This book provides both practice-oriented and academic insights into the disruptive power of fintech for the banking industry. It explores (1) whether and how the banking industry can use newly emerging technologies in the financial sphere to its advantage while managing any associated risks, (2) how these technologies affect traditional banking service formats as well as the pricing of these services, and (3) whether the emergence of fintech in the banking industry calls for a rethinking of existing banking regulations such as the Basel Accords as well as country-specific regulations.
Prior publications in this area typically examine both current applications of fintech in the banking industry, as well as its future prospects, by analyzing actual cases or exploring the impact of a single emerging technology on the banking industry. They often ignore the interdependence between emerging technologies and overlook the connection between fintech as a whole and the future of the banking industry. This book addresses this gap by providing a comprehensive overview of various fintech applications and by analyzing what they mean for the future of banking. Given the potentially disruptive power of fintech, the book will focus on the challenges banking supervisors are likely to encounter as a result of fintech’s continual ascent. It will thus encourage readers to think about and explore how to find a balance between the beneficial aspects of fintech and the challenges it creates in terms of supervision, regulation, and risk management.
Author(s): Thomas Walker, Elaheh Nikbakht, Maher Kooli
Series: Palgrave Studies in Financial Services Technology
Publisher: Palgrave Macmillan
Year: 2023
Language: English
Pages: 408
City: Cham
Preface
Acknowledgments
Contents
Notes on Contributors
List of Figures
List of Tables
1 Fintech and Banking: An Overview
Introduction
Overview of Content
Part I: Financial Technologies and Their Effect on the Banking Industry
Part II: Challenges, Opportunities, and Regulations Regarding Fintech in the Banking Industry
Part III: Evidence from Around the World
References
Part I Financial Technologies and Their Effects on the Banking Industry
2 Centralized and Decentralized Finance: Coexistence or Convergence?
Introduction
Centralized Finance (CeFi) and Technological Innovation
CeFi—The Architecture of Our Current Financial System
Finance—A Functional View
Technological Innovation and CeFi—A 150-Year History
Economical and Technical Introduction of DeFi
DeFi—An Introduction
The DeFi Hierarchical Layer Model
The DeFi Layer Model
Deep Dive: Protocol Layer
MakerDAO—A DeFi Protocol Deep Dive
The Technological Future of DeFi
Comparing DeFi with CeFi
A Functional Comparison Along the Value Chain
Loan Origination
Exchange Trading
DeFi Advantages and Opportunities
DeFi Disadvantages and Challenges
DeFi Fault Lines
DeFi and CeFi—Coexistence or Convergence?
A Scenario Analysis
Recent Examples of DeFi–CeFi Convergence
Conclusion and Suggestions for Future Research
References
3 Fintech and the Digital Transformation of the Banking Landscape
Introduction
Theoretical Framework
Innovation and Financial Innovation
Systemic Innovation
Technology Diffusion Process
Systemic Innovation and Digital Transformation of the Banking Landscape
Diffusion of Fintech-Based Innovations and Potential Disruption/Revolution Under the Global Pandemic of COVID-19
Research Implications and Conclusions
References
4 Shifting Paradigms in Banking: How New Service Concepts and Formats Enhance the Value of Financial Services
Introduction
An Outlook on the Future
The Next Banking
What Customers Want
What Open Banking May Offer to Customers: From Definition to Main Features
A Next Generation of Business Models: Platforms and Ecosystems for Embedding Financial Services and Develop a Contextual Banking
From Disintermediation to Cooperation
The Infinitive Financial Intermediation
New Concepts and Formats of Services: The Case of Account Aggregation Services
Present and Future Developments in Value Chains
Summary and Conclusions: Next Steps Forward
References
5 Competitors and Partners at the Same Time: On the Role of Fintech Companies in the Latvian Financial Market
Introduction
Sample and Survey Design
Sample
Survey Design
Results
Basic Characteristics and Performance
Survey Results
General Characteristics of the Respondents
Outlook
Conclusions
References
6 Non-Fungible Tokens
Definition and Basic Concepts
Sources of Value
NFTs as Financial Assets
Unique Benefits of NFTs
Types of NFTs
Digital Art
Play-to-Earn Video Games
Digital Real Estate and Other Applications
NFT Creation and Smart Contracts
NFT Collections
Non-Fungible vs Semi-Fungible
Deployment of an NFT Collection
Metadata and Attributes
Minting and Unveiling
Media Storage
Alternative Blockchains and Additional Features
Alternative Blockchains
Additional Features
Marketplaces
On the Economics of NFTs
Conclusion
References
Part II Challenges, Opportunities, and Regulations Regarding Fintech in the Banking Industry
7 Open Banking: Opportunities and Risks
What Is Open Banking?
