• FP&A software lets businesses plan for future growth.
• While spreadsheets have their place – and their time – FP&A software allows you to extract more value from your data.
• Generative AI is making its presence felt in FP&A software, bringing new capabilities.

If you are buried in spreadsheets, and the thought of running another quarterly forecast in Excel is making you wince, it could be time to consider financial planning and analysis (FP&A) software. It’s the 21st century, after all.

There’s plenty to celebrate about spreadsheets. Tools such as VisiCalc and Lotus 1-2-3 brought accounting entries made on large sheets of paper into the digital age. Electronic spreadsheets were one of the reasons why many businesses invested in personal computers and opened the door to ‘what if’ scenario planning.

But a lot has happened between then and now, including the growth of FP&A software – dedicated tools that overcome the issues that firms face when trying to chart future growth using Excel or Google Sheets.

Spreadsheet problems

It doesn’t take long to discover the pitfalls of using spreadsheets for business planning. “Excel is not a process-based tool,” Nelson Petracek – chief technology and product officer of Board International, a global provider of intelligent planning solutions – told TechHQ. “At a certain point, firms look for something better.”

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A big disadvantage of using software such as Excel or Google Sheets is that information can quickly become siloed and teams can become isolated in their thinking. Multiple spreadsheets can be in use at the same time, and that creates another problem.

If you’ve ever asked a colleague whether they have the most recent version of a spreadsheet, you’ll be aware of the perils of trying to manage version control manually. On top of that, companies put themselves at risk if sensitive business information is left unprotected.

General spreadsheet applications are not necessarily built with security front and center, and the business risks of using spreadsheets include unauthorized access, suffering a data breach, or losing data if standalone files are deleted by mistake and not backed up.

Last week, a portion of our @BlumbergCapital team met to strategize around fintech.

The most interesting subsectors we identified were:

– insurtech
– fp&a software
– b2b lending
– crypto
– regtech

What’s missing?

— Greg (@gregbrainard) January 30, 2023

It’s no accident that growth in FP&A software has coincided with companies generating more information than ever before. And solutions help not just in remedying the shortcomings of spreadsheets, but also combine other tools for visualization and data management into a single holistic platform.

Difference between business intelligence and FP&A software

Unlike business intelligence solutions – which answer questions such as “What can this data tell me?” – FP&A tools are designed fundamentally to help organizations address planning challenges.

“Companies are trying to expand and want to know what product goes where to meet demand,” said Petracek, referring to an everyday use case for Board’s intelligent planning solution.

Depending on their operating sector, firms may want to map that growth to e-commerce targets and run different scenarios to optimize pricing. Systems can incorporate various influencing factors, such as calendar events, weather forecasts, and many other business-relevant data sources.

List of FP&A software providers –

• Abacum
• Board
• Cube
• Finmark
• Kepion
• Planful
• Pry
• Syntellis
• Telemetry
• Vena
• Workday Adaptive Planning

To get started with FP&A software, users will typically focus on an initial use case, and go through an onboarding process with their provider. Petracek noted that there are often two types of response as users see the solution spring to life.

At the executive level, business leaders appreciate the amount of visibility that FP&A software gives them. Board’s solution includes a ‘Digital Boardroom’ with a built-in briefing book that includes geo, sales, EBITA overviews, and country details.

Annual or quarterly reports can be created within the platform as well as exported as so-called ‘live reporting books’ in MS Word and PowerPoint. What’s more, because those assets are integrated into the intelligent planning solution, charts and in-text references update in tandem with any changes or updates made within the main platform.

Having a single source of truth avoids any confusion between old and new data and means that users can make decisions based on a complete real-time view of business performance.

For staff who’ve been grappling to manually update spreadsheets and paste that information into reports, document automation is a huge time-saver and allows them to perform more value-added tasks.

Plus, as in almost every other enterprise software application available today, the benefits of generative AI and large language models hasn’t escaped business planning tools. The feature lets users have a conversation with their data and quiz the information using natural language, rather than having to learn any specialist commands.

It’s possible to assign access right down to the level of individual cells within the platform, and security around the system – in terms of who can do what – is fully controlled by the customer.

“The cloud environments are completely separate,” said Petracek. “Each customer has their own box.”

Board’s secret sauce includes a proprietary memory technology that it dubs Hybrid Bitwise Memory Pattern (HBMP), which – according to the firm – enables ten times faster query execution.

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As you would expect, Petracek was reluctant to go into too much detail, but he did reveal that the FP&A software can slice and dice data in different ways so that calculations are available in an instant. Also, the HBMP technology allows Board to scale its solution to match growing data demands.

In terms of deployments, finance teams are often some of the first experience what the software can do. However, as word spreads, organizations will scale up their activity and apply FP&A software across multiple domains – such as manufacturing and other business areas, to address different scenarios.

Having FP&A software is a boost in terms of making it easier for different business units to collaborate. And there are regulatory wins too, as firms can demonstrate that they are on top of their business information and have data to support their claims.

From a usability perspective, web-native FP&A software can be viewed on any device, from a laptop to a smartphone. “People want to consume information in different ways,” Petracek pointed out.

Today, there are thousands of companies that have made the leap from using spreadsheets to dedicated business planning tools. In the case of Board, customers include some very big names such as Coca-Cola, Puma, L’Oréal, KPMG, GSK, BASF, Toyota, KUKA, and Siemens.

Most recently, Euronext – a pan-European stock exchange group with around 1,900 listed issuers and EURO 62 trillion in market capitalization as of Q3 2023 – has chosen to use Board to optimize its financial planning, forecasting, and budgeting.

It speaks to the capability of FP&A software to deliver insights for use cases where spreadsheets would not only struggle, but perhaps fail completely.

The post FP&A software – swapping spreadsheets for SaaS appeared first on TechHQ.

Sponsored by Ramp

AI has played a starring role in most functions over the past year, with countless products hitting the market promising to revolutionize how things are done. The finance department is no different; from automated fraud detection to intelligent chatbots providing real-time spend analysis, the technology certainly has the potential to relieve repetitive tasks from personnel.

However, while AI certainly has promise in finance teams, so far, the tangible impact of these products has been minimal. Eric Glyman, the co-founder and CEO of Ramp, told Bloomberg: “I think far more companies are marketing the use of AI, how their chatbot’s going to revolutionize the industry, than are truly trying to solve problems.

“I’ve never met a customer who said, ‘I just wish I could chat with my bank account, I would ask it questions and learn things.’ Instead, they tend to ask things like, ‘I’d like to pay less for this service I’m paying for, I’d like to automate my accounting and close my books quicker.’

“I think, often, if you see companies claiming AI but you can’t find real customers behind it, they’re not talking about how they’re integrating AI truly into the workflow, their software is probably ‘AI washing’.”

AI products that don’t solve actual pain points are examples of AI washing. In these solutions, automation might be too complex to set up or not fit for purpose, so accounting teams remain bogged down by basic operational tasks like chasing employees for receipts and coding transactions manually, while finance leaders are still tethered to stale data for important business decisions.

