FINTECH K31

April 6, 2021 (Tuesday)

Toledo, N.
Department of Financial Management, De La Salle University
AGENDA

• Reminders
• Recap
• Guest - Antonino Paguirigan Jr., PhD (Complex Systems
Scientist / Lead AI Expert, Viralint Pte. Ltd)
Updates and Reminders
• April 6, 2020 (Tuesday) - Guest, Dr. Antonino Paguirigan Jr, Complexity
Scientist

• Academic Easing April 6 to 13, 2021

• Less synchronous class, less new topics

• No submissions and deadlines

• Group Presentation on May 2021

• Group Final Paper on week 13 or 14?

Image source: fintechnews.sg 2

Exercise - Revised deadline
Cloud Computing and APIs

In approx. 800 words, how are cloud computing and APIs related? Explain and
cite at least 3 (company) case examples.

Submission via AnimoSpace (Assignments), on or before April 13 (Tuesday),

4:00 pm

38
Cloud Computing

• The Cloud

• Where’s the cloud exactly?

• Classification (by location

and by services

• Characteristics

• Need and Relevance

• Risks and Concerns

• Advantages/Disadvantages

• Platforms

• FinTech and cloud services

Image source: textlinks.com
12
API-fication

• API

• API economy

• PSD2

• How FinTech use API

• FinTech Enabling Payments

Leveraging API

• Proprietary Platforms

• Extending Wealth
Management
Image source: radware.com 25
 Antonino Paguirigan Jr., PhD
- Complex Systems Scientist / Physicist
- Scientist and Lead AI Expert, Viralint Pte. Ltd, Emage AI Pte. Ltd

- Previously, ACCeSs-AIM Senior Data Scientist

- Most Outstanding PhD, University of the Philippines - College of Science
- Best Dissertation, University of the Philippines

Toledo, N.
Department of Financial Management, De La Salle University
 FinTech
Blockchain

Toledo, N.
What is Blockchain?

“Blockchain is a shared, immutable ledger for recording

transactions, tracking assets and building trust.”

Image source: fintechnews.sg

What is Blockchain
Why did blockchain emerge?

• The need for an efficient, cost-effective, reliable, and secure

system for conducting and recording financial transactions.

• The shortcomings of current transaction systems

• Limitation of cash

• Amount of time

• + step from intermediaries

• Fraud and cyberattacks

• Barriers to entry to use service such as credit card companies

• Accessibility to the general mass

• Transparency and proper information dissemination is still an

issue

Image source: ipwatchdog.com

Source: Gupta, 2020
Fundamentals
The coin that started it all - Bitcoin

• Bitcoin was launched in 2009 by

Satoshi Nakamoto

• rather than relying on a central

monetary authority to monitor, verify,
and approve transactions and
manage the money supply, Bitcoin is
enabled by a peer-to-peer computer
network made up of its users’
machines, akin to the networks that
underpin BitTorrent and Skype.

• Advantages: cost-effective, efficient,

safe and secure
Image source: whattoexpect.com
Source: Gupta, 2020; Arjunwadkar, 2017
Bitcoin and “Satoshi Nakamoto”
• Bitcoin and blockchain are not the same

=
How does blockchain work?

YouTube, What is hashing on the Blockchain

via https://www.youtube.com/watch?v=IGSB9zoSx70

Source: Gupta, 2020

Understanding blockchain
Types of blockchain

• Public blockchain - is one that anyone can join and

participate in, such as Bitcoin. Drawbacks might include
substantial computational power required, little or no
privacy for transactions, and weak security.

• Private blockchain - similar to a public blockchain

network, is a decentralized peer-to-peer network.
However, one organization governs the network,
controlling who is allowed to participate, execute a
consensus protocol and maintain the shared ledger.

• Consortium (or federated) blockchain - is a system that

is 'semi-private' and has a controlled user group, but
works across different organizations. There are many
benefits to consortium systems, and
many blockchain platforms are setting themselves up as
a backbone for these cross-company and cross-
discipline solutions.

