Introduction to Fintech

DFA2225Y(3)

Lecture 1

Mr. Tahir Wahab

 FinTech Overview

• What is FinTech?
• History
• Types of Fintech
• FinTech products and services

Mr. Tahir Wahab

FinTech Overview
What is FinTech?

• Describes the intersection Payments

between software and
technology to deliver financial
Financing Investments
services.
• May refer to technical
innovation applied in a FinTech
traditional financial services
context or to innovative
Big Data Advisory
financial services offerings that
disrupt the existing financial
services market. Insurance

Mr. Tahir Wahab

Mr. Tahir Wahab
Mr. Tahir Wahab
Growth of FinTech
• Statistics: • FinTech has emerged due to:
• Forcasted that over $4.7 trillion of • technology (social networks, big
revenue at traditional financial data)
services companies is at risk of • favorable regulatory environment
disruption by FinTech companies • demographics (rise of the millenials)
• FinTech firms attracted $19 billion in • mobile financial services provide
investment in 2015 cheap banking solutions to the
unbanked

Mr. Tahir Wahab

Where Fintechs are (EY study)
Place Market Size Investment Fintech staff Characteristics
NYC 7.5bn 1.9bn 57,000 • close to markets
• 1st generation
• incubators & accelerators
California 6.3bn 4.8bn 74,000 • mature FinTech community
• established connections
• large VC funds
UK 8.9bn 707m 61,000 • global financial hub
• progressive government & reg.
• effective network of hubs
Germany 2.4bn 524m 13,000 • mostly credit & lending
• increasing focus on b2b
• complex startup environment
Hong Kong 0.9bn 62m 8,000 • relatively nascent market
• community focused on capital
markets
Singapore 0.9bn 50m 7,000 • gateway to Asia
• easy to do business, English
• dedicated team at regulator
Australia 0.8bn 267m 10,000 • emerging Fintech ecosystem
• 0.9bn commitment to innovation

Mr. Tahir Wahab

Examples of FinTech
Peer to peer or marketplace lending platforms
 lending to individuals or businesses through online services
that match lenders directly with borrowers
 operation of lending platform may be regulated

Equity crowdfunding
crowdfunder
 funding a project or venture by raising money from a large
number of people
 may be regulated for arranging securities transactions or
operating an unregulated investment fund

Roboadvice
 automated financial advice (computer based algorithms and
decision trees)
 may be subject to adviser registration/regulation
Mr. Tahir Wahab
Examples of FinTech

Virtual currencies
 Bitcoin etc. might constitute currencies if the trading in them
is regulated; also raises AML issues

On-line payment accounts

 accounts through which you can send money, make
payments online, and receive money
 may be regulated as non-bank payment institutions

Payment initiation services

 service used to initiate a payment to another party

Mr. Tahir Wahab

Mr. Tahir Wahab
Understanding Fintech

• Financial technology, or Fintech for short, refers to

technology-enabled financial solutions. It is often
described as the union of financial services and
information technology.
• The interlinkage of finance and technology might
seem like something fairly recent but has actually
evolved over distinct eras.
• We could actually say that finance & technology
have been intertwined ever since we can speak of
modern society.

Mr. Tahir Wahab

 Drivers of innovation
• Technological advancements have changed how we do nearly everything in
our day-to-day lives. Technologies such as IoT, AI, blockchain and cloud
computing are the major drivers of FinTech companies.
• Consumer behaviour, particularly in Gen X, Y and Z, has shifted and the
previously existing financial systems in some markets are simply not keeping
pace with societal changes, allowing technology enabled players to enter the
market.
• Barriers to entry have lowered as technology has flourished, forcing
financial institutions to change or be left behind. It has opened the door for
new challenger start-ups, like Monzo in the banking industry, who are
targeting consumers with different needs and behaviours.
• Greater access to information through analytics, artificial intelligence, and
cloud computing allow companies to see trends – and adjust to them – more
quickly.
• Investment in the sector has been gargantuan and is continuing to grow
rapidly, ensuring we will see many more advancements in the near future.
Mr. Tahir Wahab
Benefits of fintech

Fintech applications offer the B2B space a host of potential benefits.

While some fintech applications are

1. consumer specific (personal finance applications for one), or

directly benefit the consumer,

2. the vast majority of solutions in the space are B2B focused.

Mr. Tahir Wahab

• Cut costs
• Businesses can always benefit from technology that provides more
automation. In the regulatory technology industry, banks are primed
to save billions of dollars per year by implementing regtech solutions.
• In addition to cutting down on the number of employees needed to
carry out tasks that can be automated, the insights provided by
fintech applications can streamline business operations and improve
operating efficiency.

Mr. Tahir Wahab

• Improve decision-making
• This is one area in which fintech can help businesses immensely,
particularly in light of the increased usage of AI in solutions.
Businesses can now rely on AI-powered, data-driven insights to shape
strategy. Armed with these insights, businesses can make better
informed decisions about where to direct resources and how to target
clients.

Mr. Tahir Wahab

• Introduce transparency
• One of the major benefits of fintech, specifically in regards to
blockchain-based fintech and AI-powered regtech for the financial
services industry, is the introduction of transparency. Fintech projects
create auditable money trails and can help identify potentially
fraudulent activity faster and more easily than a human.
• The transparency introduced by these projects will catalyze the
evolution of the anti-money laundering (AML) and know your
customer (KYC) portions of the industry.

Mr. Tahir Wahab

Fintech examples

• Because Fintech is such an inclusive word, there are many

subcategories that fall within its purview. Every financial services
industry has been affected by the Fintech revolution, from insurance
and compliance to banking and payments.
• Fintech aims to make institutions more efficient and effective, provide
consumers and businesses with more choices, increase transparency
and cut down on the amount of time wasted during financial
transactions.
• Examples, Insurtech, Regtech, APIs, Payments, Banking, Lending,
Blckchain, and Smart Contracts.

Mr. Tahir Wahab