Session 1 OF FINTECH COURSE

INSTITUTE OF BUSINESS MANAGEMENT

2nd Feb 2025

SHOUKAT BIZINJO
 Welcome and Course Overview
Introduction (Self and the Class)
Course Overview
Course Objectives and Structure
Course Overview
◦ Main topics to be covered:
◦ Evolution of FinTech; Digital Payment Systems; Blockchain and Cryptocurrencies; Regulatory Challenges;
Future Trends in Financial Technology
Learning Outcomes
◦ By the end of the course, students should be able to:
◦ Understand the historical development of FinTech; Analyze the impact of digital-first banking
models.; Evaluate the challenges and opportunities within the FinTech landscape.
Assessment Methods
◦ Discuss the evaluation criteria:
◦ Participation and attendance; Assignments and case studies; Final project or examination
Ice-breaker Activity
◦Experiences or understanding of FinTech, Mobile Usage
 INTRODUCTION TO FINTECH
“Banking is necessary but banks are not (1994)”- Bill Gates

FINTECH (Financial Technology)

The word ‘fintech’ is simply a combination of words ‘financial’ and ‘technology’ that is used to describe
variety of “innovative business models” and “emerging technologies”. It transforms/automates the delivery
of services. (1)
FinTech, a blend of 'financial technology,' refers to integration of technology into offerings by financial services
companies to improve their use and delivery to consumers.
Or FinTech refers to innovative technology that enhances or automates financial services.

EXAMPLES
Digital Banks - offers same set of services that is being offered by their conventional counterparts but
through digital channels like Mobile App, KIOSKs and Digital Banks etc

1.https://www.demandsage.com/fintech-startupsstatistics.
1.
What is a Fintech?

Technologically enabled financial innovation that could result in new business models,
applications, processes, or products with an associated material effect on financial markets
and institutions and provision of financial services.
- Financial Stability Board (FSB)

“FinTech” refers to this new financial industry that relies on

innovative technologies and business models to provide financial
services outside traditional financial sector. Lending, payments, and
cross border transfers are some of the segments most highly affected
by this development.
- World Bank Chile Center and Malaysia Hub
Neobanks and Digital-First Banking
What are Neobanks?
◦ Neobanks are digital-only banks that operate without physical branches, offering services through mobile apps and online
platforms.

Differences from Traditional Banks

◦ Lower operational costs due to the absence of physical infrastructure.
◦ Enhanced user experience with user-friendly interfaces and personalized services.
◦ Rapid implementation of features based on user feedback.

Digital-First Banking
Concept and Impact
◦ Digital-first banking prioritizes online and mobile services, often supplementing with minimal physical presence.
◦ It focuses on seamless integration across platforms, ensuring consistent user experiences.

Global Examples
◦ Revolut (UK): Offers multi-currency accounts, cryptocurrency trading, and budgeting tools.
◦ Chime (USA): Provides early paycheck access and fee-free overdrafts.
◦ N26 (Germany): Features real-time transaction notifications and spending statistics.
 FINTECH LANDSCAPE
 There are more than 30,000 Fintech Startup in the world.

 The revenue of the Fintech industry has grown by almost 100% from 2017 to 2023.

 The Fintech industry revenue has been $200 billion in 2024 and expected to grow further.

 The investment in the Fintech companies was highest in 2021, with a $238.9 billion investment.

 The Fintech sector gets almost $50 billion in investment every year.

 Stripe is the top Fintech startup in the United States, with a $95 billion market value as of
2023, while Visa dominates with $576 billion market capitalization.

 Globally, an average of 64% of consumers adopted Fintech services.

Source :https://www.demandsage.com/fintech-startupsstatistics.
 Key Pillars of FinTechs
Digital Payments
◦ Services like mobile wallets (e.g., Apple Pay, Google Wallet) have transformed how transactions are conducted.
Lending Platforms
◦ Peer-to-peer lending platforms such as LendingClub connect borrowers directly with investors, bypassing
traditional banks.
Blockchain and Cryptocurrencies
◦ Blockchain provides a decentralized ledger, enhancing transparency and security.
◦ Cryptocurrencies like Bitcoin and Ethereum offer alternative investment opportunities and payment methods.
Personal Finance Management
◦ Applications like Mint and YNAB help users manage budgets, track spending, and plan savings.
Key Drivers of FinTech Evolution

Advancements in Digital Technologies: AI, Big Data, and Blockchain.