• Hybrid blockchain - is a combination of public and

private entities. The best way to describe it is using a
public blockchain where a private network is hosted.
This means that there is restricted participation that is
controlled through the private blockchain itself.

Source: ibm.com
Infographic: 101blockchains.com
Key Elements of Blockchain

• Distributed ledger technology - All network participants have access to the

distributed ledger and its immutable record of transactions. With this shared ledger,
transactions are recorded only once, eliminating the duplication of effort that’s
typical of traditional business networks.

• Immutable record - No participant can change or tamper with a transaction after it’s
been recorded to the shared ledger. If a transaction record includes an error, a new
transaction must be added to reverse the error, and both transactions are then
visible.

• Smart Contracts - To speed transactions, a set of rules — called a smart contract —

is stored on the blockchain and executed automatically. A smart contract can define
conditions for corporate bond transfers, include terms for travel insurance to be paid
and much more.
Source: ibm.com
Key Concepts of blockchain for business

Image source: Gupta, 2020

Understanding blockchain
Understanding blockchain
Blockchain Adoption

88%
expect that blockchain (for in-product processes or
systems) will continue to achieve mainstream
adoption

‘Disruptive’
The global financial sector that is currently dependent on manual networks will change
from blockchain implementation by a huge margin. FinTech innovation is expected to
benefit the global financial system.

Source: Deloitte’s Global Blockchain Survey, 2020

Blockchain in banking
10 use cases of blockchain tech in banking

• Payments, especially cross-border payments

• Stock Exchange and Share Trading

• Trade Finance

• Digital Identity Verification

• Syndicated Lending

• Accounting, Bookkeeping, and Audit

• Credit Reports for Businesses and Individuals

• Hedge Funds

• Crowdfunding (ICOs)

• Peer-to-Peer (P2P) Transfers

Source: fintechnews.org
Image source: medium.com
Blockchain as a way to move forward
Banks and financial institutions are implementing blockchain technology

Blockchain technology proponents believe it can be used to

create secure and convenient alternatives to time-consuming
and expensive banking processes. And this theory seems to
be gaining traction, as almost every major bank around the
world is testing it.

For example, banks are trying to create systems that decrease

the number of participants involved in transactions. But some
have invested more heavily than others. Some are investing in
blockchain startups. Others are partnering with fintech
companies that use blockchain (in fact, nearly all blockchain-
based proofs of concept (POCs) developed by banks have
been undertaken in conjunction with fintech partners.)

And finally, multiple global banks — including UBS, Goldman

Sachs, and Morgan Stanley — have published research on
blockchain technology through in-house efforts; however, this
research is mostly limited to explaining technical details and
exploring theoretical use cases. Few banks to this point have
constructed their own blockchain-based systems or in-house
technology without the aid of banking or fintech partners. But
a handful of large global banks with the necessary resources
to research and build large-scale projects have started
to patent their own blockchain-based systems or their
underlying tech.

Source: businessinsider.com
Blockchain as a way to move forward
For Banks

• Payments — Insant Cross-Border transfers

• Stock Exchanges — Real-time Settlements

• Trading — Automated with Smart Contracts

• Crowdfunding — Regulated Token Purchase For All

• Syndicated Lending — Seamless Data Verification

• Accountancy — Blockchain as an ‘Electronic Notary’

Source: McKinsey.com
Blockchain as a way to move forward
Potential for retail banking

• Remittances

• Know-your-customer/ID fraud prevention

• Risk assessment using customer data

Source: McKinsey.com
Blockchain as a way to move forward

This is not JP Morgan’s first

blockchain rodeo. JP Morgan
launched an Interbank Information
Network (IIN) for cross border
payments. 176 banks world wide have
joined IIN since 2017.

IIN is designed to transfer information.

JPM coin is designed to instantly

transfer value.

Initially it will only be accessible to

wholesale customers of JP Morgan.
Unlike other stable coins JPM coin is
a permissioned private blockchain.

