BUS7B47 Financial Insights And Business Intelligence Assignment Sample

Financial Insights And Business Intelligence Assignment

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Introduction OfFinancial Insights And Business Intelligence

Fintech denotes firms that apply technology to improve or improve financial services and procedures. Fintech is being used by firms, and industries from all over the world to enhance their financial performances. Amazon is such an example of a big organization that can utilize fintech for more profitability. In this essay, two fintech solutions that can help Amazon is critically evaluated.

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Fintech Solution for Firm’s Growth: Mobile Payment Solutions

Fintech innovations have grown rapidly thanks to smartphones and tablets which enable mobile payment systems to pay for goods and services. Numerous businesses have adopted this tactic, including Starbucks, which unveiled its mobile payment app in 2011. Starbucks' mobile payment app now accounts for more than 41% of all transactions nationwide (Gong, 2022). The app offers consumers a range of features, such as simple ordering, rewards, and promotions. Starbucks does make use of a variety of benefits provided by mobile payment options, such as:

Improved Efficiency: Ordering, and paying for food and drinks has become more convenient for customers thanks to mobile payment solutions. Smartphones allow customers to rapidly order drinks from the store, pay for them and pick them up without having to wait in a queue.

Rewards and Promotions: Customers can receive discounts and free drinks by utilizing the app, among other incentives. Customers are encouraged to utilize the app, and this fosters consumer loyalty.

Data Analytics: Starbucks might use this to gather information on consumer behaviour, including buying habits and preferences, through the app. The customer experience can be personalized using this data, and specific promotions can be made.

Increased Sales: The mobile payment app has led to an increase in sales for Starbucks. Customers using the app are more likely to frequent the store and spend more money than non-users (Moghavvemi, 2021).

Amazon's financial performance could gain a variety of advantages from mobile payment options. In this part, taking into account both the advantages and disadvantages of this FinTech solution, it will be assessed critically how mobile payment solutions can assist Amazon in enhancing its performance.

Strengths:

  • Increased Convenience: Customers can pay for their products quickly and conveniently with the help of mobile payment options. This ease of use can enhance the customer experience, which can boost repeat business and customer loyalty. Customers can pay for their purchases using a mobile payment solution without having to carry cash or credit cards, which can improve sales.
  • Reduced Transaction Costs: By removing the need for cash and card transactions, mobile payment solutions can assist Amazon in lowering transaction costs (Thangamuthu, 2020). By doing this, Amazon may cut costs associated with payment processing fees and lower the possibility of fraudulent purchases. Amazon can grow its profitability and raise shareholder value by lowering transaction costs.
  • Enhanced Data Collection: Amazon may better target its goods and promotions to certain customers by using data from mobile payment systems to learn more about client purchasing patterns. Additionally, by using this data to identify consumer behaviour trends and patterns, strategic planning can be aided.

Weaknesses:

  • Security Risks: The security of client financial information may be jeopardized by mobile payment solutions' susceptibility to fraud and hacking (Mogaji and Nguyen, 2022.). This could harm Amazon's brand and cause a decline in customer confidence. To protect the security of its customers' financial information, Amazon will need to make significant security investments.
  • High Initial Investment Costs: Amazon will have to spend a sizable sum of money on developing and implementing a mobile payment solution because doing so can be pricey. In the short term, this may have an effect on the company's profitability.
  • Limited Access: Mobile networks and technology are necessary for mobile payment solutions; however, not all clients may have access to them. The reach of Amazon's mobile payment solution may be constrained as a result, which may affect how well it works to boost financial performance.

Fintech Solution for Firm’s Growth: Digital Lending Solutions

A FinTech solution called digital lending gives both individuals and companies a quick and simple way to receive loans. In this part, the potential benefits and drawbacks of digital lending for Amazon in terms of its ability to boost its financial performance will be analyzed. Alibaba Group is one business that has significantly improved its financial performance as a result of digital lending solutions. Alibaba is a global Chinese conglomerate with knowledge of technology, retail, and e-commerce. By employing digital lending solutions to provide financial services to small and medium-sized firms (SMEs) in China, the organization has dramatically improved its financial performance (Lu et al. 2022). Alibaba did benefit from a number of advantages afforded by solutions, including:

Increased Revenue: The Company’s ability to offer financial services to SMEs thanks to Alibaba's digital lending solutions has expanded the user base of Alibaba. Due to this, the business has seen a rise in income and customer loyalty.

Improved Customer Experience: Alibaba might have enhanced the general user experience on its platform by providing financial services to SMEs. It is now simpler for SMEs to expand their firms and compete with bigger corporations since they have access to a variety of loan choices that they previously did not have.

Cost Savings: Alibaba has been able to cut costs related to conventional lending practices, such as human underwriting and credit checks (Frost et al. 2019). This has aided the business in increasing efficiency and profitability.