Many companies market AI without genuinely integrating it into their products’ workflows, and finance leaders may not become aware of this until after investing in it. As a result, they become skeptical over whether they’ll actually see any payback from their investment. In 2020, a BCG and MIT study found that only 10 percent of organizations saw “significant financial benefits” through increased revenue or cost savings after implementing an AI solution.

So how can finance teams select AI that’s actually worth their while? Before investing in a new AI-powered solution, it is wise to audit the organization’s needs. This way, decision-makers can be sure that the solution aligns with actual pain points and workflow requirements, preventing costly missteps and disappointment.

Auditing AI software for your finance team

1. Will it speed up work?

A good place to start is thinking about how it can speed up work. AI has the potential to take on demand/revenue forecasting, anomaly and error detection, and financial reporting, to name just a few of its abilities. As a result, finance professionals can shift their focus to more value-added activities, such as strategic analysis and decision-making.

Mark D. McDonald, senior director of research at the Gartner Finance Practice, said: “Forecasting is a popular use case in finance departments because legacy processes are manually intensive and notoriously unreliable. AI excels at automation and improving accuracy.

“Many pre-configured software packages address common finance processes such as accounts receivable and accounts payable but be aware that use cases which address unique business needs, such as forecasting, will require some internal skills to build.”

Reporting is another common time-consuming area for finance teams. Generic chatbots can be marginally useful, but those actually trained on a company’s data can perform deeper analysis to provide valuable and actionable insights. Access to such insights will also be accelerated if the bot responds to natural language commands.

2. Will it increase accuracy?
   

As Mr McDonald highlighted, another aspect to look out for in AI-enhanced finance products is how it can make things more accurate. Machine learning algorithms can identify and organize data from various sources in a single place, reducing the scope for human errors. In finance, this encompasses coding expenses, checking for inconsistencies in financial statements, and ensuring compliance with regulations. However, as before, a product that offers these features will only be a worthwhile investment if it aligns with the organization’s specific needs and challenges.

Source: Shutterstock

For example, if finance teams are suffering from long close processes, look for finance software that offers accounting AI. These days, expense coding can be automated with an algorithm trained on coding data from tens of thousands of accountants. Human errors in expense reporting could be eliminated with AI-scanned receipts that are instantly matched to transactions and suggested memos from each receipt’s context.

“Automating back-office workflows is a key to achieving efficiency gains across a number of areas, including accounts payable, accounts receivable, and internal IT services, such as helpdesk support,” said Randeep Rathindran, vice president of research in the Gartner Finance Practice. “In a cash-constrained environment, where margins are under pressure, the urgency to improve productivity in these areas is heightened.”

3. Will it save money?

Finally, when auditing the company’s needs for an AI-enhanced solution, business leaders must consider where it could save money. Productivity increases could present savings indirectly, but there are potential direct benefits to be accrued, too.

AI has the potential to make vendor price comparisons for accounts teams, for example. Ramp’s finance AI offers price intelligence that helps finance leaders get the best deal by bringing the wisdom of the crowd to software pricing. Finance teams can upload software contracts and, powered by GPT-4, Ramp extracts pricing details and benchmarks them against millions of Ramp transactions. This provides visibility into software pricing down to individual SKUs and cost per seat, so finance teams instantly understand whether they’re getting a fair price.

AI can also catch out-of-policy spending by analyzing expenses against established guidelines and alerting finance teams in real-time, potentially saving the organization from resource-intensive compliance issues.

The demand for well-integrated, useful products in accounting and finance is there. A report from Accenture found that 84 percent of C-suite executives believe they must leverage AI to achieve their growth objectives. Ramp’s finance platform has been built with AI as a core component from day one to ensure that all its features address real challenges for finance professionals and help organizations scale successfully. To explore the AI capabilities of Ramp and witness the impact it can make on your business, schedule a demo with the team today.

The post Practical ways to use AI to improve your organization’s finances appeared first on TechHQ.

Fintech firms rely on clever software and mobile apps to jump ahead of conventional financial players such as older banks and payment providers. Such high-tech thinking in finance extends to the use of quantum computing as a way of maximizing business profits, helping fintech firms and other progressive companies extend their advantage.

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A recent example of how quantum computing can help business can be seen in the use of commercially relevant solvers by Satispay, a European fintech based in Italy. Wanting to accelerate the adoption and usage of its novel payments network, Satispay built a proof-of-concept using D-Wave’s quantum annealing technology, which is ideal for tackling optimization problems.

“Together with D-Wave, we’ve built a quantum-hybrid application that has demonstrated immediate business value at scale, helping us more effectively manage our rewards program to save money, improve rewards appreciation, and drive increased membership,” Dario Brignone, founder and CTO of Satispay told investors.

To understand why Brignone looked to quantum computing for answers, rather than use classical machines, it’s helpful to consider how the Milan-headquartered fintech – which operates in Italy, France, Germany, and Luxemburg – grows its market footprint.

What is Satispay?

Italy, the home of Satispay, is fuelled by espresso. But until Brignone and his fintech colleagues put their heads together, it was unheard of to pay for the nation’s favorite serving of coffee by card. The hold-up was payment processing fees, which meant that coffee shops would rarely accept anything, but cash, for food and drink bills of less than 10 Euros.

Recognizing a fintech opportunity, Satispay created its own network that eliminated all of the intermediaries that are traditionally involved in e-payments, which – as a result – was more efficient and cheaper. Bricks-and-mortar stores can accept transactions up to 10 Euros without any charges, while transactions above that value attract a fixed fee of just 20 cents.

Quantum computing helps Satispay’s business by puzzling out the best combination of rewards, which are designed to attract new customers and keep existing users engaged with the app. When fintech users open Satispay, they see a list of merchants near them with their current location at the top of the list –for example, if they are already inside a physical store or coffee shop.

Considering the example of a user buying a coffee, they simply ‘push’ the amount digitally to the store owner, who can view the transaction on their own app, or even using a regular point-of-sale terminal. Incentives for customers include cashbacks, such as receiving 20% cashback on all purchases in a given store. But there are also variations, including having the reward for a first purchase only, and incremental cashbacks that become more attractive as customers return and shop again.

Biglietto per il trasporto ancora più smart grazie alla collaborazione tra GTT e Satispay. L'app che ti consente di acquistare online in modo sicuro sull'app TO Move, selezionandolo come metodo di pagamento. Inserisci il codice promo “GTT” hai un bonus di benvenuto di 5€. pic.twitter.com/wUUf1yN78m

— GTT Torino (@GTT_Torino) October 24, 2023

“The challenge for Satispay was how to best match those offers with those who wanted to take up on them,” Murry Thom – VP of Quantum Business Innovation at D-Wave told TechHQ. “And the key step when running the optimization is to focus on what you are trying to optimize.”

In the case of Satispay, the fintech payments firm wanted the largest growth in its customer network for a fixed budget. However, given that multiple factors are all tied to the same budget, it’s a problem that can get complicated even at a modest scale when modeled using a classical computer.

