn’t a priority for many.

Unfortunately, this mistake could cost you dearly down the road. By opening a business bank account, you can protect yourself from business debt liability, show the HMRC that your business is legitimate, and establish credibility with your customers and vendors.

For more business finance and banking tips, subscribe to our CFI.co Print Magazine.

Investment Management

Matthew Teifke On How Austin, Texas Became The Hottest Real Estate Market In The Country

ByCFI.co Blogger

Austin, Texas is in the middle of a real estate boom. Having been voted the highest growth market by Yahoo Finance in 2021, the city continues to draw tech professionals, artists, and everyone else that is looking for a better quality of life. Matthew Teifke from Teikfe Real Estate has been a market leader in the different Texan cities of Austin, Houston, San Antonio, and Corpus Christi.

Matthew Teifke - Austin Texas

Born and brought up in Texas, Matthew Teifke realized his passion for dealing in everything real estate from a very young age. The Round Rock native started early, gaining his real estate license at the tender age of 18. He was active in dealing with his family properties and was clear that this was all that he wanted to do for the rest of his life.

The principal reason for starting Teifke Real Estate was to bring financial freedom for everyone from buyers, and sellers to even agents and consultants. The company was formed in 2015-2016 by Matthew with the aim of catering to the Texan cities of Austin, San Antonio, Houston, and Corpus Christi.

With the belief that Texas was going to be the hottest real estate destination in the country in the coming years, Matthew brought in his friend, Alex Coffman. Alex was equally passionate about real estate and jumped on board to join Teifke Real Estate as Co-Founder. Together, they ventured into offering diverse real estate services for the Texan housing market.

The Growth of Austin, Texas as one of America’s Premier Real Estate Market

According to Matthew Teikfe, this was a long time coming. He states, “Texas has always been a great place to live, raise a family, explore employment opportunities and maintain an affordable standard of living.” He attributes that the interest of real estate investors in cities like Austin, San Antonio, and Houston is not something new.

“The potential was always there. People kept migrating to cities like Austin from different parts of the country. Look at the migration numbers that Austin sees every single day. People know that this can be a place that can help them live well on an income that would be difficult for them in places like San Francisco or New York City.”

Matthew is right. According to a report published by U-Haul, 145 individuals are moving to Texas every single day. The numbers match up and show that Texas has been attracting individuals from the West, Midwest, and other parts of the country. Fewer taxes (Texas does not have state personal income tax), sunshine, and larger living spaces are major factors.

There is no denying the fact that big tech companies are lining up to shift operations and offices to Texas. Look at Tesla’s Elon Musk who recently announced that they are investing more than $1.1 Billion in building a new headquarters in Austin. Oracle, Facebook, PayPal, AMD, and Texan native, Dell already are generating thousands of new jobs in the state.

As Matthew opines, “You have these young tech professionals that are moving in with their young families, children and pets and exploring great school districts in Austin. They work as software developers or game designers. They earn well, have always dreamt of having a house and want a far more relaxed living condition as compared to NYC or Silicon Valley.”

Teifke Real Estate: The Beginning of the Promise of Financial Freedom

There are tons of real estate companies in Texas. Matthew knows that. He still feels that what they are trying to do at Teikfe Real Estate is vastly different from what some of his peers are up to. More than just securing a commission here and there, Teifke Real Estate is geared toward achieving financial freedom for everyone that is involved in this ecosystem.

As Matthew puts it best, “Our goal is to help different real estate agents attain financial freedom. We want our sellers to get the best and most realistic prices for their properties. Likewise, we are also committed to helping all our buyers and investors get the best deals and prices on the market.” He truly believes that there can be a situation where everyone can be a winner!

This shows how Teifke Real Estate has been able to shape its various offerings. Let us shed some light on what they offer, as has been on the Teifke Real Estate website:

Coaching present and prospective real estate agents
Buying assistance with regard to residential, commercial, and investment properties
Selling assistance for residential, commercial, and investment properties
Assisting with construction, renovations, and remodeling work
Sourcing deals and arranging finances for prospective buying or selling
All-cash house purchases to help sellers that are looking for immediate help

Both Matthew and Alef run an excellent podcast on the real estate markets. Together they help enlighten and educate audiences on the ins and outs of buying, selling, and investing in the Texas real estate markets.