Opportunities
Risks and Mitigation Strategies
Open Banking in Global View
Europe
Asia
Australia
Americas
Conclusion
Bibliography
8 The Rise of Financial Services Ecosystems: Towards Open Banking Platforms
Introduction: Origin and Definition of the Open Banking Phenomenon
New Actors in the Financial Services Market: Identifying TPPs and Their Activities
Application Programming Interfaces (APIs) as a Technological Tool of Open Banking
An Increasing Competition: How Is the Access to Financial Services Changing?
A Different Approach to Complying with PSD2: Towards Open Banking Platforms
Risks and Challenges of the Open Banking Phenomenon
Conclusive Remarks
References
9 The Cryptoassets Market in the United Kingdom: Regulatory and Legal Challenges
Introduction
The Developments in the Cryptoassets Market
The Regulation Landscape of the Cryptoassets Market
The Reasons for the Regulations
What Regulations Exist Thus Far?
What Is Regulated and What Is Unregulated?
Regulatory and Some Legal Challenges
Cybercrimes and Cryptosystems: What Is the Definition of Money Laundering?
The Cryptocurrency Methods of Money Laundering
Money Laundering Regulations in the UK
Scope of Cryptoasset Activities
The EU Perspective on Regulating Cryptoassets
The Cryptocurrency Impact on the UK Banking Sector
Conclusion
References
10 A Preliminary Comparison of Two Ecosystems: Fintech Opportunities and Challenges for Financial Inclusion
Introduction
Theory: Entrepreneurial Ecosystems
Method
Findings
An Ecosystem with Established Fintech Organizations
An Ecosystem with Emergent Fintech Organizations
Discussion of Research Results
Conclusion
References
11 Investigating Variables that Increase the Desire and Loyalty to Utilize Fintech After the COVID-19 Lockdown: A New Normal Behavior
Introduction
The Technology Acceptance Model
Hypotheses
The Impact of the COVID-19 Lockdown, Trust, Data Security and Privacy, QAS, and Perceived Usefulness Toward Fintech
The Impact of Technology Literacy Skills in Multi-Groups on the Intention to Adopt Fintech
Research Methodology
Data Collection
Procedure Development
Analysis and Results
Measurement Model
Structural Model
Multi-Group Test of Computer Literacy Skills
Intention to Adopt Fintech During and Post-COVID-19 Lockdown
Discussion
Theoretical Implication
Practical Implications
Limitations and Future Research
References
Part III Evidence From Around the World
12 Fintech and Financial Inclusion in Developing Countries
Introduction
Fintech and Financial Inclusion in the Developing World
What Is Financial Inclusion, and How Can Fintech Impact It?
Predominant Fintechs in Developing Countries
Constraints on Fintech in Developing Countries
Mobile Money Adoption: A Regional Comparison
Introduction to Mobile Money
Empirical Overview of Mobile Money Penetration
Evolution and Impacts of Mobile Money
Cryptocurrency and Blockchain: Next Frontier, or a Bridge Too Far?
Risks and Regulatory Implications of the Fintech Revolution in Developing Countries
Conclusion and Prognoses for Internationally Inclusive Fintech
References
13 The Cash Holdings of Fintechs and SMEs: Evidence from OECD Countries
Introduction
Theoretical Framework and Hypotheses
Methodology
Results
Conclusion
References
14 Fintech Companies in Brazil: Assessing Their Effects on Competition in the Brazilian Financial System from 2018 to 2020
Introduction
Fintechs and Competition: An Overview
Fintechs in Brazil: An Overview
Assessing the Impacts of Fintechs on Brazilian Banks from 2018 to 2020
Final Remarks
References
Index