The good news for Satispay, highlighting how quantum computing can help business operators, is that the solver built by the team showed an improvement of 50% in customer rewards programs for the same budget. And this gets straight to the ‘immediate business value’ that Brignone mentioned in his statement.

Quantum computing can help firms achieve a range of business objectives. Staying in the world of finance, another popular application for using physics to solve complex problems that would be too time-consuming for classical computers, is managing financial risk.

Quantum algorithms have been applied in the area of portfolio management – for example, to help asset holders determine how much capital to hold for worst-case scenarios.

How to program a quantum computer?

When we use our laptops and smartphones, it’s unlikely that many of us are racking our brains trying to picture electrons flowing through transistors. However, quantum bits (qubits) have proven to be a captivating topic – for example, thanks to concepts such as superposition and entanglement that begin to describe how computation takes place.

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That being said, users wanting to discover how quantum computing can help their business don’t need to puzzle over why qubits can be both zero and one and get to grips with a Hamiltonian or Eigenspectrum. Quantum computing vendors such as D-Wave and others have numerous tutorials available that answer common questions on how to program a quantum computer.

Also, for popular tasks such as solving optimization problems, there’s a good chance that there’s already a model that users can build upon rather than having to start from scratch. Satispay plans to put its application into production and expects its internal teams to be using the quantum computing tool on a weekly basis.

The post How can quantum computing help my business? appeared first on TechHQ.

• Credit scoring has not traditionally been a very data-secure process.
• Increasingly, regulators are demanding data privacy.
• Fully Homomorphic Encryption could deliver data privacy to credit scoring.

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Credit scoring is a process most people and businesses think they understand. It’s the assessment of financial risk we place on individuals and enterprises, based on which financial institutions will lend or not lend. Credit scoring determines what flexibility you’re given to raise funds, and so it can be the make-or-break factor in business success.

Add to that the fact that in the modern world, financial data, which is vital for companies and whole economies around the world, has to be treated sensitively and kept securely, and you have a technological and ethical dilemma, with banks and institutions facing growing demands and regulations in relation to credit management. That adds a fresh level of responsibility that financial organisations have to meet.

The European Central Bank ECB recently conducted an in-depth analysis of the credit risk landscape. It discovered that nearly 20% of identified deficiencies or problems in the banking sector were related to credit risks, while 44% of these deficiencies were connected to flaws in the credit risk management frameworks of banks.

That translates into one crucial fact: banks have not been effectively managing the risks associated with their lending.

Fully homomorphic encryption and credit scoring

The analysis also found that another 10% of the issues were related to how banks classified loans and the provisions they made for potential losses. One-third of the deficiencies were linked to non-performing exposures (NPEs), suggesting that a significant portion of loans were not performing as expected.

This is where fully homomorphic encryption (FHE) comes in.

Credit scoring – the gateway to finance.

The technology, which is based in cryptography, is a potential game changer in the field of credit scoring. It can be implemented to develop platforms, allowing secure communication. It can perform computations on encrypted data without needing to decrypt anything. That means it can underpin secure messaging, secure emails, secure file sharing, and secure, accurate data encryption. As such, it’s a fundamental privacy enhancing technology (PET).

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This crypto-technology can be hugely beneficial for lenders as it can allow them to establish credit scores from an applicant’s data without having any actual access to decrypt the data. That means it can deliver insights on the data without ever exposing sensitive personal information to privacy risks during the credit scoring process.

Privacy considerations and regulatory changes

Regulators are placing greater and greater emphasis on safeguarding the privacy of consumers. Currently, the credit scoring method is not ideal from a privacy perspective, as it often involves sharing personal data with lenders. Nevertheless, this has become an accepted and necessary approach to facilitate access to credit – a kind of ‘known issue’ that had to be swallowed if the traditional credit scoring system was to work at all.

That may be about to change, though. As technologies like FHE become more mature, regulators are indicating that they may strengthen privacy rules, resulting in stricter regulations that protect the privacy of an individuals’ financial data.

FHE shows promise in significantly improving privacy in the everyday business of credit scoring. Especially when credit scoring can largely be done by machine-to-machine interaction without overt human scrutiny of the data (including its private elements), FHE can enhance both privacy and security.

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That can make the credit assessment process more effective, reducing the risk of data breaches, mitigating insider threats, and enhancing consumer trust.

The post Crunching numbers securely: the role of fully homomorphic encryption in credit scoring appeared first on TechHQ.

Financial leaders are under a lot of pressure at the moment. Supply chain issues, recruitment during a skills shortage, and maintaining a competitive edge through prudent technological investment are all making judgment calls difficult, especially when it comes to cash flow. The situation is not helped by traditional forecasting methods, like spreadsheet models, and manual processes no longer being effective in such a volatile business landscape.

With all these big-picture challenges, securing cash for investment becomes a top priority, but the correct way to do so is not obvious. While bank loans and overdrafts might appear to be easy short-term solutions, they can apply additional pressure on cash flow when those repayments are due, which may come during even more turbulence.

Indeed, external investment and selling shares can introduce risky third-party influence into the business and even dilute its value. Working on improving efficiency through process optimization and automation may help, but generally, this will only yield value incrementally and take a long time to have any real impact. More extreme measures, like divesting underperforming business divisions or asset liquidation, could be taken to speed up efficiency gains, although it could similarly jeopardize the company’s long-term stability.

One solution that has the potential to produce a significant cash injection without sacrifice is to unlock working capital through accounts receivable (AR) ledgers. This means optimizing the management of outstanding invoices and customer payments. By streamlining the AR process, a company can reduce the time it takes to collect customer payments or days sales outstanding (DSO), ultimately converting unpaid invoices into readily available cash. This can boost liquidity without additional debt or risking the company’s financial stability, making it an attractive option for businesses facing cash flow challenges.

One solution that has the potential to produce a significant cash injection without sacrifice is to unlock working capital through accounts receivable (AR) ledgers. Source: Corcentric

However, it is getting to a point where the oldAR approaches, such as manual invoice processing, will no longer cut it. The most competitive companies are turning to automation and advanced analytics to maximize their cash flow in this way. However, leveraging these modern capabilities doesn’t need to be overly complicated or expensive, particularly if you partner with an experienced managed service provider like Corcentric.

Corcentric Managed AR works as an extension of the existing AR team, with experienced finance specialists managing receivables on the company’s behalf, regardless of how many invoices it processes. This saves internal personnel from having to chase collections or manage disputes, and they can be reassured knowing that Corcentric’s white-glove approach will ensure customers are always handled with respect. The solution maximizes customer process efficiency and frees up the AR team by automating manual and repetitive invoicing processes. This can all be achieved without recruiting, training, and managing additional staff or investing directly in new technology.

Any upfront investment quickly pays for itself because the solution frees up cash as it grows through the business. International businesses can begin with Managed AR in one region and gradually expand, with the option to pilot the scheme on an initial sub-ledger before scaling up to release more working capital.