Matthew Teifke’s personal take on Austin’s Real Estate Situation

Every possible marker, news journal, or real estate magazine points to the growth in the Austin real estate markets. Matthew believes that this is the best time to get in on the action. You do not want to end up in a FOMO situation later on.

While the growth is there, it is still possible to get your hands on your dream house in Austin, Texas. “Look at the median house prices in Austin. It is still somewhere around $470,000 if I am not wrong. You give this another year or so and you are looking at a figure of $700,000. Just wait for Tesla to open and you will see 10,000 highly paid tech professionals in an all-out bidding war.”

Matthew is right. Prices are rising, but when you compare the house prices in Austin with somewhere like San Francisco, NYC, or even Washington, you see that the affordability factor is still there. Not for long though. Waiting is going to do no good since inventory is always in short supply as compared to the demand, which will always keep increasing.

Matthew suggests that if you have been an individual or family that was waiting for a high-growth real estate market, one where you will be able to double your investments in three to four years, Austin is the place to be right now.

We couldn’t agree more.

Finance

Financial Tips : Are Banks Still Relevant in This Cryptocurrency Era?

ByCFI.co

Did you know that experts expect Bitcoin’s value could multiply to twenty-five times its current value within the next decade?

Cryptocurrencies are growing in popularity around the world every day. This is making many people want to know how valuable they will be in the future. When making investment decisions you shouldn’t act on impulse and should instead make decisions that are based on logic and strategy.

This is why it’s important to know whether banks are going to matter in the future. To make you make sense of the future of money, we’ve created a guide of the top financial tips about banking and cryptocurrencies.

Why Banks Are Important Today

Banks are able to store currencies and provide consumers with security. When you open a bank account and deposit money, you can rest assured that your money is safe. This is because banks are FDIC-insured.

They’re also able to keep records of your transactions. This oftentimes includes things like processing activity from credit and debit cards.

If you’re traveling internationally, you’ll never have a problem taking money from your account in different currencies. All you need to do is withdraw cash from an ATM.

Those who want to buy a house usually need help from banks so that they can get mortgages. New business owners also need banks if they want to get lines of credit to get financing for making investments.

Where Traditional Banks Fall Short

The financial crisis of two thousand and eight showed consumers that the world’s banking system has weaknesses. This inspired many people to develop new ways to work with finances such as Satoshi Nakamoto, who invented Bitcoin.

One of the reasons Bitcoin has soared in popularity is that it didn’t need to incorporate traditional banking into its process. Here are other ways that banking falls short.

Lack of Accessibility

You’re out of luck if you want to visit your local bank teller during the weekend because they’re only open on weekdays. Banks also make it difficult for those who need to make big transactions. Instead of doing this online, you have to go in person to visit a branch.

Inclusion

Traditional banking systems are set up to reward those who certain groups and people. These people receive incentives such as soft loans, longer payment durations, and better interest rates. This unfair system is exclusive and ineffective.

Problems with Security

Skilled con artists can easily hack banking websites and mobile apps. This is why so many people get money stolen from their bank accounts. Traditional banking systems are also vulnerable to fraud and embezzlement.

Not only is this a problem for consumers but it’s also an issue for insurance companies that offer fraud protection.

Higher Feed and Slower Transaction Speeds

Traditional banks have many unnecessary fees and taxes on transactions. Most banks charge their customers for withdrawing cash from ATMs that are out of their networks. It’s also common for banks to charge high fees on international transactions and wire transfers.

Banking systems also run on ineffective digital systems. This means that they have slow protocols, which means it can take a long time to send and receive money.

How Cryptocurrencies Are Better Than Traditional Banking

There are many ways that cryptocurrencies function more effectively than traditional banking systems.

Many people choose to use cryptocurrencies to make transactions because they are more efficient and have lower transaction fees. Here are more top ways that cryptocurrencies can make traditional banking obsolete.

They Are Decentralized

There is no third party that controls cryptocurrencies. This means that there are fewer human interactions involved in making transactions, which means that they are less biased.

Since anonymous identification numbers are all that are used for making transactions, it’s safer and more reliable to do business with cryptocurrencies than with banking.

Fewer Concerns About Security

Those who understand the importance of financial planning are probably concerned by traditional banking’s lack of security. Cryptocurrencies, on the other hand, operate on blockchain technology. This means that their systems are nearly impossible to hack.

