How the global financial services sector has been transformed by artificial intelligence, data science, and blockchain.
Artificial intelligence, big data, blockchain, and other new technologies have upended the global financial services sector, creating opportunities for entrepreneurs and corporate innovators. Venture capitalists have helped to fund this disruption, pouring nearly $500 billion into fintech over the last five years. This book offers global perspectives on technology-fueled transformations in financial services, with contributions from a wide-ranging group of academics, industry professionals, former government officials, and current government advisors. They examine not only the struggles of rich countries to bring the old analog world into the new digital one but also the opportunities for developing countries to “leapfrog” directly into digital.
The book offers accessible explanations of blockchain and distributed ledger technology and explores big data analytics. It considers, among other things, open banking, platform-based strategies for banks, and digital financial services. Case studies imagine possible future fintech-government interaction, emphasizing that legal and regulatory frameworks can help to create trust in financial processes. The contributors offer novel takes and unexpected insights that will be of interest to fintech experts and nonexperts alike.
Contributors
Ajay Bhalla, Michelle Chivunga, John D’Agostino, Mark Flood, Amias Moore Gerety, Oliver R. Goodenough, Thomas Hardjono, Sharmila Kassam, Boris Khentov, Alexander Lipton, Lev Menand, Pinar Ozcan, Alex Pentland, Matthew Reed, David L. Shrier, Markos Zachariadis
Author(s): David L. Shrier, Alex Pentland
Publisher: The MIT Press
Year: 2022
Language: English
Pages: 331
City: Cambridge
Contents
Introduction
I. Foundations
1. Fintech Foundations: Convergence, Blockchain, Big Data, and AI
1.1 Introduction: The Convergence Revolution
1.2 Disruptive Technologies
1.3 The Convergence Revolution
1.4 Blockchain Basics
1.5 What Blockchain Is
1.6 What Blockchain Is Good For
1.7 What Blockchain Could Enable
1.8 Big Data and AI Fundamentals
1.9 Big Data and Financial Services
1.10 Data Quality
1.11 Social Physics and Unlocking Potential
1.12 Ethics of Big Data and AI
1.13 Regulation
1.14 Unsolved Problems
Notes
II. Transitioning To the Digital Era
2. Edge Effects: Bridging from Old to New
2.1 Introduction
2.2 Wounded Workflows
2.3 Where There’s Friction, There’s Ire
2.4 Check Tech
2.5 The Paper Weight
2.6 To Build or Not to Build? That Is the Question
2.7 Fragmentation across the Nation
2.8 Taxing Consequences
2.9 Automation and Morale
2.10 More Data, More Problems
2.11 To Label Is Human, to Store, Divine
2.12 A Bot Is Born
2.13 Keep It Simple, Sometimes
2.14 The Missing Link
2.15 What’s Your Problem?
2.16 The Right Stuff for the Right Kind of “New”
2.17 Means, Not Ends
Notes
3. Open Banking: How Platforms and the API Economy Change Competition in Financial Services
3.1 Introduction
3.2 Open APIs in Banking
3.3 The Economics and Strategy of Platforms
3.4 Platform Competition in Banking
3.5 External Threat: Big Tech
3.6 Conclusions
Notes
4. Digital Financial Services
4.1 Introduction
4.2 Context
4.3 Description
4.4 Key Considerations for Future Development
Notes
5. Policy and Fintech, Part I: Frameworks
5.1 Introduction: Financial Innovation and Regulatory Concerns
5.2 Regulatory Goals and Techniques
5.3 Laws of General Applicability; Contracts and Instruments
Notes
6. Policy and Fintech, Part II: Use Cases
6.1 Specific Use Case I: Transaction Records and Trading Markets
6.2 Specific Use Case II: Identity, Trust, and Data Security in a Blockchain Environment
6.3 Specific Use Case III: Blockchain, Stability, and Systemic Oversight
6.4 Conclusions and Steps Forward
Acknowledgments
Notes
7. Digital Banking Manifesto 2.0
7.1 Introduction
7.2 Current Fintech Trends
7.3 First-Wave Companies: Digital Incrementalists
7.4 Second-Wave Companies: Digital Hybrids
7.5 Third-Wave Companies: Digital Natives
7.6 Key Requirements for a Digital Bank: Customer Perspective
7.7 Key Requirements for a Digital Bank: Investor Perspective
7.8 Key Requirements for a Digital Bank: Bank Perspective
7.9 Digital Customer Segment
7.10 Unleashing Digital Currency
7.11 Narrow Bank
7.12 Shaping Ecosystems
7.13 Beyond Banks
Notes
III. Fintech Possibilities
8. Regulatory Sandboxes
8.1 Introduction
8.2 Existing Initiatives and Models
8.3 Possibilities for a Government to Consider
8.4 Next Steps
8.5 Conclusions
Notes
9. Leapfrogging with NextGen Fintechs and Emerging Tech for the Growth of Africa
9.1 African Context
9.2 The Relevance of the AfCFTA and Digitization
9.3 Digitization and Fintechs to Spur African Growth
9.4 The Relevance of Blockchain in the Context of Africa
9.5 Blockchain as a Critical Friend of Government
9.6 Blockchain and Derisking Markets
9.7 Blockchain as a Lever for the Scalability and Resilience of MSMEs
9.8 Conclusion and Recommendations
Notes
10. The Rise of RegTech and the Divergence of Compliance and Risk
10.1 Traditional Audit and Compliance
10.2 The Promise of Regulatory Technology
10.3 The Perils of Provable Compliance
10.4 Conclusion
Notes
11. On Governance and (Technical) Complexity
11.1 Data Framework
11.2 Solution: Bolster Confidence with Internal and External Skill Sets
11.3 Investors Drive Next-Generation Governance Both Externally and Internally
11.4 RegTech
11.5 Language and Competencies Shifting to Reflect the Future State
Notes
12. Responsible Technology: Advancing Trust and Securing the Ecosystem
12.1 Where We Are
12.2 A Guide to Responsible Innovation
12.3 Responsible Innovation and Trust
Notes
Conclusion
Contributors
Index