Managed AR provides visibility into financial data through advanced analytics so finance teams can identify opportunities for growth and any risks. Visibility into customer communications and payment status is also still provided even when processes have been automated.

Managed AR provides visibility into financial data through advanced analytics so finance teams can identify opportunities for growth and any risks. Source: Corcentric

Corcentric has designed the Managed AR solution to reduce the burden on IT teams rather than increase it. Automated invoice creation and delivery processes allow companies to efficiently manage their AR without necessitating complex and time-consuming proprietary ERP integrations. Additionally, Corcentric strongly emphasizes security and compliance, regularly testing the service to ensure it meets the highest standards in those areas.

A key differentiator for Corcentric Managed AR over other options like invoice factoring is that it is a non-recourse and fully-funded solution. This approach removes the risk of unexpected costs, such as if a customer defaults on payment while ensuring all invoices are settled within guaranteed timeframes. Cash flow predictability is bolstered as a result, while the risk of bad debt is effectively eliminated, providing long-term financial security.

Corcentric has been matching the right people, processes, and technology with businesses to help them improve working capital since 1996 and recognizes the growing need for cash flow optimization. Consequently, its Managed AR solution, which has given customers a 60 percent DSO reduction and an 86 percent decrease in disputes, has become an asset to many companies looking for a competitive edge.

This includes North America’s leading commercial vehicle manufacturer, Daimler after its National Accounts parts division approached Corcentric seeking enhanced billing and technology expertise to cover its expanding fleet parts business. The deployment of the Managed AR solution not only improved processing efficiency but also provided valuable insights into customer trends, helped produce spending forecasts and informed strategic initiatives. Managed AR reduced Daimler’s DSO from 37 days to 15, and enabled 17,000 direct connections between Daimler dealers and buyer ERP systems.

Corcentric understands that every business is unique and leverages individualized solutions to ensure the Managed AR seamlessly aligns with specific financial goals and requirements. Contact its expert team today to discuss a customized strategy for your organization that will unlock the full potential of your working capital.

The post Unlocking working capital: How Managed AR pays for itself appeared first on TechHQ.

Fintech firms stand out from the crowd by bringing bright ideas to the financial services sector. And a big part of those success stories is the adoption of machine learning and AI tools into fintech products. In fact, it’s interesting to note that – according to McKinsey analysis and Bank of England data – 72% of financial services firms have implemented AI in some form, compared with 55% for businesses generally.

Financial services companies are ahead of the curve in other areas such as quantum computing, where qubits have the potential to solve problems beyond the reach of classical processors. Use cases for early adopters include financial risk management and compliance – for example, running Monte Carlo simulations on NISQ devices to examine how much capital to hold for worst-case scenarios.

Navigating a sea of signals

Some might be wondering why fintech companies and forward-thinking financial services providers deploying AI and other solutions have a habit of being at the cutting edge. “It’s pretty simple,” Ronald Binkofski – CEO of STX Next, a global IT consultancy company – told TechHQ. “Financial transactions can be very complex.”

Binkofski draws attention to the scale of the ecosystem and the frequency at which information is sent and received. The situation makes it impossible for humans to stay on top of things without help from algorithms and automation, and it speaks to fintech firms being progressive in their adoption of AI.

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For example, traders need to be able to extract information from a sea of signals and prioritize their response. In e-commerce, systems should ensure that customers receive the products and services they are expecting and don’t get cheated. Banks need to differentiate between genuine clients and bad actors.

“It’s not perfect, but in a short period of time, the technology will manage it,” comments Binkofski, noting how systems such as voice recognition can go beyond the frequencies that people can hear to bolster defenses against fraud.

Global IT firms such as STX Next and others play a key role in turning the ideas of fintech companies and other organizations into reality. Binkofski and his team have supported numerous projects, from an industrial IoT perfume-making machine to an interactive web experience exploring early Buddhist texts.

Zooming into fintech, AI solutions can help on multiple fronts. Data analytics opens the door to more personalized services and understanding what customers want based on large volumes of information. AI, machine learning, and automation make solutions scalable, so that having more customers doesn’t stretch resources too thin.

As we’ve written about on TechHQ, financial services providers have been quick to explore the application of AI techniques in combatting fraud, using audio-based authentication to improve customer experience. Advances in the use of biometrics mean that security doesn’t have to be as onerous for clients who may be anxious to access help.

There are numerous benefits that fintech firms and other companies can access through AI-powered solutions. But success isn’t just about having the right software development partner. Project management skills are vital too, and STX Next has in-house teams to keep everything on track.

Tech team: Ronald Binkofski (center) and colleagues put a human perspective on what it takes for fintech and other partners to realize AI-enabled products and services. Image credit: STX Next.

Returning to Binkofski’s comments on the complexity of the financial ecosystem, banks started building out their mainframe systems in the 1970s, and those designs aren’t easy to change. “They can be a closed black box with a few touch points,” he explains.

In such cases, accessing data is more likely to involve building bridges rather than starting over, particularly if the original authors of the software are no longer around. There can be a lot of abstraction to deal with in coupling legacy systems with state-of-the-art solutions, but the outcomes make the challenges worthwhile.

“Be surprised by the future and be happy about how people will drive the technology,” Binkofski advises company leaders who are feeling overwhelmed. “If the positives outweigh the negatives, then we are on the right lines.”

Rather than seeing AI as an existential threat, he’s on the side of algorithms helping to navigate what would otherwise be an overwhelming amount of information. Machines are ideal for handling other machines and handing over insights in a way that humans can understand and act upon.

Our Gold Prize for Fraud Detection and Prevention Platform goes to … https://t.co/QjIXSFxWfU!

Learn more about @Fraud_net https://t.co/b0NVwXJYTK

See our other winners https://t.co/Hh5PPA1WVj#fintech #fda2023 pic.twitter.com/UTvLzybch6

— Juniper Research (@juniperresearch) October 3, 2023

Standing still is not a viable strategy and could be another reason why fintech firms are open to new ideas, such as the use of AI and pursuing other novel approaches. Blockchain solutions are challenging traditional ways of doing things; the financial services sector as a whole is a curious mix of firms at the bleeding edge and companies in need of help to catch up.

Another puzzle is how to bring order to the virtual world. “Nothing is physical, which makes it hard to regulate using methods in the physical world,” Binkofski believes.

It’s possible that we may need a new legal system dedicated to the virtual world, and solutions could be required sooner rather than later as enterprises embrace the opportunities of hardware such as VR headsets. Extended reality (XR) includes spatial computing and mixed reality, which blend real and virtual environments, further complicating the topic of regulation.

Fintech AI playbook

One of the takeaways from fintech’s AI success stories is that the firms in the lead are the ones embracing the opportunities. There are failures, but it’s unrealistic to expect perfection from day one. In financial services and elsewhere, the use of machine learning algorithms to make sense of data is transforming the delivery of services to clients.

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Also, AI often adds value to what’s already there. For example, in brick-and-mortar retail, machine learning can build personas out of what’s in the shopping basket helping store owners to run their operations more efficiently.