The Ability to Make Smart Contracts

One of the greatest benefits of cryptocurrencies is that they let people create smart contracts. These smart contracts don’t need humans to create or process them because computers do all of the work. This means that they are reliable and easy to create.

Fast Transaction Speeds

It’s possible to process many more transactions by using cryptocurrencies than it is with traditional financial systems. This is because there are many protocols that traditional banks need to use to make transactions. By using cryptocurrencies, it’s possible to make transactions that are almost instantaneous.

Why the World Still Needs Banks

Even though the age of cryptocurrency is changing how people handle their money, there are still many reasons why to believe in the importance of banks.

People still need to use traditional banks to do certain kinds of investment banking. This is because it’s not possible to use cryptocurrencies to do things such as underwriting and overseeing acquisitions. This is a type of work that humans need to do.

It’s also not possible for cryptocurrencies to mimic the vital operations of central banks. This means that there is nobody to set interest rates or control inflation.

Make Use of Top Financial Tips in the Cryptocurrency Era

If you’re worried that banks will become obsolete because of the rise of cryptocurrencies, remember that there are many important things cryptocurrencies can’t do that banks can do. People still need banks to offer things like loans and mortgages. It’s also important to have a central bank to keep control of inflation and set interest rates.

CFI is a great resource for those who want to find out about finance and banking trends. If you have any questions feel free to contact us. And if you’d like to receive financial tips from CFI don’t forget to sign up for our newsletter.

Investment Banking

Investment Banking vs. Retail Banking? What’s the Difference

ByCFI.co

Whether you prefer to bank online or at a physical location, there are a few differences between retail and investment banking. The investment banking world deals with high prices and high levels of competition. Retail banks are generally volume-driven.

In fact, the investment banking market is expected to reach just south of $140 billion in the next few years.

Regardless of the amount, both provide necessary financial services for customers big and small. Curious to know more about the differences between the two? Continue reading for an overview of the key differences between them.

Retail Banking

When you picture a physical bank, you’re most likely picturing a retail bank. These retail banks provide a way for the general public to conduct their everyday banking needs onsite. Some of the basic services offered at a retail bank include:

Checking accounts
Savings accounts
Certificates of deposit
Personal lines of credit
Mortgages
Auto loans
Credit cards

The main services utilized at a retail bank generally relate to checking and savings accounts to deposit and withdraw funds. Retail banks also allow consumers to build their credit via credit cards or auto loans.

While physical branches do exist, more and more retail banks are moving online.

Investment Banking

Investment banking falls under the corporate banking umbrella. It generally serves a different clientele. They focus on an institutional client base as opposed to individuals.

Investment banks serve institutional needs and provide advisory services related to capital markets. Some of these areas include:

Equity markets
Bond markets
Portfolio management
Mergers and acquisitions
Equipment lending
Syndicated loans

Investment bank services operate on a larger scale in terms of complex transactions.

Main Differences Between Them

In terms of financial services offered, some of the main differences between the two can be broken down as follows. A few differences relating to retail banks include:

Catering more toward the general public
Managing lesser sums of money
Granting access to individual services

A few services for investment banks include:

Catering to larger institutions
Handling complex sums of money
Providing corporate services

These may be overly simplified summations. However, both types of banking handle a variety of finance-related transactions. Some are at the consumer level, and some are at the corporate level.

When to Choose an Investment Bank

For corporate mergers or startup company IPO launch preparation, investment banks and bankers are heavily involved.

Whether it’s a public company or a private one, choosing the best investment bank can make all the difference. This helps to obtain a successful financing deal, valuation, or initial public offering.

Having the right team behind a transaction will help. First and foremost, it helps determine whether a deal gets completed. Investment banking teams exist to help companies navigate through the complex and often unwieldy process of something like an IPO. They are trained to manage complex projects with transparency and efficiency.

The operations of a team of investment bankers could be divided into three functions:

Financial advisors
Mergers and acquisitions
Research

Operations of Investment Banking

A normal bank facilitates transactions at an individual customer level. Investment banks facilitate transactions for businesses and institutions. The transactions themselves are more unique when it comes to investment banking, thus bringing in the need for specific teams to complete said transactions.

Financial advisors provide a strategic outline of short-term and long-term business goals. They also provide a thorough understanding of industry trends and global markets.

