Revised Fintech Fin Inno AI PDF

Understanding Fintech Fintech, which stands for financial technology, is a term used to describe cutting-edge technology designed to improve and automate the supply and use of financial services. Fintech is mostly used to help businesses, consumers, and entrepreneurs manage their financial operatio...

Understanding Fintech Fintech, which stands for financial technology, is a term used to describe cutting-edge technology designed to improve and automate the supply and use of financial services. Fintech is mostly used to help businesses, consumers, and entrepreneurs manage their financial operations, workflows, and personal money more skillfully. Computers and telephones use it in the form of specialized software and algorithms. A shortform for "financial technology" is "fintech." When the term fintech originally appeared in the 21st century, it was used to describe the technology found in the backend systems of reputable financial organizations, such banks. From around 2018 and 2022, there was a shift toward consumer-oriented services. These days, fintech includes a broad spectrum of industries and enterprises, such as retail banking, investment management, education, fundraising for nonprofits, and fundraising. Cryptocurrencies like Bitcoin are created and utilized as part of fintech. Though the fintech industry may make the most news, the traditional global banking sector, with its multitrillion-dollar market capitalization, remains the focus of attention. "Financial technology" broadly refers to any advancement in the way people do business, including the development of digital currency and double-entry bookkeeping. Financial technology has grown at an exponential rate since the internet revolution. You probably use some aspect of fintech on a daily basis. A few examples include sending money to a friend via Venmo, transferring money from your debit account to your checking account using your iPhone, and managing your investments with an online broker. According to EY's 2019 Global FinTech Adoption Index, two-thirds of consumers use two or more fintech services, and these consumers are becoming more aware of fintech in their daily lives. Fintech Issues The U.S. Department of the Treasury claims that although fintech companies give businesses and consumers new options and capacities, they also bring new risks that need to be considered. The two primary issues raised by the Treasury are "data privacy and regulatory arbitrage." The Treasury called for increased oversight of consumer financial activities, particularly with regard to nonbank firms, in its most recent report, which was released in November 2022 Eg. World of crypto currency. One issue is regulation. Through initial coin offerings, or ICOs, startups can directly raise capital from the general public. They are mostly unregulated and have developed into havens for fraud and scams. Due to regulatory uncertainty surrounding initial coin offerings (ICOs), entrepreneurs have been able to avoid fees and compliance costs by passing security tokens through the U.S. Securities and Exchange Commission (SEC) under the guise of utility tokens. Because of the diversity of fintech products and the range of industries they impact, developing a single, comprehensive solution to these problems is difficult. Generally speaking, governments have used pre-existing laws to regulate fintech, sometimes modifying them. Eg of existing fintech Fintech has been used in numerous financial domains. These are but a few instances. ​ Robo-advisors are applications or web-based platforms that automatically invest your money in the best possible ways, frequently at minimal cost, and are available to regular people. ​ Buying and selling stocks, exchange-traded funds (ETFs), and cryptocurrencies from your mobile device is made simple by investing apps like Robinhood, frequently with little to no commission. ​ Online payments to individuals or businesses can be made quickly and easily with payment apps such as PayPal, Venmo, Cash App, Block (Square), Zelle, and others. ​ With personal finance apps like Mint, YNAB, and Quicken Simplifi, you can pay bills, create budgets, and view all of your financial information in one location. ​ Peer-to-peer (P2P) lending platforms such as Upstart, LendingClub, and Prosper Marketplace enable borrowers and small business owners to get loans from a variety of people who give them microloans directly. ​ The ability to hold and transact in cryptocurrencies and digital tokens such as Bitcoin and non-fungible tokens (NFTs) is provided by crypto apps, which include wallets, exchanges, and payment applications. ​ Technology specifically applied to the insurance industry is known as insurtech. One instance would be using gadgets to track your driving behavior and modify your auto insurance costs. Is fintech applied in banking only? No. While banks and startups have developed helpful fintech applications centered around basic banking (such as bank transfers, credit/debit cards, loans, and checking and savings accounts), the popularity of many other fintech areas that are more related to investing, payments, or personal finance has increased. Fintech in Malaysia With a population that is tech-savvy and an economy that is expanding quickly, Malaysia is one of the most developed countries in Southeast Asia. The fintech industry in Malaysia has grown significantly in the last several years, and a number of creative fintech businesses have surfaced there, offering services to meet a range of financial needs including lending, banking, investing, and payment processing. This issue of Top 10 of Malaysia