Financial Aspects of Digital Business PDF

FINANCIAL ASPECTS OF By Team 2 DIGITAL  DIGITAL The rapid advancement of digital BUSINESS technology, especially in the midst of the ongoing the ongoing Covid-19 pandemic, FINANCE...

FINANCIAL ASPECTS OF By Team 2 DIGITAL  DIGITAL The rapid advancement of digital BUSINESS technology, especially in the midst of the ongoing the ongoing Covid-19 pandemic, FINANCE causing the dependence on technology in daily life is increasing. In addition, technology also helps fulfil various needs of society, both socially and economic. Proper financial management is very important for the success of an enterprise or business. To achieve financial goals, it is important for business leaders to keep track of all financial transactions, such as sales, capital expenditure, and customer payables. However, this can be challenging when it is done manually and not in a systematic and integrated manner. Systematic and not integrated. To overcome this this, entrepreneurs can utilise advancements in technology to simplify the process of recording financial records through digital devices. The rapid advancement of information technology is changing changing the way many corporate tasks are performed. Digitalisation is the process of DIGITAL BUSINESS USAGE OF FINTECH COMPANIES IN INDONESIAN FINANCE PLATFORM Companies are constantly working to improve new technologies to make financial services more According to a report from the Indonesian FinTech accessible. With that, the concept of Regulatory Association, here is a diagram of the usage of Sandbox has come up as a tool for governments to fintech companies in Indonesia currently. test and evaluate new fintech companies. The Regulatory Sandbox is a project of the Financial Conduct Authority (FCA) in the United Kingdom, which was launched in October 2014 that works as a testing tool used by OJK to evaluate the condition of business processes for helps OJK in maintaining the stability of the financial system. The introduction of the regulatory sandbox program is one of the ways OJK monitors the growth of the fintech sector in Indonesia. The purpose of this program is not only to boost the financial services and fintech industry in  DIGITAL Digital finance describes a major transformation in the financial services sector driven by technological advances. Innovations such as apps, new business models and digital tools have FINANCE revolutionized the way financial services are delivered. These technologies provide convenience for online payments, fund transfers, investments, and loans. The Role of Technology in Digital Finance: ARTIFICIA DISTRIBUTE CLOUD D LEDGER MACHINE L COMPUTI LEARNING INTELLIGE Improving efficiency and TECHNOLO Like blockchain, facilitates NG Supports data storage Helps understand consumer behavior NCE customer (AI) providing a more GYtransactions. (DLT) secure and transparent and analysis at scale. patterns to create more personalized relevant services. experience. Benefits of Digital Finance: Wider Access: Enables more individuals and businesses to access financial services. Diverse Choices: Provides a variety of options to suit user needs. Operational Efficiency:  Electronic Money (E-Money) TYPES OF BUSINESS Electronic money that is stored digitally for transactions or fund transfers, managed by the DIGITAL FINANCIAL issuer according to the value entered by the user. INNOVATION SERVICES Electronic Wallet (E-Wallet) Digital wallet to store payment card information or electronic money that can be used for transactions. Payment Gateways Platform that facilitates various payment methods such as bank transfers, credit/debit cards, e-money, and virtual accounts. Quick Response Code (QRIS) A standard QR Code based payment system that makes transactions easy, fast and secure. Transfer Fintech Lending Low-cost interbank money transfer services, such as Digital lending and borrowing platform that brings BI-Fast, which supports sending to multiple accounts. together MSMEs with lenders (individuals/institutions). Remittances Digital Bank International money transfer services carried out by Completely digital banking services, from licensed banking or non-bank institutions. registration, e-KYC, to transactions, without a physical office. Open API Paylater An open connection system that enables integration Financing services for purchasing products or of financial services via API for banks and non-banks. services, both online and offline, with a later payment feature. Identity Verification Crowdfunding The platform for verifying customer identity uses Public fundraising platforms for specific purposes, demographic and biometric data to ensure data such as equity crowdfunding for business investment validity. or social causes.  1. Crowdfunding TYPES OF DIGITAL FINANCE Crowdfunding is a way to raise money from a large group of people online, usually in small amounts. It is managed by companies that use internet platforms. Well-known crowdfunding sites include Kickstarter and Indiegogo. There are four main types of crowdfunding: DONATION- REWARD- DEBT-BASED EQUITY- BASED BASED CROWDFUNDI BASED CROWDFUNDI CROWDFUNDI NG CROWDFUNDI NG NG Those who propose a This typeNG is similar to People donate money project offer rewards, Borrowers submit buying shares in a without expecting such as goods or services, proposals to get loans company. Contributors anything in return. This to those who contribute. from lenders. The lenders provide funds in exchange type is often used for This is common in provide money with the for ownership stakes in humanitarian projects or creative industries, like expectation of being paid the company and can non-profit causes, like video games, where back with interest. earn