With the right partners, firms can boost their performance, and the process begins with a conversation. STX Next runs discovery workshops – which feature a product consultant, product design lead, and software architect – to help firms set out the best approach for realizing business ideas.

And the approach is a reminder that reaching out and understanding the technology options and being able to validate that products match user expectations is important. AI is the bright light, but there’s lots more that makes companies successful in fintech and elsewhere.

The post How fintech companies and other firms succeed using AI appeared first on TechHQ.

• Financial technology in rural America is an unlikely source of diversity in hiring.
• But diversity is available wherever the effort is genuinely embraced.
• Financial technology gives companies more opportunity to recruit based on cultural fit, rather than experience.

More and more businesses, as they look to recruit both younger generations of workers and people whose whole work-life relationship was shifted during the pandemic, are coming to realize that the Old Ways are no longer fit for purpose in the tech-savvy, hyper-agile 2020s.

As algorithms and generative AI evolve to take much of the traditional “grunt work” out of traditional office roles, people are demanding that companies treat them as – shock, horror! – human beings, rather than cogs in the giant wheel of capitalism.

Add to that the fact that time and time again, in study after study, diverse teams and business have been shown to radically outperform homogenous ones, and what you get is a new mood in tech recruiting.

While larger operations may still cling to the ways in which enormous corporations have been traditionally built, with standard interviews, like-for-like recruiting, and a largely immovable hegemony of white, straight, non-disabled men, for smaller and more flexible businesses, the opportunity to dismantle those norms and replace them with a more diverse, intersectional workforce, and reward them with both a sense of purpose and a decent wage, to build more of a community of human beings than a workforce of parts, is a positive and irresistible thing.

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Bringing financial technology to rural Iowa

Our ongoing conversation with Outhay Lovan, chief strategy officer at Vizypay, a company trying to bring 21^st century fintech to the mom-and-pop businesses of rural Iowa, ranged over several crucial topics.

In Part 1, we talked about the way in which mainstream corporate tech America had overlooked this crucial market, and how it was important to treat it differently to how most financial technology organizations are trained to think – to go after the big bucks at all times.

In Part 2, we tackled the skills and diversity crises in financial technology, and Vizypay’s unusual response to that, throwing out traditional focuses on pre-existing skills and experience and centering its recruitment on finding people who were a fit for the company’s culture – meaning it didn’t get bogged down in the skills shortage affecting most of the rest of the industry.

As Part 2 was coming to a close, we began discussing both Outhay’s own path to Vizypay, and her determination that both recruitment and HR should be different to the norm in financial technology once she got in. Both parts of that story show what’s happening in more agile companies aiming to add significant diversity to their teams for both the economic and the “right thing to do” advantages.

Financial technology done differently in Iowa.

THQ:

It hasn’t escaped our notice that you’re both a woman and an Asian American, leading strategy for a financial technology firm specializing in selling to small businesses, in rural Iowa.

Were you local before getting the gig at Vizypay, or did you come in having drunk the Kool-Aid?

OL:

A bit of both, really. Yeah, I was local, I live in Des Moines, but I’d never heard of the company. I caught it on social media. You remember I mentioned we like people to be their true vocal selves on social media? Well, that’s how I first heard of Vizypay. I was working in HR at the time, but I saw these people being really enthused about their work on social media and was pretty much thinking “How do I get me some of that Kool-Aid?”

It was feed after feed on LinkedIn, and I was like, “What is going on there?” All the talk was about the culture and the people, and I figured if I was ever going to get to something like a leading role in HR, it would be all about the culture and the people. So it just felt like a perfect blend.

And when I came in, my first two months I wasn’t tasked to do anything – just observe the environment, observe the culture and the processes. And it was obvious it didn’t have a traditional HR sensibility, but was focused on the people.

So then it was a case of developing a strategy around our people.

Looking local and achieving diversity – a contradiction in terms?

THQ:

Treating people as “actual” people, rather than cogs in the corporate machine?

OL:

Which is the traditional approach, right? A traditional approach to human resources is very tactical in nature. You know, people think of HR as individuals that just process payroll, or just process benefits. It’s always been viewed that way. But now, things need to shift.

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Building unique staffing pipelines in financial technology

I was trained in college to work in that black and white way, but I do best in shades of gray. And I think that’s how we operate as a company, too – pushing boundaries, changing the norm.

Financial technology and diversity along several axes.

THQ:

Let’s talk diversity and inclusion, then. You’re there in rural Iowa. The tech industry generally is very, very underrepresented for women to start with, and very underrepresented for non-white people. What’s your diversity pipeline like right now?

OL:

Yeah, actually, we’re pretty diverse. Austin McNab, our co-founder, came from a company that was very white-male dominant. So it was always a big thing for him – how do we bring more diverse leadership to the table, how do we bring more leaders of female minorities to forums, to conferences, to seminars?

A majority of people here are of Asian American descent, including myself. And a lot of them are first generation immigrants, like myself. And as we talk about our culture, we talk about what drives you, the parts of your life that are giving you the grit to be here.

I grew up poor. My family lived in a shack. We were sponsored to come here by a Mennonite church, which sounds crazy, but it’s also very humbling. But as Asian Americans, we do have a voice and we are loud, and we want to be proud about that. And you don’t see that often, especially here in Iowa.

The importance of grit in financial technology.

THQ:

Without in any sense dissing Iowa, it’s part of America where it instinctively feels like if you focus on local recruitment, as you do, it’s going to be hard to find diversity.

This is not your traditional financial technology sales environment.

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Women in tech: women and the future of fintech

OL:

Exactly. You’re absolutely right. People think of Iowa and tell me “Oh, you adapted very well.” But I’m like “Man, I was raised in Iowa. What are you talking about?” Yes, you can’t get any more rural America than Iowa. But yeah, there are Asians in Iowa, too.

In terms of diversity, I don’t have the racial demographics to hand, but 46% of our workforce are millennials, 39% are Gen Z. And – which lots of people find to be the kicker – 95% of our workforce come from outside the payments industry.

Gen Z – the new hope for diversity in fintech?

THQ:

So diversity sliced in a couple of ways that most companies don’t think of. That 95% figure is enough to give bigger, traditional companies a bout of the cold sweats. And that’s down to the culture-first approach? Where the recruitment process is based on your fit with the company culture, rather than your pre-existing education or experience?

OL:

Exactly, yes. Everything is coachable. If you’re an individual that is open, we’re willing to give you a chance. We’ve had people with 10, 15 years of sales experience, and they come on, and to be honest with you, some of them struggle, because it’s different to what we do. It’s hard work to be boots on the ground, door to door. And that’s where they think, “Okay, I got it, I’m a veteran salesperson,” but we hold them accountable.

But we also have an individual who was a delivery driver, and when they dropped off equipment to their customers, they’d cross-sell items. That person became very successful, because they followed the process. They didn’t have years of years of experience that tainted their mindset. They were willing to go along with the process, follow the process, understand the process. And they had the eagerness, they had the drive.

It’s not about your years of experience. It’s about who you are, and whether or not you have what it takes.