Investment banks also facilitate mergers and acquisitions, which involve estimating a company’s valuation. The process ultimately ends in price negotiation and facilitation of the acquisition itself.

The Role of Research

Investment banks also have research divisions that provide investment advice for clients. The research branch is able to advise clients by keeping on top of knowledge in areas such as:

Credit research
Fixed income research
Macroeconomic research
Quantitative analysis

Research teams are highly knowledgeable. A good research team is well-sought after by companies during the process of financing a deal.

To Summarize

There are many differences between the operations of retail banking and investment banking. One of the key differences to remember is the type of client to which services are offered.

Retail banking, in general, exists to offer financial services to individuals. Investment banking is geared toward commercial or corporate use.

Investment banks exist to expand products offerings and increase market shares. They work as intermediaries between financial markets and organizations. Responsibilities also include:

Helping issue shares of stock
Counsel during the pre-underwriting stage
Counsel during securities distribution stage
Examination of financial statements
Organizing prospectus information for potential investors

Retail banks provide customer service and financial advice on a more individualized level. Retail banks also provide underwriting services for products such as home mortgages and auto loans. Retail banks provide a way for the average customer to deposit cash, withdraw funds, and extend credit.

An Investment in Banking

From mergers to everyday cash deposits, banking systems today accommodate a wide range of clients and services. The world of banking saw many changes as a result of the global pandemic. Markets shifted from previous patterns. Previously in-person transactions moved online.

However, both investment banking and retail banking do have one commonality that remains the same. They exist to serve their clients and their clients’ success.

If you found any of the above information helpful, be sure to check out any of the additional articles we have listed in our Banking dropdown. We offer plenty of resources for businesses and individuals alike.

Technology

Clever Campaigns: 4 Marketing Tactics Your SaaS Brand Hasn’t Tried

ByCFI.co Blogger

The SaaS industry is experiencing a boom, and forward-thinking companies can develop an exceptional profit margin with the right product.

SaaS

For your SaaS business to stand out from the crowd and generate a huge ROI, it must develop an engaging marketing strategy.

As the sector is rife with competition, you’ll need to focus on promoting your software, increasing confidence in your brand, and setting your business apart from its rivals.

If you’re ready to create a clever campaign, check out these four marketing tactics your SaaS brand might not have tried.

Rev-Up Your Revenue with Referral Marketing

It is foolish to overlook referral marketing, as it is the online equivalent to word-of-mouth advertising.

Your company must encourage as many customers as possible to recommend your product to their friends, family members, or professional network in-person or via digital platforms, such as LinkedIn or email.

The more recommendations your current customers make, the more leads you could generate each month and the bigger your business’s annual profit margin.

As a referral will come from a person they know, a prospective customer is more likely to trust your brand and place an order.

Encourage customers to refer your brand by introducing a customer referral program or providing access to a premium feature for a successful referral.

Dropbox is a great example, as the company promises to provide its users with extra storage after successfully inviting friends.

The innovative tactic helped the brand grow from 100,000 users to 4 million in 15 months.

Promote Your Insurance Policy

Modern consumers expect SaaS companies to provide fast, stable, and effective software.

The last thing they will want is for a product to let them down when they need it, which is why they will want to buy from a dependable company.

Promoting your business insurance coverage will give customers peace of mind that you can recover their lost income or pay for a lawsuit following a service outage.

The right insurance policy could help your business financially recover from a serious business error, defense fees, or a business interruption.

Simplify the Sign-Up Process

A long sign-up process for a SaaS product will cause prospective customers to feel frustrated and bored.

Make sure you don’t lose an order by simplifying the sign-up process on your website. For instance, reduce the initial steps to maintain a customer’s interest and help them place an order quickly.

Remember, some customers might not feel committed to buying your product, and a lengthy sign-up might give them more time to think twice about placing an order.

Minimize Software Options

More products equal more customers, right? Wrong. While you might believe a vast array of products will increase sales, too many options may confuse your customers or provide too much to consider.

Rather than missing out on many orders, minimize your software options to simplify your customers’ choices. This will ensure they find the exact product for their requirements and budget, and they won’t need to study different packages to avoid making a mistake.