Source: medium.com
Blockchain as a way to move forward
The BSP established a formal regulatory framework for crypto exchanges in its Circular No. 944 dated Feb. 6, 2017.

Finchain Technology Inc., Iremit Inc.,

Moneybees Forex Corp., and Wibs PHP
Inc.

Aba Global Philippines (Coexstar),

Atomtrans Tech, Betur (dba Coins.ph),
Bexpress, Bloomsolutions (Bloomx),
Coinville Phils, Etranss Remittance
International, Fyntegrate (dba Philippine
Digital Asset Exchange or PDAX),
Rebittance (Rebit, Buybitcoin.ph), Telcoin,
VHCEX, and Zybi Tech (dba Juancash).
News.Bitcoin.com previously reported
that there were 13 approved crypto
exchanges in the Philippines. However,
Bitan Moneytech has been delisted as of
June 30 and is no longer on the above
BSP-approved list.

Source: news.bitcoin.com
Blockchain as a way to move forward

Source: Forbes.com
 Infogrpahic 1: block geeks.com
Inforgraphic 2: Abbaspour, 2018
Traditional system VS Blockchain

VS
Blockchain and possible applications

Healthcare
Education Logistics

Government
??? Insurance

Agriculture
Management
Major sources

Arjunwadkar, P. (2018). FinTech: The Technology Driving Disruption in the Financial Services Industry. CRC Press.

Gupta, M. (2020). Blockchain. 3rd IBM Limited Edition. John Wiley and Sons, Inc.

25
Group Presentation (May 2021)
FinTech business case

Choose 1 FinTech company and post in the group discussion:

- No repetition of FinTech companies

- First-come-first-serve

You will present on topics/issues such as the following but not limited to:

- How the fintech company works including relevance

- Identify the technologies they use and how they utilise it

- Which banks/companies are they working with?

- What improvements should the FinTech company consider?

- How does the fintech company impact the different sub-industries of Finance (Lending, Payments, Wealth Management, etc.)

You will have partner groups: Groups 1 and 3; Groups 2 and 4 (this will be part of class participation):

- Partner groups are required to participate actively during their assigned group’s presentation

- Ask questions, comment on the presentation, and suggest improvements on the assigned groups presentation

39
Guidelines
Presentation

Pre-presentation
• Use respectable sources/references

• It should tackle historical and current landscape of the topic/company/ Introduction (background of the topic/
company)
industry

Body topic 1
• It should be current and relevant (eg. local, regional, global)

Body, topic 2
• Have you accomplished the outline? Body, topic 3
During presentation Body, topic 4 etc.
• Make sure that your presentation is ready. If you will present a video, make Conclusion (opportunities, recommendations,
sure that the “audio” is also shared. Plan for back-ups, just in case, the and future trends)
speaker gets disconnected

• You are given 30 min to present your topic

Post presentation
• Those who are done presenting should:

• Submit a copy of their presentation

• Accomplish the peer evaluation - this will be uploaded in AnimoSpace

• The group presentation is 20% of your grade

40
Group Presentation
Schedule of Presentation (as of March 30, 2021)

Schedule of Presentation Partner Group

Group 1 : May 4, 2021 Group 4

Partner groups are

Group 2 : May 4, 2021 Group 5 required to participate
actively during their
assigned group’s
Group 3 : May 6, 2021 Group 6 presentation

Group 4 : May 6, 2021 Group 1

Group 5 : May 11, 2021 Group 2

Group 6 : May 11, 2021 Group 3

41
Guidelines
Term Paper (FinTech case analysis) Introduction
- present the topi/company, should make up approx
10% of the essay
• Approx. 1,500 to 2000 words, submit via AnimoSpace

• Deadline: 13th week?