presents its selection of the top ten fintech businesses (in no particular order), which have transformed the traditional financial industry by making financial services easily accessible and reasonably priced available to the general public. As a result, Malaysia has become a centre for fintech innovation. Successful fintech co in Malaysia Touch and go Praba Sangarajoo, the CEO of Touch 'n Go, has been leading Malaysia's shift to a cashless society. Originally designed to make commuting easier, it has developed into a fintech solution that is now used by more than 50% of Malaysians and is not just found on highways. It is regarded as one of the best electronic payment systems in the nation for small-scale transactions. Millions of users have access to Touch 'n Go's popular fintech services, which include the Touch 'n Go card, e-wallet, Smart Tag, TNG Digital, Touch 'n Go RFID and PayDirect, GO+, GOinvest, and GOpinjam for lending and investing. The company has built a solid reputation thanks to its electronic payment system and commitment to innovation. Boost Anthony Sheyantha Abeykoon serves as Boost's CEO. With its ever-expanding fintech ecosystem that includes its all-in-one fintech app, merchant solutions, AI-based lending business, and cross-border payment platform, Boost, the regional full spectrum fintech arm of Axiata, financially empowers millions of customers, including both users and merchants, across seven countries in Southeast Asia. One of the most well-known apps that uses cutting-edge technology and creative solutions to streamline business is Boost. Users can top off their prepaid mobile phones with Boost while they're on the go and receive cashback after each top-up with Boost's mobile wallet. Additionally, digital vouchers from well-known companies like Grab, Spotify, iflix, Steam Wallet, Tealive, and MyBurgerlab are available through Boost for up to 50% less. Fintech advantages ​ The use of financial technology has significantly changed how finance businesses are run. This does not imply that traditional banking is no longer available. It simply indicates that fintech  clients have a selection of options to select from whenever it's convenient. Both conventional banking and financial services driven by technology are adamant about providing their clients with financial services or products that exceed their expectations. ​ Although it's possible to believe using cutting-edge technologies will cost a fortune, this isn't always the case. Financial technology firms limit their own expenditures on technology. With financial technology, however, that is untrue—instead, they would help to lower total costs. With Fintech, the integration of bank account cards and customer IDs has allowed for the unification of physical and digital payment methods onto a single platform. Providing easy-to-use transaction options within a budgetary constraints is the primary factor that benefits businesses. ​ Businesses can send and receive money in multiple currencies from their accounts without having to pay costly conversion fees. Convenience, not price, is the driving force behind fintech. The most convenience method of running a banking business is provided by fintech software. Businesses are embracing fintech because it leverages technology to provide customers with a more dependable and superior experience. Blockchain technology, IoT, AI, machine learning, and a number of other financial technologies are improving the financial businesses and will help them in the long run. ​ Fintech makes it simpler to get a payday loan or a short-term loan. You can easily find a large number of lenders online and receive prompt assistance. Conventional banks might not have the same benefit, and it would take them months to complete it quickly. Fintech is the method of choice for most businesses because it is quick, easy, smart, and efficient. ​ since the emergence of fintech, some procedures have significantly become more straightforward. Example, you can apply online for a digital lender, and your application might get approved faster. Following the processing of their information, clients are able to access any kind of financial service they need much faster. ​ Financial technology provides highly specialized services, using it increases efficiency. Because automation removes the need for human intervention, it permits a high degree of specialization. As a result, it provides outstanding service quality and high efficiency. Fintech solutions can be invested in for a variety of reasons, but the primary advantages are improved time management and productivity. Fintech disadvantages ​ Not having any physical branches. Given that issues pertaining to the service's delivery must be resolved through social media or email, this could be a drawback. ​ Even though some fintech companies use blockchain technology as a differentiator to increase security, not all of them do, which puts user data security at risk. ​ While many find it as simple as using their smartphones, the reality is that this condition instantly leaves out a significant portion of the population that does not have access to the Internet and will therefore find it difficult to open a bank account, even in the case of Fintech. ​ Not enough regulation where authorities from all over the world still developing laws pertaining to it. Since there is a lack of regulation, fintech is open to fraud. What is financial innovation? It is the creation of brand-new financial markets, organizations, goods, and procedures. The financial sector has a lot of room to grow because of how new technology is accepted and integrated. Three categories exist