dividends if the building schools or backers might receive company profits. helping during disasters. special features in the game.  3. Digital Payment System 2. Microfinancing Digital Payment Systems are a type of Microfinance, also known as FinTech that provides payment services for various bills, including electricity tokens, microbanking, is a financial service credit cards, and mobile phone credits. This that helps low-income individuals technology offers an effective cashless improve their finances and daily lives. payment alternative for people. Users can Many people in lower economic make payments through mobile banking, classes lack access to traditional internet banking, SMS banking, or e-wallets. banking services, which makes it Using digital payment systems helps prevent difficult for them to grow their crimes like theft of physical valuables such as livelihoods. Microfinancing connects wallets, ATM cards, and cash. Additionally, lenders (creditors) directly with every digital payment transaction is borrowers (debtors) to provide recorded, creating a history of payments for business capital. The business model users. is designed to offer competitive returns for lenders while keeping loans affordable for borrowers. An example of a startup in this field is Amartha, which links micro- entrepreneurs in rural areas with 4. E-Aggregator An e-aggregator is a service that collects, analyzes, and interprets financial information transparently from various sources. It serves as a platform that combines different information about companies for investors, including risks, returns, impacts, and creditworthiness of target populations. 5. P2P Lending Peer-to-Peer (P2P) Lending is a financial service that connects lenders directly with borrowers through an online platform, allowing them to agree on loan terms without involving traditional financial institutions. This system operates electronically and uses the internet to facilitate transactions. P2P Lending platforms also serve as data centers, collecting various financial information relevant to users. This includes details about credit cards, financial management tips, and investment options. The goal is to provide users with valuable insights before making financial decisions. How P2P Lending Works For Lenders: Individuals or entities that provide loans can earn interest on the money they lend. However, they also face risks, such as the possibility of borrowers defaulting on their loans. For Borrowers: Individuals or businesses seeking loans benefit from quick access to funds. However, they must repay the loan with interest, which represents a cost. Benefits and Risks Benefits for Lenders: Potential for higher returns compared to traditional savings accounts or investments. Benefits for Borrowers: Easier access to loans with potentially lower interest rates than those offered by banks. Risks: Lenders may lose money if borrowers fail to repay. While borrowers must manage the obligation THE BENEFITS OF DIGITAL BUSINESS 1. Efficient Revenue Management FINANCE Enables tracking of income from various sources such as e-commerce, digital advertising, or app subscriptions. Digital finance systems, like payment gateways, make payments faster and more accurate. 2. Enhanced Transparency Transaction data is automatically recorded in digital systems, reducing the risk of errors or manipulation. Blockchain technology, for example, fosters greater financial transparency. 3. Financial Data Analysis Leveraging big data allows businesses to analyze purchasing patterns, customer preferences, and cost efficiency. Tools like Google Analytics or digital accounting software enable better predictions and planning. 4. Operational Cost Optimization Reduces the need for physical documentation since everything is integrated digitally. Automation of financial processes, such as automatic invoicing, saves time and resources. 5. Access to Digital Financing Digital businesses can easily secure loans or investments through crowdfunding platforms or fintech lending. These platforms make funding accessible to small THE BENEFITS 0 FASTER RISK 0 OF DIGITAL 6 TRANSACT IONS Online payments enable MANAGEM EN 7 Digital finance systems can detect potential fraud or businesses to operate in BUSINESS transactional errors earlier. real-time, even globally. Digital insurance provides Digital finance systems can quicker protection against integrate with business risks. cryptocurrencies, which are FINANCE relevant in some markets. When a digital business Digital systems ensure that plans to expand, sound all transactions are well- financial management documented, making tax supports its scaling needs. compliance or financial For example, integration auditing easier. with global platforms like PayPal or Stripe simplifies SIMPLIFIES SUPPORTS international transactions. REGULATORY 0 BUSINESS SCALABILI COMPLIANCE 0 8 TY 9  CONCLUSIO N The financial components of digital businesses play a critical role in the changing environment of technology. This is due to improvements in digital finance tools such as payment gateways, blockchain technology, artificial intelligence, and crowdfunding services which enable businesses to adopt more efficient, more transparent and more scalable approaches. Not only do these improvements reduce operational expenditure, they also improve service delivery by making financial services more secure and tailored to individual customers. Also, mechanisms such as the Regulatory Sandbox promote the equilibrium and soundness of the fintech ecosystem. In a globally competitive business space, where digital technologies are the order of the day, it is important for organizations to adopt digital finance if they wish to be on top of competitors.