FinTech and Innovation Mid-Term Test

FinTech and Innovation Mid-Term Test

• Format: 20 multiple-choice questions (MCQs) and 2 short essays
• Coverage: Topics 1-5 from lecture notes, weekly readings, and tutorial slides
• Date: 06 November 2024 (Wednesday), 3:00 PM during lecture slot (1 hour)
• Venue: LT09
• Instructions: Physical test, handwritten, bring pencils for MCQ sheet and pens for essay answers

Factors Contributing to FinTech Development in Malaysia

• Increased Mobile Device Usage: Falling smartphone and broadband prices have made digital access more affordable, expanding the FinTech target audience.
• Exposure to Novel Financial Products and Services: Consumers are becoming accustomed to innovative financial solutions.
• Millennials as a Key Demographic: Millennials, the largest population cohort, are digitally savvy and drive demand for FinTech services.
• Growing Economy and Workforce: Expanding economic activity and workforce fuel demand for financial services, including alternative solutions.

FinTech: Threat or Opportunity for Financial Institutions?

• Disruptive Potential: FinTech disrupts traditional financial service activities such as money transfers, check deposits, loan applications, fundraising, and investment management.
• Collaboration and Innovation: Many banks view FinTech as an opportunity to collaborate and adopt new technologies.
• Competitive Landscape: While new competitors arise, FinTech also offers banks additional capabilities to enhance their services.

FinTech's Impact on Traditional Financial Institutions

• Scenario 1: Better Bank: Digitization and modernization of banks, including innovative payment services and digitized lending processes.
• Scenario 2: New Bank: Technology-driven banks with full-service "built-for-digital" platforms (e.g., Atom Bank in the UK, WeBank in China).
• Scenario 3: Distributed Bank: Modularized financial services, such as the adoption of mobile wallets developed by third-party technology companies.
• Scenario 4: Relegated Bank: Banks become commoditized service providers, and direct customer relationships shift to other service providers.
• Scenario 5: Disintermediated Bank: Banks lose relevance as customers interact directly with service providers, bypassing intermediaries (e.g., peer-to-peer lending platforms).

Technological Innovations Driving FinTech

• Increased Processing Capacity: Advancements in GPU technology have significantly enhanced processing capabilities.
• Cloud Computing: Enables data storage and access from any location with an internet connection.
• AI and Machine Learning: Facilitates big data analytics and chatbot applications.

Blockchain Technology

• Definition: A decentralized, distributed ledger technology that records transactions across a network of computers securely and transparently.
• Application Examples: Cryptocurrency (e.g., Bitcoin), supply chain management, and digital identity.
• Process Flow: Transactions are validated and added to the blockchain in blocks, creating a chronological record that is tamper-proof.
• Benefits: Transparency, security, immutability, and decentralization.
• Limitations: Scalability, regulatory uncertainty, and energy consumption.

Prepare for your FinTech and Innovation mid-term test covering topics from lecture notes, readings, and tutorials. This test includes 20 multiple-choice questions and 2 short essays that will challenge your understanding of key factors influencing FinTech development in Malaysia. Ensure you're ready for November 6, 2024!