Banking

Here’s What to Do to Keep Your Retail Bank’s Customers Happy

ByCFI.co Blogger

Many of today’s average retail banking customers are considered “digital natives,” or people who have grown up and gotten acclimatized to the ubiquitous presence of technology. It is now like second nature for many customers to use their bank’s core technologies to pay their household bills, settle their loan payments, or transfer for personal and business purposes—all in just minutes, using only a computer or a mobile phone.

retail banking

Banks have taken notice, and many have gone the extra mile and shifted into more digitally driven retail banking models. This likely holds true for your own bank and its retail banking program. However, the fight to hold on to your market share won’t be an easy one. There’s no guarantee that you’ll keep all your retail banking customers loyal to your brand, or that you’ll attract as many new customers as you hope to, just because you’ve undergone a digital transformation. Like-minded financial institutions have attempted to do the same, which makes it a pretty tight race to the top of the retail banking industry.

Knowing just how stiff the competition is, what can you do to satisfy your current retail banking customers—and better yet, how can you get them to recommend your bank to others? To answer that question, here are five useful tips to strengthen your retail banking efforts.

Open Up Different Touchpoints for Retail Banking

Some of your retail customers may still choose to go the traditional route and settle their banking transactions over the counter. However, a large chunk of them will want multiple touchpoints with your banking ecosystem, for example through their smartphones, tablets, laptops, and even wearables. One way that you can keep them satisfied is to invest in technology that makes instant, round-the-clock omnichannel banking easy for you to handle. Consider onboarding a digital banking platform that will allow you full dexterity when managing your retail customers’ banking journeys across multiple channels.

Make It a Breeze to Open New Retail Banking Accounts

How do you win over a new crop of retail banking customers who are deciding between your brand and another brand? The answer lies in making sure that their first experience with your bank—i.e., opening an account—is a simple and pleasant one. Revisit your current customer enrollment processes to streamline them and remove redundancies, without compromising on your know your customer (KYC) and customer due diligence (CDD) standards.

Deliver Innovative New Products That Fit Your Customers’ Life Stages

Next, look for ways to bolster your bank’s product development for its retail banking offerings. Sticking with the same lineup of generic-looking account offerings, and failing to communicate what kind of customer they’re actually for, will result in the stagnation of your retail banking program. Try innovating your roster of products to include distinct perks, for example rewards points for thrifty customers. You can also enter into a bancassurance agreement with an insurance carrier to give young, health-conscious, or especially pragmatic customers additional insurance benefits with their account. If your products can truly resonate with your retail customers’ needs and values at specific stages in their life, you’ll have an edge over your competitors.

Improve the User-Friendliness of Your Retail Banking Platforms’ Interfaces

Given how often retail banking customers turn to their banking apps and websites, it helps for a bank to invest in enhanced user experience (UX) for these channels. When you do this for your own retail banking channels, aim for simple, streamlined, and intuitive UX that makes it a pleasure to transact through your bank’s system. Your customers may consider leaving your bank if your interfaces are confusing, tiresome, and difficult to navigate. The opposite also applies: you’ll cultivate a loyal following among your retail customers if they can associate your brand with great UX.

Offer Multiple Options for Customer Care and Engagement

Gone are the days of relying only on telephone hotlines to address customer service concerns. You should expect your customers to want to reach out to you through multiple mediums, for example through email, chat, and even social media. You’ll be able to decongest the high volume of retail banking requests and increase the efficiency of your customer care by employing technologies like automation and artificial intelligence. Automate and use chatbots for relatively simple process flows while letting your customer care team resolve more complex problems. If you can already anticipate that your customers want speed, accuracy, and thoroughness in the resolution of their concerns, be proactive when it comes to strengthening your customer care.

Final Words: Customer Satisfaction Plays a Big Role in the Success of Your Retail Banking Program

Your retail customers account for a huge part of your bank’s existing clientele. The happiest of them will serve as effective brand ambassadors for your bank, especially to new customers who are still deciding on a provider. Make it a priority to improve upon your retail customers’ satisfaction, and you’ll be able to take your retail banking program to new heights.

Business

5 Ways Partnering with the Best Bank Will Boost Business Growth

ByCFI.co

Did you know that 82% of businesses fail because of cash flow problems? That’s right; not because of management issues or unfair laws, but stalled cash flows. In times of financial turmoil, only a reputable bank can get your business out of the doldrums. It’s unfortunate that most business owners don’t quite understand the importance of having a reputable bank as a partner. In fact, about 26% of small business owners don’t have separate accounts for their business. This begs the question, is partnering with a bank really good for business growth and prosperity?