That means we’re much more open to hiring across a range of diversity lines, because for us it’s all about whether you understand the culture, and whether you have the grit to do the job in this different environment, in this different way.

The culture-first approach to recruitment building diversity in fintech.

The post Building diversity on the edge in financial technology appeared first on TechHQ.

• Financial technology is facing both a skills and a diversity crisis.
• Traditional skills pipelines are unlikely to work in rural communities that don’t have a strong history in financial technology.
• That means there’s a potential to turn the processes of corporate America on their heads.

The financial technology industry, as a sub-sector of the wider tech world, is currently suffering a skills shortage.

It’s also, as the same sub-sector of the same tech world, stuck in a practically eternal, ongoing diversity crisis. If you think of the traditional people who have made up the vast majority of the tech sector, they have been white, male, cisgender, heterosexual, etc. For every point of deviation from this template, the likelihood of you existing in tech is reduced by some significant factor, so that, throughout the whole of the US tech sector, only 28% of staff are women.

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Bringing financial technology to rural Iowa

That is the very definition of a diversity crisis.

Tightening the diversity crisis in financial technology.

If you then transpose that diversity crisis into, for instance, one of the more rural states in America, you would tend to expect a significantly greater homogeneity in the talent pool and the staffing pipeline, particularly in a specific field within tech, like financial technology.

If you have those expectations, you should probably talk to Outhay Lovan, chief strategy officer at Vizypay, a company bringing connectivity and financial technology to mom-and-pop businesses in rural Iowa.

We sat down with her for a wide-ranging discussion. In Part 1 of this article, she explained how it’s possible to go about bringing financial technology to a community and a region that’s been overlooked and forgotten by bigger players in the market, most of whom are (by all the rules of aggressive capitalism, correctly) chasing big city and big business dollars to maintain the cutting edge of provision in the financial technology market, with, as she put it “all the bells and whistles.”

But towards the end of Part 1, we began discussing the importance of company culture in succeeding at selling financial technology a) in a significantly rural state, and b) to significantly smaller operations, often run for generations by families on a cash-and-handshake basis.

Outhay explained that at Vizypay, while you could have all the right credentials and all the “right” experience, if you didn’t fit with the company’s up-front, tell-it-like-it-is ethos, you probably wouldn’t get in the door.

That made us wonder. In a presumably narrowed talent pool, how does a company dependent on selling financial technology to a non-typical market recruit talent into its operation?

The recruitment process in financial technology – in Iowa.

OL:

We said in Part 1 that our approach to the financial technology business was entirely vested in serving the local small business community. We’re not out to sell them what they don’t need and charge them a fortune for the privilege, we’re there to deliver what they do need, because none of the big boys will – it’s not economically viable for them to do so.

The same approach is key to our recruitment strategy. We have an initiative called Look Local First, which falls within that same mindset – how do we spotlight local merchants, and how do we scale that? How do we sustain that? So everything we do is based around that idea.

THQ:

So what does the recruitment process look like? Who gets to walk in the door and stay? Define the culture for us in its fundamentals?

OL:

We go through what might look like a typical three-step recruiting process.

Our first interview is all about talking about who we are. And we’re being honest about it – this is who we are. We’re going to make you uncomfortable, probably. We’re going to say LFG (Let’s *Ahem* Go) – does that make you uncomfortable? If it does, that’s the first sign for you.

We direct people to our website, watch our YouTube channel. If that makes you uncomfortable, then you’re not going to fit long-term. So our first conversation with any candidate is really to talk about who we are. And we hit on our three whys, which we mentioned in Part 1 – our culture, our transparency, and being a voice for small business owners.

THQ:

No in-depth discussion of the role and its necessary skills?

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Women in tech: women and the future of fintech

OL:

We hardly go into the detail of the role at all at first interview. The next phase goes into more of that detail. And at our third stage, you’re meeting the managing partners or owners. They’re part of every interview process – and they’re also screening for culture fit.

The discomfort factor.

They’re going to make those individuals get a little uncomfortable in the interview process, because it’s not your typical interview. Stage 3, you’re meeting with the CEO, you’re meeting with the owner of the company, and they’re gonna ask you some interesting questions. But it’s all about you being uncomfortable, and all about you bringing your authentic style. How do you deal with being uncomfortable?

Most interviews in the financial technology world are very structured. There’s nothing wrong with structure as such, but a lot of the generation that’s coming into the workforce now are looking for a genuine way to make a difference. They want a job with a sense of purpose, not the typical 9-5 type of job. They’re looking to belong.

That’s what we bring to the table – we’re changing up that process.

THQ:

A financial technology business that needs to make money, but feels like a non-profit?

OL:

Yes. Yes. Yes. And we encourage our folks to be loud on social media. LinkedIn is free branding, right? Each one of our employees has a profile, each one of our employees can talk about themselves. A lot of companies tell employees to shy away from talking on LinkedIn, because it’s such a professional network, and it has to be about business.

That’s not us. Talk about you. Let people see who you are. You absolutely don’t have to talk about Vizypay, but talk about where you’ve been, showcase those businesses that you’ve been to, bring back that love of that restaurant you go to every day. Share with the world. We want our employees to have their own individual brand.

Be social on your social networks.

THQ:

That makes more sense in mom-and-pop rural America than it would in, say, San Francisco or Chicago.

Do you think the approach could be more broadly applied in different areas with similar outlooks?

OL:

I think it could. The norm in college is you’re taught to go into interviews in corporate America. You’re go in to your interview and you’re talking about these key areas, your strengths or weaknesses, what you can bring to the table, and you’re having to compete with 50 other candidates who also know the game and are bringing their scripted strengths and weaknesses.

Everybody’s trying to find out whether this person fits the role?

The area nobody pays enough attention to is whether the person fits the culture.

That’s crucial for us, because the skills are entirely teachable. But the attitudes, the culture, those are what we’re looking for.

Bucking the trend of corporate America – sometimes you don’t need the degree.

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Women in tech: the fintech mindset

THQ:

Hang on, we think our brains are melting. If all the skills are teachable, then your pipeline problem is different to… the whole rest of the industry’s, isn’t it?

You’re not dealing with a lack of skilled candidates as a problem, because it doesn’t matter to you if the candidates are unskilled – that, you say, is the teachable bit. Your only issue is finding enough people with the right sort of mindset?

The inversion of financial technology’s pipeline problem.

OL:

Right. Most places will get caught up in a classic Catch-22 situation. I can’t give you an opportunity because you don’t have the skills or the experience – but how do you get the skills or the experience if I don’t give you a chance?

Our mindset is different. We’re willing to give anyone a chance. The role is trainable and coachable. So the person don’t have a college degree, or they don’t have the experience of having done the job. But as I say, the skills are trainable. And the individuals that fit our culture have that sense of resiliency that means we can train them. So it’s the character of people that matters in our recruitment pool, not the qualifications or the experience.

Culture above all.