Consumer Behavior & Generational Shift Consumer Expectations: Instant, seamless,
and personalized financial services.
Regulatory Changes Conducive policies & regulations: Open banking, PSD2, and
evolving compliance measures.
Global Financial Inclusion: Bridging gaps for the unbanked population
Impact of COVID-19
Expanding Investment
EMERGING TECHNOLOGIES
 Artificial Technology

 Cloud Computing

 Application Programing Interface

 Artificial Intelligence and Big Data

 Machine Learning

 Robo Advisors

 Block Chain

 Big Data
EMERGING TECHNOLOGIES
Ubiquity
Is available everywhere, at all times. This omnipresence reduces the limitations of geography and time,
allowing businesses and customers to interact 24/7.
Global Reach
Extends a company's reach beyond local or national boundaries. It enables businesses to easily
communicate and interact with customers worldwide, expanding the potential market size.
Universal Standards
Relies on common Internet standards, which reduces the complexity and cost of communication and
transactions between different systems, devices, and networks worldwide.
Richness
Allows for rich communication that combines text, video, audio, graphics, and other multimedia elements.
This richness improves the effectiveness of communication and enables a more immersive experience for
customers.
Interactivity
Allows for two-way communication between businesses and consumers, as well as among consumers
themselves. This interactivity enhances customer engagement and provides better feedback mechanisms.
EMERGING TECHNOLOGIES
Information Density
Reduces the cost of information processing, storage, and transmission, leading to an
increase in the quality, accuracy, and timeliness of information available to both
businesses and consumers. This results in more efficient markets and better decision-
making.
Personalization/Customization
Enables companies to tailor products, services, and marketing messages to individual
users based on their behavior, preferences, and history. This customization can lead to
higher customer satisfaction and loyalty.
Social Technology
Provides a platform for user-generated content and social interactions, allowing people to
create, share and discuss content. This social technology fosters communities and
networks that can influence consumer behavior and business decisions.
 BENEFITS
Economic opportunities
Jobs and attract investments, In 2022, the fintech startups of Pakistan secured the funding of
$315 million
Improved financial inclusion
Access to financial products does not have to be in person and can be digital, thereby
improving financial inclusion.
Improved speed and efficiency
Digitizing and automating finance allows services that may have taken days in the past to be
completed in a matter of seconds.
More competition and choice
It enhances the healthy competition and brings more choices for the consumers.
Cost Effective
It brings the cost down.
Transformation of Financial Institutions: FinTech is reshaping banking, lending, payments, and
investments
Leading FinTech Companies- Major Innovations in FinTech

Cryptocurrencies & Blockchain: Bitcoin, Ethereum, and decentralized finance (DeFi).

Peer-to-Peer (P2P) Lending & Crowdfunding: Lending Club, SoFi; Redefining lending through P2P
platforms;
Regulatory Technology (RegTech): Compliance automation and fraud detection
M-Pesa: Mobile payments transforming financial inclusion in Africa (Mobile Money & Payments )
Venmo: Social payments changing peer-to-peer transactions; social payments transformation.(Mobile
Money & Payments )
Stripe & Square: Online and small business payments.; Digital Payment Platforms; (Mobile Money &
Payments )
TransferWise (Wise): Disrupting traditional remittances; Cost Efficient Remittances
 Challenges in FinTech Adoption
Regulatory Hurdles: Compliance, anti-money laundering (AML), and data protection
laws. Navigating complex financial regulations across different regions
Cybersecurity Risks: Ensuring robust security measures to protect user data;
Increasing fraud threats, data breaches, and hacking.
Scalability Issues: Balancing innovation with financial stability.
Customer Trust & Data Privacy: Overcoming concerns related to digital financial
services. Convincing users to trust a bank without physical branches. Gaining customer
trust in digital finance
 Opportunities for Growth

Financial Inclusion Expansion: Reaching unbanked populations. Reaching underserved populations

with accessible banking services
AI & Machine Learning Integration: Personalized financial services.
Blockchain for Secure Transactions: Reducing fraud and increasing transparency.
Partnerships/Collaborations between FinTech & Traditional Banks: Driving hybrid financial models
Cost Efficiency: Reducing costs associated with physical infrastructure.
Data-Driven Insights: Leveraging user
 Conclusion & Key Takeaways

FinTech is reshaping the financial landscape through innovation.

Traditional financial institutions must adapt or collaborate to stay
relevant.
The future of finance is digital, inclusive, and continuously evolving
Discussion on Course Project Topics

Working on Group Formation of Students for

Tentative Topic Discussions on Innovative and
Emerging Areas of FinTech
Q&A Session
• Any Questions?
• Contact: [Your Email/LinkedIn].
THANK YOU