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Lecture 6 - Introduction and What Is Fintech

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30 views27 pages

Lecture 6 - Introduction and What Is Fintech

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Toàn Lê Minh
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Introduction and What is Fintech

Dr. Tu Le
IBT, University of Economics and Law,
HCMC, Vietnam
Learning objectives
 Discuss what Fintech is
 Discuss the application of Fintech
 Explore different perspectives of Fintech
 Understand Fintech technologies
Fintech vs Techfin
 Fintech: The use of technology to deliver
financial services and products to consumers
– Financial companies look for technology to improve
their service and customer experience
– A traditional bank offers mobile banking service
– Fintech is about non-traditional financial institutions
such as PayPal, Zеllе, and Vеnmо in the United
States, or online-only Starling Bank, Mоnzо and
Rеvоlut in the United Kingdom.
 Techfin
– A technology firm that wants to deliver
financial products on the basis of existing
tech solutions
– Google, Amazon, Fаcеbook and Apple
(GAFA) in the United States, and Bаidu,
Аlibаbа, and Tеnсеnt (BAT) in China
Fintech Techfin
 Exist with an objective to  Exist with an objective to
maximize the use of emerging improve the existing
technologies to disrupt existing experience or capabilities in
‘old world’ financial services the financial services industry
models  Not so disruptive compared to
 The use of blockchains fintech but more incremental in
nature
Quiz
 Plaid technologies
 Alipay
 Circle
 Apple pay
 Wechat Pay
 Adyen
 Qudian
Different perspectives on
Fintech
 Fintech for dinosaurs
 Fintech for entrepreneurs
 Fintech for investors
 Fintech for customers
Fintech for dinosaurs
 ‘We need banking, but we no longer need banks’
Bill Gate, The World's Billionaire, in 1994
 The ‘dinosaurs’ of the financial world have evolved
rather than becoming extinct
 It applies to all financial giants that are disrupting
the banking & capital markets, insurance services,
asset and wealth management, transfer, and
payment of funds
 Bank-fintech cooperation
 https://www.about.hsbc.com.sg/news-and-media/are-banks-
the-dinosaurs-of-the-digital-age
Fintech for entrepreneurs
 Entrepreneurs refer to the start-ups or early-stage
companies
 Fintech is seen as a sweet-pot by entrepreneurs
 In the case of COVID pandemic, Fintech
entrepreneurs can fill the gap left by traditional banks
by making financial services accessible through
digital platforms
Fintech for investors
 Investors see fintech businesses as a
‘need for the future’ to put money in, to
generate high returns
 Both ‘technology’ and ‘financial sectors’
parent Fintech opens the door to
endless opportunities
Fintech for customers

 Fintech aims to provide customers with alternative


channels for financial operations
 Customers, especially millennials, prefer financial
services to be mobile, accessible 24/7,
personalized, and flexible.
Case study: CAPITAL ONE
 How has Capital One fundamentally disrupted the
financial services industry?
 How does Capital One differentiate itself from other
competitors in the card industry?
Potential benefits

 Speed and convenience


 Greater choice
 Cheaper deals
 More personalised products
Potential risks
 Unclear rights
 Making a rash decision
 Technology-based risks
 Financial exclusion
Fintech business applications
Applications of Fintech
 Digital payments
– using mobile wallets instead of credit cards
 Investment and wealth management
– The cloud-based bot-enabled platforms are
being used for advising users about asset
management and investment.
– Robo-advisors
 Lending/Loan
– Apply for a loan using their mobile phones
either via banks or other online platforms
– Fintech credits
 Trading
– Online trading apps have given anyone who can
invest in the market, monitor risk in real-time,
and share knowledge as well in the online
platform itself
– Traders can conduct huge data through ML
algorithms to identify trends and risks.
 Personal Banking
– Banks and start-ups in this space are creating
online wallets and profiles to maintain services
to translate into a better and faster user
experience
 InsurTech
– Users can acquire new services and fill out
claims directly from the app at any time
 Regtech
– Focusing on the automation compliance
rules/processes for financial institutions
– Anti-Money Laundering and Know Your
Customer (KYC) guidelines which cope up
against fraud
– Offering quick and cost-effective management of
massive data, i.e transactional data/records and
compliance documents, such as corporate tax
returns.
Fintech technologies

 Artificial Intelligence (AI) and Machine


Learning (ML)
– Some of the fintech applications of AI and ML
include credit scoring, fraud detection, regulatory
compliance, and wealth management.
 Big Data and Data Analytics
– Used to predict how consumers are likely to
behave.
– Contribute to formulate marketing strategies and
fraud detection algorithms.
 Robotic Process Automation (RPA)
– The process of assigning manual, repetitive tasks
to robotics instead of humans in order to
streamline workflows in financial institutions
– Statistics and data collection
– Regulatory compliance management
– Communication and marketing through e-mails
and chatbots
– Transaction management
 Blockchain
– Blockchain technology is being adopted at a
large scale in the financial industry
– Each transaction is encrypted, and the
chances of successful cyber-attacks are
relatively low when blockchain technology is
employed.
– Blockchain technology is also the backbone
of many Cryptocurrencies.
Fintech implications for
established businesses
 Why is fintech a threat?
– https://www.youtube.com/watch?v=Zw_kU
sZftps
 Global Fintech trends for 2021
Top predictions for fintech in
Q1 -2021

 Pulse of Fintech H2’20, KPMG


Strategies for established
businesses
 Cooperating with new entrants,
 Acquiring them partially or completely
 Competing with them directly
Summary
 Know different aspects of fintech
 Know potential benefits and risks of
Fintech
 Understand the application of Fintech
 Understand Fintech technologies

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