• Groups are required to expound on their presentation (consult final focus of the topic with your professor)
Body
• Expound on a specific topic/company
- provide the key points of the paper, should make-
• The paper must focus on providing a case-study analysis on the fintech company and financial industry
up approx 75% of the paper
• Company’s history and growth

• identify strengths, weaknesses, opportunities, threats in relation to its technologies and also competitors

• Incorporate financial and economic indicators

Conclusion
• Analyse technologies used
- identify/provide key-take aways/opportunities/
• Identify corporate and business strategy
recommendations/future trends, should make up about
• Analyse research and findings
15% of the paper
• Provide recommendations

• Must provide a perspective on the SDGs applicable to the financial industry, such as:
References/Bibliography
• SDG 1: No Poverty
- at least 10 references, excluded from the word count
• SDG: 8 Decent work and economic growth
and similarity index
• SDG: 9 Industry, innovation, and infrastructure

• SDG: 10 Reduced inequalities

• Use of charts, diagrams, graphs, illustrations, and other infographics are recommended

• Use proper quotations, in-text citations, and referencing (APA format)

• At least 10 references

• Watch out for any forms of plagiarism (intentional or unintentional)

Example:
• Accomplish the peer evaluation - this will be uploaded in AnimoSpace

• Format

• font: Times New Roman

PayMaya and the impact of
• font size: 12
digital wallets to SMEs

42
 GROUPINGS
Group 1 Group 2 Group 3 Group 4 Group 5 Group 6

Mary Khristine Bea Llana Artates,

Juan Alianne Alfonso John Reyes (Leader) Waxx Navales Princess

Angelique De Leah Beatrice

Leon Katherine Batto Audrey See Jan Gavin Go Tagabucba Dabatos, Mary

Gillian
Santino Palacios Carbonilla Shaila Sy Reignard Uy Joaquin Sese Edralin, Dazle

Dane Amil Vera Lacandili Issey Tan Aaron Yaneza Regine Torres Rivera, Isabelle

Tenorio,
Reynalyn
Questions/Concerns

AnimoSpace, discussion threads

[email protected]

Blockchain Primer
 • Intro to Blockchain
Outline • Blockchain as cryptocurrency
• Blockchain Applications
Blockchain
A technology that:
• permits transactions to be gathered into blocks and recorded
• cryptographically chains blocks in chronological order
• allows the resulting ledger to be accessed by different servers

Public Key à “username”

Private Key à “password”
Private and Public Keys
 Blockchain
Transactions

• 3 things you need:

• Sender’s BTC address
• Amount
• Receiver’s BTC address

Coin Burning: Even if receiver’s BTC address does not exists, transaction will be valid when as sender’s address exists.
Transactional Block
 Bitcoin, Ethereum etc. à application of blockchain technology on digital
Cryptocurrency currency
Cryptocurrency:
Smart Contracts
• Smart contracts help you exchange “money”,
property, shares or anything of value in a
transparent, conflict-free way while avoiding
the services of a middleman

• Pre-written logic in the form of a computer

code

• Stored and replicated on the blockchain

• Executed and run by the network of

computers running the blockchain

• Can result in updates to accounts on the

ledger
Blockchain Applications
• LEGAL • SUPPLY CHAIN
• With smart contracts, no need for legal documents • Utilize distributed ledgers, companies obtain
(or lawyers) to ensure that transactions are carried transparency into shipment tracking, deliveries, and
out correctly progress among other suppliers. (Even if no
inherent trust is present)
Blockchain Applications
• GOVERNMENT • HEALTHCARE
• Offers technology to store personal identity • Medical records can be stored in blockchain and
information, criminal backgrounds, and citenzeship insurance coverage can have automatic transactions
authorized by biometrics without waiting for approvals
Blockchain Applications
• INSURANCE • ELECTION
• Autonomous vehicles and other smart devices • IDs are assigned inside the blockchain to ensure
communicate updates with insurance providers via fidelity during elections. The technology ensures
blockchain. Data authentication and auditing completely anonymized and at the same time
become unnecessary which in turn decrease transparent election system.
premium costs and delays.