THQ:

Which is ingenious, given that you’re based in rural Iowa, selling financial technology to mom-and-pop businesses. There are probably not going to be a huge number of trained and experienced financial technology salespeople beating down your door. But people with grit, determination, and a commitment to improving the local community – those you have in almost ridiculous abundance.

OL:

Exactly. It’s kind of strange – we had one guy who came in with all the experience you could want, and he couldn’t really do the job, because he was trained in the traditional way to sell as much as possible for as much as possible.

That’s not going to work in this location, with these people. I said we were straight-up and honest in our dealings – that’s a mirror of the community in which we’re active. Slick sales pitches don’t work here. Honesty, straight talk and understanding what’s needed, not what’s available but redundant – that’ll serve you better selling financial technology in this location, to our customers.

Less what you can be taught, more who you are and what you bring?

THQ:

It’s almost like re-tooling your regular car to run on electric power – you’ve re-tooled your business to run on character traits you’re likely to find locally and added your own training on top.

OL:

Exactly.

THQ:

Which is how you’re able to continually recruit as needed without being affected by a skills – or necessarily by a diversity – crisis.

OL:

Always focus on the people first. Focus on culture. Skills, we can teach. Experience, you can gather. Focus on the people – and on serving the local community with what it needs – and you’ll succeed.

Company culture – if you build it, they will come.

In Part 3 of this article, we’ll deal in more detail with diversity, inclusion, and the benefits of a diverse, culture-based hiring process, even in areas that have been traditionally homogenous.

The post Building unique staffing pipelines in financial technology appeared first on TechHQ.

• Modern financial technology has been lagging in rural America.
• The push to add new financial technology to “mom-and-pop” businesses is revolutionary.
• Some financial technology firms in rural areas are also able to break the mold in their staffing policies.

There is a myth in the minds of most people with a Starbucks on every corner and avocados on tap.

The myth is that travelling to parts of rural America is like travelling back in time to an America as great as some people are repeatedly trying to make the whole nation. A Norman Rockwell painting, with just a touch of American Gothic.

The idea that such communities could have modern, up-to-date financial technology jars with these lazy stereotypes, but there are firms looking to connect up the “mom-and-pop” businesses of rural America, despite connectivity issues which have tended to reinforce the myths.

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Women in tech: women and the future of fintech

We sat down with Outhay Lovan, chief strategy officer at Vizypay, for a handful of reasons.

First, the firm is working in rural Iowa to connect independent mom-and-pop businesses to the financial technology of the 21^st century. That’s inherently interesting because it flies in the face of traditional tech business wisdom, and the fact that it’s succeeding gives the finger to the tech industry norm, with its roomfuls of men chasing the big bucks.

Call us Communists if you must, but we like things that do that.

But we also sat down with Outhay because she’s a woman thriving in the tech industry (and that’s unreasonably rare, as women make up just 28% of the tech workforce). Her experience in that world is – necessarily, because of the work she does – unusual.

And as part of her role involves strengthening both the internal and the external staff experience at the company, she also has experiences to share that not only buck the traditional fintech corporate trend, but also offer insight into a different way to build a tech skills pipeline, from which bigger firms might find they could benefit.

Financial technology for mom-and-pops?

THQ:

A fintech that exclusively services small businesses in rural Iowa. Who woke up one morning and thought that was a great idea?

OL:

One of our founders, Austin McNab, had experience in the industry – credit card processing based out on the west coast, in California. He was taught the traditional way in both sales and processing, and the more he got into the world of payments, it felt like that was the way of things.

And then a little later, he figured there had to be more to it than just that traditional way. Any salesperson you talk to, they’re just trying to get the sale, right?

Coming into Iowa and meeting our other managing partners, he knew he wanted to get into this business, but do it the right way in regards to supporting those small business owners, those local mom-and-pop shops, because the bigger dogs were going after bigger clients and a lot of the small business owners were forgotten, or taken advantage of by (as he says himself) someone like him.

The idea was to support those small business owners, because some of those business owners still have dial-up!

THQ:

*Panics in nostalgia, hearing the noise that only people of a certain age remember…*

OL:

Understanding that the big dogs were actively neglecting mom-and-pop businesses was the “Aha!” moment that made the company focus its efforts here in Iowa.

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Women in tech: the fintech mindset

THQ:

That’s the manufactured mindset of aggressive capitalism, isn’t it? That you must go after the biggest clients, because that’s where the most dollars are. And as you say, the smaller businesses get overlooked and left behind.

But when it comes to things like financial technology, games theory kicks in. If everyone’s going after the big clients and no-one’s focusing on the mom-and-pop businesses, there’s not the economic incentive to bring transformative financial technology to some areas, and so you get a situation where whole communities don’t have that technology.

Small town, small business American needs financial services too!

OL:

Yeah, exactly. But once you’ve been doing the job a while, you realize that small business owners don’t need all the bells and whistles of a “big client” system. As I said, they may still have dial-up, so they just need a basic terminal that they can use to start processing credit cards, on top of cash.

In Iowa, you could probably go into small towns and see signs like “Cash only” and “Do not accept credit cards.” So the question becomes how you can tailor your programs and your services to benefit those small business owners.

“We take cards now!” should be a new sign in rural America.

I’m part of a network group, based out in New York. And a lot of those C-suite leaders that I talk to, they’ve been involved in some sort of start-up or they have consulted with businesses that have tried to service small businesses, and they tell me a lot of those companies have not been successful.

So they always ask the question, “What have you guys done differently?”

A different approach to financial technology.

THQ:

OK, we’ll bite. What have you guys done differently?

OL:

It’s a mindset shift. Everything we do has to benefit the small business owners. Our values have to serve the small business owners, and the people we bring on have to reflect that. It has to feel almost like a nonprofit. What we do isn’t going to show right away, but in the long run, what we’re doing is going to show its value.

THQ:

So rather than turning up with your services and going “Feast your eyes on all our fabulous financial technology! It’ll change your lives, for a fairly hefty fee!”, you go in with the question “What is it you need in terms of financial technology to make your life better?”

OL:

Exactly that, yeah.

THQ:

So what’s the USP of successfully tailoring your approach to small businesses?

OL:

Firstly, it’s a location thing. Ask people in Chicago or San Francisco, they’ll say there no way this can work.

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But I first heard about Vizypay on social media and it excited me. I was like “How do I get into this?” So first of all, I think the location is key.

And we have three “Whys” in the company. The location and helping small businesses is one. Finding people who are different from the norm of the industry is another, because not only will a “normal” financial technology approach not work in this set-up, but we want people who are people first.

Financial technology, selling to small businesses, all the so-called “skills” you normally need before you can get in the door, we can teach you all that. We want people who fit with our culture.

That’s the thing. You can be the best fit for the job on paper, you can have the years of experience, you can have the education down. But if you don’t fit our culture, it’s not going to work out long term. Sorry to say that dude, but that’s how it’s gonna work.

We’re transparent, and we’re up-front. We’re real, we’re who we are. And that’s disrupting a business culture in itself. Our culture asks “Why close the door on who you are when you come to work?” Bring your whole self into the workplace. That definitely drives where we’re trying to go with our vision of supporting those small business owners.