for innovation: process, institutional, and product. Institutional innovation is the emergence of new financial firms, such as specialized credit card companies, direct banks, and related services like investment consulting. Product innovation includes the development of new goods like foreign currency mortgages, derivatives, and securitization. Process innovations are fresh approaches to carrying out financial operations, like phone and online banking. What is financial innovation in the banking sector? Encouraging banks to invest in new technologies that would help the financial system fulfill its functions is possible when the right kind of innovation and favorable conditions are present. This leads to advancement. There are different types of financial innovations ​ Financial business processes that are innovative provide better services to clients and increase the efficiency of business operations. These innovations include, among other things, new business practices that increase productivity and open up new markets. The facility for online banking is the most basic example. ​ Financial Institutional Innovations: Innovation plays a key role in the financial system's development, which is necessary for economic expansion. A new organization establishing itself and offering cutting-edge procedures or services is one example. It is difficult to create a regulatory framework that strikes a fair balance between social and private incentives and fosters innovation, globalization, and the expansion of the financial sector. ​ Product innovations include the introduction of financial innovation instruments and products like family wealth accounts and weather derivatives. Novelties in products are introduced to enhance productivity or better accommodate shifting customer needs. Fin Innovation advantages: ​ Financial intermediaries can benefit from economies of scale when they bundle related financial services that can be offered to customers who prefer a conveniently offered suite of products. ​ Thanks to the Internet and mobile technology, it is now much easier to interact and communicate with clients and other businesses remotely. Technology has also enhanced financial inclusion by improving direct delivery channels' efficiency and accessibility, enabling them to offer more individualized and reasonably priced financial services. ​ Digital innovation not only reduces transaction costs but also creates new opportunities for innovative financial services and business models. The adoption of new technological advancements affects both new and established providers. It is possible to reduce the cost of obtaining, storing, processing, and exchanging information by using digital technologies. Fin Innovation disadvantages: ​ In actuality, fintech companies control sensitive data. User data needs to be more independently managed. ​ Fintech and big tech have issues with cybersecurity. Additionally, attacks become more common as services disaggregation increases interconnectivity and forges new links. ​ It is not the case that the fixed-cost infrastructure ages at the same rate as technology. Regulating frameworks also make it more difficult for new players to enter the market. Example of Fin Innovation in Malaysia Online banking has increased in Malaysia in the past ten years. Mobile banking has shown a lot of promise because of its flexibility in being used anywhere, at any time, and with affordable data plans made possible by 4G advancements. Commercial banks have chosen to decrease the number of their branch locations and ATMs, which has led to an increase in the popularity of online and mobile banking. Financial institutions, which were initially wary of fintech, have begun to adapt, according to data from the 2019 World Economic Forum's Network Readiness Index. Malaysia ranked highest among emerging and developing Asian nations. Out of all the nations in Southeast Asia, Malaysia is beginning to establish itself as having one of the most advanced fintech ecosystems. Fintech Malaysia claims that due to online payments and transactions, the nation's GDP increased by 20% in 2020, greatly improving its economic prospects. Government initiatives aimed at reducing the rising unemployment rate and increasing employment in the fintech sector have made this development possible for the public sector. Numerous advancements in recent years have been made possible by the growing interest in fintech. The formation of the Malaysia Digital Economy Corporation (MDEC), a government organization with the goal of hastening the development of the nation's digital economy, is one particular instance. Among these have been programs to encourage fintech innovation, like the founding of the Malaysia Fintech Hub, which offers resources and assistance to fintech companies. Other instances include the introduction of electronic payment and banking services, the growth of online lending marketplaces, and the use of artificial intelligence and blockchain technology. Many recent advancements have been made possible by the growing interest in fintech. The formation of the Malaysia Digital Economy Corporation (MDEC), a government organization entrusted with quickening the expansion of the nation's digital economy, is one instance of this. Initiatives to support fintech innovation have included the creation of the Malaysia Fintech Hub, which offers resources and assistance to fintech companies. Other instances include the emergence of online lending marketplaces, the use of blockchain technology, and the use of electronic banking and payment services. Artificial Intelligence: How it started Although the term artificial