Amazon's financial performance could gain a variety of advantages from Digital Lending Solutions. In this part, taking into account both the advantages and disadvantages of this FinTech solution, we will assess critically how mobile payment solutions can assist Amazon in enhancing its performance

Strengths:

  • Increased Revenue: Amazon can offer financing choices to its clients and suppliers through its digital lending solutions, which could result in higher sales and earnings. This might aid Amazon in increasing both its client base and profits.
  • Improved Customer Experience: The experiences of customers can be enhanced by using digital lending solutions, which can provide a quick and simple way for clients to receive credit (Wewege, 2020). This may increase customer happiness and retention, promoting repeat business and favourable recommendations from peers.
  • Reduced Costs: By expediting the loan application and approval procedure, digital lending solutions can help Amazon cut costs. This can lessen the requirement for workers to process loan applications and eliminate the need for manual paperwork. Amazon can increase its profitability and maintain its position as a market leader by lowering costs.

Weaknesses:

  • Credit Risk: The possibility of default when using digital lending solutions can have an effect on Amazon's financial results. To reduce the danger of default, Amazon will need to thoroughly assess the creditworthiness of its clients and suppliers.
  • Regulatory Compliance: Regulation compliance standards, which can be difficult and time-consuming, apply to digital lending. To avoid facing both legal and financial repercussions, Amazon will need to make sure that all applicable laws are followed when developing its digital lending options.
  • Data Privacy and Security: Access to sensitive financial data is needed for digital lending solutions, which makes it susceptible to security risks and data breaches (Bowers, 2019). To ensure that the financial information of its clients is secure, Amazon will need to make significant security-related investments.

Reviewing Amazon's financial performance was aided by the data acquired for Assignment 1. The financial statements of Amazon, including the income statement, balance sheet, and cash flow statement, as well as other financial information, including profitability ratios, liquidity ratios, and efficiency ratios, were probably examined. It was highlighted that the rising demand for e-commerce and cloud computing services over the past several years has been a major factor in Amazon's strong revenue rise. However, the company's profitability has been somewhat erratic, with net income varying from year to year.

The current ratio of 1.2 and a quick ratio of 0.8 indicates that Amazon has an excellent liquidity position meaning that it has adequate liquid assets to cover up short-term liabilities. The company's profitability metrics have fluctuated over the past few years. For instance, Amazon's revenue decreased from 6.9% in 2019 to 5.1% in 2020 and its ROE decreased from 29.3% in 2019 to 24.2% in 2020 (Statista.com, 2022). With the use of these financial evaluations, Amazon can receive tactical advice on how to raise its financial performance, which can be used to assess both its strategic goals and potential threats. Examining Amazon's profitability measurements, such as gross margin and net profit margin, which can find new growth opportunities and lead to profitability, can help assess how profitable Amazon is.

Conclusion:

Digital financing and mobile payments are two fintech developments that could help Amazon strengthen its financial position. Amazon may be able to increase sales and client loyalty by simplifying its payment procedures and improving the user experience using mobile payments. By providing flexible financing choices, the corporation may also enhance the customer experience. Digital lending might give Amazon the extra funds it needs to finance the expansion of its business or new endeavours. But it's important to remember that both approaches could come with risks as well, such as security issues with mobile payments and credit issues with digital financing. Thus, in order to reduce any potential drawbacks, Amazon must carefully consider these options and create efficient risk management plans. In the end, FinTech solutions like mobile payments and digital loans can help Amazon maintain its position as a player in the quickly changing digital market. Amazon can use these technologies to enhance consumer satisfaction, boost financial results, and keep its position as the industry leader in innovation and expansion.

References

  • Bowers, J., Sherman, I.N., Butler, K.R. and Traynor, P., 2019, May. Characterizing security and privacy practices in emerging digital credit applications. In Proceedings of the 12th Conference on Security and Privacy in Wireless and Mobile Networks (pp. 94-107).
  • Frost, J., Gambacorta, L., Huang, Y., Shin, H.S. and Zbinden, P., 2019. BigTech and the changing structure of financial intermediation. Economic Policy, 34(100), pp.761-799.
  • Gong, X., Liu, X. and Xiao, Z., 2022. A dedication-constraint model of consumer switching behavior in mobile payment applications. Information & Management, 59(4), p.103640.
  • Lu, Z., Wu, J., Li, H. and Nguyen, D.K., 2022. Local bank, digital financial inclusion and SME financing constraints: Empirical evidence from China. Emerging Markets Finance and Trade, 58(6), pp.1712-1725.
  • Mogaji, E. and Nguyen, N.P., 2022. The dark side of mobile money: Perspectives from an emerging economy. Technological Forecasting and Social Change, 185, p.122045
  • Moghavvemi, S., Mei, T.X., Phoong, S.W. and Phoong, S.Y., 2021. Drivers and barriers of mobile payment adoption: Malaysian merchants' perspective. Journal of Retailing and Consumer Services, 59, p.102364.
  • Statista.com, (2022), “Amazon - statistics & facts” Available at:https://www.statista.com/topics/846/amazon/#editorsPicks [Accessed on: 02-05-2023]
  • Thangamuthu, A.P., 2020. A survey on various online payment and billing techniques. Humanities, 7(3), pp.86-91.
  • Wewege, L., Lee, J. and Thomsett, M.C., 2020. Disruptions and digital banking trends. Journal of Applied Finance and Banking, 10(6), pp.15-56.
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