Bring your whole self to work – but bring the grit and the drive too.

Our people have grit, they have something to prove, there’s always a backstory. And that’s what we’re doing – when we talk to our individuals, it’s not your normal interview process. It’s “Tell me about your strengths and weaknesses.” Forget those general questions. We’re like, “Let’s be real with each other. And let’s talk about what you can bring to the table. How are you unique versus the other person?”

And we really get down to that individual being comfortable being their authentic self. That’s where we’re able to see, “Okay, this talent fits our culture.”

We’re going to make people uncomfortable because that’s who we are. And everything tailors itself into why we are such a voice for small business owners. Everything we do is geared to that.

Which is a long way round to answering your question on the USP of selling financial technology and services to small businesses in rural Iowa(!)

In Part 2 of this article, we’ll investigate how the challenges of diversifying the pipeline of tech industry staff are intensified in rural America – and how you go about meeting those challenges for everybody’s benefit.

The post Bringing financial technology to rural Iowa appeared first on TechHQ.

Mining Bitcoin on a laptop is a great way to learn more about how decentralized cryptocurrencies work. But it won’t make you rich. Crypto hobbyists report Bitcoin earnings equivalent to just a few cents a day. And even if you scale this up by adding tens of GPUs to your home setup, you’ll still only push those takings into single dollar digits. The reality is that crypto mining has entered its industrial phase. And that begs the question – will market forces make BTC data centers more efficient?

Phil Harvey – CEO and founder of Sabre56, a hosting provider and digital asset project management consultant – remembers the early days of crypto when mining was done in the basement. And, as the sector has scaled up, he’s been working with clients to make their operations more efficient, applying lessons in project planning and implementation learned from a previous career in the military.

Harvey remains intrigued by the possibilities of distributed ledger technology and appreciates that more needs to happen to bring the concept into the mainstream. “We should definitely try to understand its use case better and not be afraid of the change,” he told TechHQ.

Enabling Bitcoin technology

Sabre56 sees itself as an enabler of Bitcoin technology, helping customers to build Bitcoin mining farms by bringing design, project, and cost management expertise to the table. And the company has delivered installations at sites across North America and in the Nordics.

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What’s more, the Dubai headquartered firm has taken things a step further and is establishing hosting facilities of its own. “The plan was always to evolve from being a consultant to practicing what we preach,” Harvey explained.

Speaking with TechHQ it was clear that he wants to change the perception of crypto mining as an activity that’s wasteful of energy and causes damage to the environment. Having people align to standards and run Bitcoin mining operations more professionally will help.

Sabre56 is looking at ways of implementing benchmarks that both itself and others can follow – examining how operations can become more efficient with what they have. As mentioned, there are market forces to consider too, which could end up putting all but the most energy-efficient and well-optimized operations out of business.

Popularity of BTC data centers

The popularity of BTC data centers comes down to the odds of successfully mining Bitcoin. When miners solve the puzzle of finding a low-numbered hash of the next-in-line block of digital cryptocurrency transactions, they are rewarded with a few Bitcoin for their efforts. But the chances of success are incredibly low, so much so that winning the lottery feels like a done deal by comparison.

Bitcoin miners can boost their odds of receiving a reward by running multiple machines and taking trillions of guesses. However, while the chance of success goes up, so does the electricity bill. And when Bitcoin miners shop for hosting facilities for their rigs, one of the major items on their wish list is cheap power.

Last month, Sabre 56 announced that it had been awarded a five-year deal with Bootstrap Energy to provide miner operations at the 300MW Saxet Energy Park in southern Texas, US. The area is home to gigawatts of wind power, and energy management at the site will be designed to pass electricity cost savings onto clients.

Neat and tidy operations: Sabre56-hosted crypto mining facility in Wyoming, US. Image credit: Sabre56.

But it’s not just crypto miners that may benefit from state-of-the-art BTC data centers. Large-scale Bitcoin mining facilities give power companies a buyer of last resort when wind and solar energy generation surges. Rather than having to dump the electricity, energy firms can be confident that crypto miners will be glad of the windfall.

Also, because it’s possible to pause crypto mining operations, BTC data centers can help to buffer the grid. For example, if electricity demand spikes in the neighborhood, the computing processes could, in principle, spin down to reduce the facility’s energy footprint and free up power. And this points to a key operational difference between crypto mining sites and regular data centres, which need to be up 24/7.

In fact, there’s an argument to be made that mining farms motivate energy suppliers to upgrade infrastructure, with everyone benefiting from a more stable power grid. Texas Governor Greg Abbott has reportedly been thinking along these lines, but it’d be wide of the mark to say that everyone is happy to open their arms to crypto miners.

Longer term, excess power could be used to drive electrolyzers and create green hydrogen rather than support blockchain calculations that have less tangible benefits for society. Also, crypto mining is noisy and unpopular with residents looking for peace and quiet. And the objections don’t stop there.

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Enterprising approaches to cutting carbon in the cloud

But when it comes to the energy mix consumed by BTC data centers and other crypto mining operations, there’s evidence that facilities are ahead of the curve compared with local averages. For example, the Bitcoin Mining Council – which claims to represent 43% of the cryptocurrency’s global mining network – writes that the electricity being used comprises a 63.1% sustainable power mix, according to its H1 2023 member survey.

Using Electricity Maps, which visualizes the carbon intensity of electricity being used worldwide, it’s possible to compare crypto mining to electricity consumption in general. For example, at the time of writing, 51% of electricity being consumed in the UK is from renewable sources. In the US, the Electric Reliability Council of Texas is providing 28% renewable power. And the only regions with a sustainable power mix above crypto mining’s 63.1% are Austria; the Nordic countries of Norway, Sweden, and Iceland; Germany; Canada; Brazil; Uruguay; plus pockets of the US, such as the City of Tacoma, and sources of Federal Hydropower.

Given the importance of cheap power to the economics of crypto mining and noting that the falling cost of wind and solar are fueling the rise of renewables as the world’s cheapest source of energy, Electricity Maps could just as easily function as a guide on where to site your next BTC data center.

And there are some pioneering examples. We’ve already highlighted Sabre56’s mission to make the sector more efficient. But it’s not the only industry player to recognize where the cryptocurrency sector needs to get to. TeraWulf – a vertically integrated Bitcoin miner – has multiple zero-carbon sites, which target places with an excess supply of energy, not much demand, and limited transmission opportunities.

Its Lake Mariner facility serves as a sink for abundant hydropower and its Nautilus Cryptomine is said to be North America’s first nuclear-powered Bitcoin mining facility.

The company points to the role that BTC data centers can play in giving power firms a guaranteed buyer at the time of energy production, as well as helping to meet other expenses. “That customer adds to the denominator and allows you to amortize the fixed costs of the system over a larger base,” said Nazar Khan, one of TeraWulf’s co-founders and its COO.

The post BTC data centers: market forces and the drive for greater efficiency appeared first on TechHQ.