intelligence (AI) was first used in 1956, its popularity has grown in the present day due to advances in algorithms, processing power, storage, and data volumes. In the 1950s, symbolic methods and problem solving were the focus of early AI research. The US Department of Defense became interested in this kind of work in the 1960s and started teaching computers to simulate fundamental human reasoning. The automation and formal reasoning that we see in computers today, such as intelligent search and decision support systems that can be built to supplement and even enhance human abilities, were made possible by this early work. Although AI is portrayed in science fiction books and Hollywood films as human-like robots that take over the world, AI technologies aren't all that smart or frightening at this point in their development. Rather, AI has developed to offer numerous specialized advantages across all sectors. For examples of artificial intelligence in retail, healthcare, and other fields. How AI works. ​ Repetitive learning and data-driven discovery are automated by AI. Artificial Intelligence handles repetitive, high-volume, computerized tasks rather than automating manual ones. And it does so without growing weary. Naturally, people are still needed to configure the system and pose the proper queries. ​ AI gives already-made products more intelligence. AI capabilities will improve many of the products currently in use. A multitude of technologies can be enhanced by combining massive amounts of data with automation, conversational platforms, bots, and smart machines. Improvements in the home and office include investment analysis, smart cameras, and security intelligence. ​ Progressive learning algorithms enable AI to adapt by letting the data handle the programming. To help algorithms learn, artificial intelligence (AI) looks for patterns and structure in data. An algorithm can educate itself to recommend a product online, just as it can teach itself to play chess. Additionally, the models adjust to new data. ​ AI uses neural networks with multiple hidden layers to analyze more and deeper data. It used to be impossible to build a fraud detection system with five hidden layers. Big data and amazing computer power have changed all of that. Since deep learning models learn directly from the data, a large amount of data is required for training. ​ Deep neural networks allow AI to achieve astonishing accuracy. Deep learning, for instance, is the foundation for all interactions with Google, for example. Furthermore, the more you use these products, the more accurate they become. AI methods from object recognition and deep learning are now applied in the medical field to more accurately identify cancer on medical images. ​ AI maximizes the value of data. The data itself is useful when algorithms are self-learning. You just need to use AI to find the answers, which are already present in the data. Data can provide a competitive advantage because its role is more crucial than ever. Even if everyone in a competitive industry uses the same strategies, the best data will prevail if you have the best data. But reliable AI is necessary for using that data to innovate responsibly. Your AI systems should therefore be ethical, just, and long-lasting. AI in Banking and Finance AI has had a significant transformative impact since its inception, altering the way businesses, particularly those in the banking and finance industry, run and provide services to clients. A more customer-focused and technologically relevant banking industry has emerged with the integration of AI into banking apps and services. By boosting productivity and making decisions based on data that is incomprehensible to a human, AI-based systems are now assisting banks in cutting expenses. Furthermore, in a matter of seconds, clever algorithms can identify fraudulent information. According to a Business Insider report, almost 80% of banks are aware of the possible advantages of artificial intelligence in banking. Another McKinsey report projects that artificial intelligence (AI) in banking and finance could potentially reach $1 trillion. These figures show how quickly the banking and finance industry is adopting AI to boost productivity, lower costs, and provide better services and efficiency. Application of AI in banking and finance Our world has become increasingly reliant on artificial intelligence, and banks have already begun incorporating this technology into their offerings. Some major application of AI in banking ​ Cybersecurity and Fraud Detection: People use apps or online accounts to pay bills, withdraw cash, deposit checks, and perform a variety of other digital transactions. As a result, the banking industry must increase the amount of fraud it detects.This is where banking artificial intelligence becomes useful.AI and machine learning assist banks in detecting fraudulent activity, monitoring system vulnerabilities, reducing risks, and enhancing the general security of online banking.One example of a bank using AI for fraud detection is Danske Bank, which is the largest bank in Denmark to use an algorithm. The AI reduced the amount of false positives by 60% and improved the bank's ability to detect fraud by 50%. The AI-based fraud detection system not only sent certain cases to human analysts for further review, but it also automated a number of crucial decisions.AI can also help banks manage online threats. With 29% of all cyberattacks occurring in this sector in 2019, the financial industry was the most frequently targeted. Financial services companies using artificial intelligence can react to potential