To answer this question, we’ll be highlighting a few ways teaming up with the right bank can take your business to greater heights.

1. The Right Banks Enhance Your Professional Image

Having the right bank as your partner helps enhance your corporate image. Investors associate specific banks with high-level and successful businesses. Partnering with such banks will automatically put you in the big leagues, or at least give off the perception.

What’s more, a separate business account is a clear indicator that you’re open for business. Failing to separate your business from personal affairs is a huge turn-off for clients and investors. Not only is it unprofessional, but also makes your business look illegitimate or temporary.

Having your business name on checks and financial statements shows that you’re here to stay. Avoid giving off the wrong impression by using your personal account for business transactions.

2. It Offers Commercial Loans

Unexpected financial emergencies or shortfalls are common in all businesses. As mentioned above, this is what brings most businesses to ruin. Thankfully, banks offer business loans that can help businesses fill in financial gaps.

You can use business loans to buy equipment, pay suppliers, or even fulfil payroll. You can even use the loan to buy real estate property and expand your business. Commercial banks will be more than happy to give you a loan provided you meet their qualification criteria.

Small businesses are the biggest winners because of small business loans from the government. The United States Small Business Administration has developed various loan programs for small businesses. They can access these loans through commercial banks and get the funding they need.

The SBA guarantees these loans, meaning that businesses with less than stellar credit scores can apply for these loans. However, the first step is to partner with a commercial bank to get the green light.

3. It Keeps Your Money Safe

The biggest benefit of partnering with a reputable bank for your business is that they offer a safe place to store your business cash. Banks offer both checking and operating accounts for your business.

A checking account will hold money that your business will use for completing payroll and paying payroll taxes. An operating account, on the other hand, holds money that finances the business’s daily operations. This may include paying suppliers, rent, or energy bills.

These different types of accounts help you manage business finances in check. It also keeps your money safe from theft or fraudulent transactions.

4. Banks Offer Lines of Credit

Sometimes your business needs financial help, but taking out a large loan means paying hefty interest and other fees. If you want to sidestep interest, you should consider opening a line of credit. A line of credit allows you to borrow a specific amount and repay it when you get payment from your client.

Let’s say you have a line of credit of 10,000 pounds. The bank allows you to withdraw any amount not exceeding 10,000 pounds. You then pay back the amount when your business receives payments for pending bills.

Lines of credit allow you to borrow only the amount you need, not a large loan that attracts hefty interest fees. Over time, you can save a bundle in interest fees; money that you can use to grow your business.

5. They Provide Debit and Credit Cards

Did you know that commercial banks offer debit and credit cards for businesses? That’s right, businesses can apply for debit and credit cards with their checking or operating accounts. You can use this credit card just like you would your personal one.

A business credit card can help you manage short-term expenses and keep your business running. It also helps you manage costs, spread cash flow, and make timely payments. The best part is that it comes with incredible rewards to help save you money.

However, it’s worth noting that business credit cards are only for business use. Using it for personal reasons violates the terms that the banks stipulate. This could result in dire consequences for your business account.

6. They Offer Priceless Advice

All business owners face the monumental task of managing their business’s finances. However, this is easier said than done, given the unpredictable nature of business. Banks can step in to give business owners valuable advice on how they can maintain cash flow and boost their profits.

The right bank can offer crucial advice on taxes, insurance, payroll management, and even retirement accounts. If you partner with the best bank, you can get insights into business growth strategies to take your business to the next level.

They will also help you set up digital payment methods that are automatically reflected in your business account. This will help streamline payments and ensure consistency between transactions and your bank account.

7. They Offer Workshops and Seminars

Banks frequently hold seminars and workshops where business owners can learn about money management and growth in their industries. They also learn about solid financial strategies and how to expand their networks. These events are a great avenue to learn and grow your business for increased profitability.

Bank Partnerships for Accelerated Business Growth

Partnering with a reputable bank is one sure-fire way to spur business growth and increase profit margins. However, you need to find a trustworthy bank that aligns with your goals and vision. Open a business bank account today and propel your business to greater heights.

Check out our wealth management section to learn how you can make good use of the profits you earn from your business.