cyberattacks before they affect employees, customers, or internal systems. ​ Chatbots: The most useful examples of artificial intelligence in banking are chatbots.Unlike humans who have set work hours, they operate around the clock once they are deployed.They also continuously pick up on the usage habits of a specific client. It aids in their effective comprehension of the user's requirements.Banks can guarantee round-the-clock customer support by incorporating chatbots into their banking applications. Additionally, chatbots can provide tailored customer service, lessen the workload on email and other channels, and suggest appropriate financial services and products by analyzing customer behavior. ​ Loan and credit decision: Banks are using AI-based systems to make better-informed, safer, and more profitable loan and credit decisions. Many banks still use credit history, credit scores, and customer references in far too limited ways to determine a person's or business's creditworthiness.Nevertheless, it is indisputable that these credit reporting systems often contain a significant amount of errors, omit real transaction history, and classify creditors incorrectly.An AI-based loan and credit system that analyzes customer behavior and patterns can determine a customer's creditworthiness even if they have no credit history. The system also notifies banks of specific actions that could increase the risk of a default. In summary, these technologies are having a big impact on how consumer lending is going to evolve in the future. ​ Data Collection and Analysis : Millions of transactions are documented daily by banking and financial institutions. Because so much information is produced, employees find it overwhelming to gather and register it all. Such a massive amount of data becomes impossible to organize and record accurately.Efficient data collection and analysis are made possible in such scenarios by innovative AI and banking solutions. As a result, the user experience is enhanced overall. Detecting fraud and determining credit are other uses for the data. ​ Customer Experience: Consumers are continuously seeking greater convenience and better experiences.For instance, ATMs were successful because they allowed users to access basic banking services, like making deposits and withdrawals, even outside of regular business hours.This degree of ease of use has spurred even more creativity. With their smartphones, customers can now open bank accounts from the comfort of their homes.Users' convenience and overall experience are improved when artificial intelligence is incorporated into banking and finance services.Know Your Customer (KYC) information can be recorded more quickly and error-free thanks to artificial intelligence (AI) technology. Customers can avoid the inconvenience of having to manually go through the entire process by using AI to automate eligibility for cases like applying for a personal loan or credit. Additionally, AI-based software speeds up loan disbursement and other facility approval processes.Customers can avoid the inconvenience of having to manually go through the entire process by using AI to automate eligibility for cases like applying for a personal loan or credit. Additionally, AI-based software speeds up loan disbursement and other facility approval processes Examples of AI in Banking in the Real World JPMorgan Chase:JPMorgan Chase researchers have created an early warning system that can identify malware, trojans, and phishing scams by utilizing AI and deep learning techniques. It takes a trojan about 101 days, according to researchers, to infiltrate corporate networks. Before the attack happens, there is plenty of notice thanks to the early warning system. Additionally, as hackers get ready to send phishing emails to staff members in an attempt to compromise the network, it notifies the bank's cybersecurity team. Commercial banks are not the only financial institutions using analytical AI-based tools in their daily operations; Goldman Sachs and Merrill Lynch are two examples of investment banks. Alphasense is an AI-powered search engine that examines keyword searches and market trends through natural language processing; many banks have also begun to use it. Disadvantages of AI Data Security The banking sector gathers a tremendous amount of data, so strong security measures are required to prevent any violations or breaches. To guarantee that your customer data is handled properly, it is crucial to find the right technology partner who is knowledgeable about AI and banking and can provide a range of security options. Not Enough Reliable Data In order to train and validate AI-based banking solutions, banks need access to high-quality, structured data. High-quality data is required to ensure that the algorithm is applicable to real-world scenarios. Additionally, non-machine readable data may cause AI models to behave unexpectedly. Consequently, banks that are adopting AI at a faster pace need to modify their data policies in order to minimize privacy and compliance concerns. Inability to Explain Systems utilizing artificial intelligence (AI) have many uses in decision-making because they save time and minimize errors. However, they may cling to preconceptions derived from earlier cases of poor human judgment. Little inconsistencies in AI systems can quickly escalate into serious problems that jeopardize the bank's operations and reputation. Banks should offer a sufficient level of explanation for each decision and recommendation made by AI models in order to avert catastrophes. Banks have to understand, verify, and defend the model's method of making decisions.