Fintech: Personal Finance (FIN533) PDF

THE FUTURE OF PERSONAL FINANCE: FINTECH FIN533 INTRODUCTION TO FINTECH 1. Fintech or financial technology is defined as any piece of technological innovation that aims to facilitate or moderate traditional financial methodologies and financial services. 2. Fintech has gained a lot of popularit...

THE FUTURE OF PERSONAL FINANCE: FINTECH FIN533 INTRODUCTION TO FINTECH 1. Fintech or financial technology is defined as any piece of technological innovation that aims to facilitate or moderate traditional financial methodologies and financial services. 2. Fintech has gained a lot of popularity in recent times as people are beginning to see the potential of managing their finances on digital platforms. There are also many great applications that have made management of personal finance easier and more efficient than ever. ‹#› INTRODUCTION TO FINTECH 1. The rise of smartphone usage has also fueled the use and acceptance of fintech platforms. Concepts such as Loading… mobile banking, cryptocurrency and digital investments are also products of fintech and its accessibility in the general public. Fintech is a product of contributions from startups, banks, and financial institutions worldwide. 2. Fintech brings excellent tools for individuals looking to efficiently handle their finances – financial automation, bill payments and budgeting are some of the popular elements of personal finances that have been made easy to deal with due to fintech and its components. ‹#› INTRODUCTION TO FINTECH 1. In order to ease their monthly schedules, individuals opt for such components of fintech apps such as automatic bill payments which decrease their monthly accounts from their payable bills and hence people are automatically left with the amount they are free to spend – hence ensuring that all bills are paid on time and that people do not overspend. 2. Over the past decade emerging technologies, paired with massive changes in regulations, have driven an unprecedented transformation of finance around the world. This process is happening more rapidly in China ‹#› INTRODUCTION TO FINTECH 1. These transformations have not only created challenges but also unprecedented opportunities, Loading… building synergies with new business and regulatory models, particularly in emerging markets and developing countries. To meet these changes, 21st-century professionals and students must be equipped with up-todate knowledge of the industry and its incredible evolution. ‹#› HOW FINTECH CAN HELP MANAGE PERSONAL FINANCES MUCH BETTER 1. FINTECH APPS HELP YOU CONSOLIDATE ALL YOUR DEBT People often fail to acknowledge and understand how much they are paying in bills on a monthly basis. In addition to that, they fail to keep track of their monthly payments and forget to pay all of their bills or loan payments – student loan payments, your living space’s rents, your insurance bills, your utility bills, and your Netflix and ZoomPro account’s bills, etc. Fintech applications like Prism allow you to feed in data about your monthly bills, and pull them up at a later time to see how much you owe and when. This allows you to see a wider picture of all your upcoming expenses and hence you would be able to brace yourself and set a budget for the coming months in advance. Such apps also allow an individual to schedule and make bill payments and save themselves the hassle of making payments themselves on a monthly basis. ‹#› HOW FINTECH CAN HELP MANAGE PERSONAL FINANCES MUCH BETTER 1. FINTECH APPS MAKE BUDGETING EASIER Many individuals complain and state that if budgeting was easier, they would be able to budget on a regular basis. They state that since budgeting manually is a difficult task, they forego budgeting mechanisms and techniques altogether, hoping that everything would eventually fall into place for them at the end of every month. However, fintech applications such as Mint allow individuals to create budgets and comply with them using a user-friendly platform that is easy to plan and execute. Such applications work by connecting your bank account and integrating your financial information with them – the app then allows you to integrate that with your budget and allows you to set financial parameters for yourself. Such apps allow an alert and notification function that sets out messages and reminders for you as and when you need them. If you are overspending in comparison to your stated budget, the app will instantly flag it and inform you likewise. ‹#› HOW FINTECH CAN HELP MANAGE PERSONAL FINANCES MUCH BETTER 1. FINTECH APPS HELP YOU LEARN SPENDING If you YOUR feel that you overspend in aHABITS certain category or spend a lot without giving it a lot of thought, fintech apps allow you to track your spending habits in overall and specific categories. Fintech apps have a lot of features that help individuals understand their spending habits, and individuals who wish to cut down their spending can track what they spend on the most and make an effort to limit such spending if it is not fruitful. In addition to that, fintech apps allow individuals to have a proof of spending with them. Proofs of spending would be required in multiple case scenarios – for your own self and budgeting, or if you are looking to get reimbursements from your company or another party etc. Fintech apps allow you to have proof of spending and do not compel you to manage and keep a record of your receipts and spending habits. Apps such as Receiptmate and Smartreceipt are very good when it comes to keeping a record and updating it for individual, personal and business receipts. ‹#› HOW FINTECH CAN HELP MANAGE PERSONAL FINANCES MUCH BETTER 1. FINTECH APPS HELP YOU LEARN YOUR SPENDING HABITS Fintech apps have made it extremely easy for individuals who are looking for help in their finances – whether you are looking to budget or track or facilitate, there is an app for everything. Fintech apps allow individuals to prepare and plan their monthly budgets and are especially recommended for individuals who are short on budget or are planning to save for a specific motive. People who are retiring in the coming years also turn towards fintech apps to track and project their investments and understand how much they would be earning or saving in the coming years to help them track money and savings for their future. ‹#› SIGNIFICANT AREAS IN FINTECH CRYPTOCURRENCY Cryptocurrency is a type of digital or virtual currency that uses cryptography for security and operates on a decentralized network, typically based on blockchain technology. Unlike traditional currencies issued by governments and central banks, cryptocurrencies rely on a distributed ledger to record and verify transactions. Imagine cryptocurrency as digital money, like regular cash, but it only exists in the online world. Instead of coins or bills, it's made up of digital tokens. The special thing about cryptocurrencies, like Bitcoin or Ethereum, is that they use a technology called blockchain to keep everything secure. Now, what makes it different from the money you use every day is that there's no physical form—it's all electronic. People can use cryptocurrencies to buy things online, invest, or even send money across the globe without relying on traditional banks. ‹#› SIGNIFICANT AREAS IN FINTECH BLOCKCHAIN TECHNOLOGY Blockchain technology is the underlying foundation of most cryptocurrencies, and it's a distributed ledger that records transactions across a network of computers. Loading… Blockchain is a decentralized technology that uses a chain of blocks to record and secure transactions across a network. Each block contains transaction data, a timestamp, and a link to the previous block, creating a secure and transparent ledger. It relies on consensus algorithms for agreement among network participants, making it resistant to tampering. Blockchain's applications go beyond cryptocurrencies, extending to industries that require secure and transparent record-keeping. ‹#› SIGNIFICANT AREAS IN FINTECH SMART CONTRACTS Utilize computer programs (often utilizing the blockchain) to automatically execute contracts between buyers and sellers. Think of smart contracts like digital agreements with built-in automation. Instead of relying on paper or legal intermediaries, these contracts are written in code and run on a computer program, often on a blockchain. Imagine you want to buy something online. In a traditional scenario, you might use a third party like a bank to make sure the seller gets paid and you get the product. With a smart contract, the code itself takes care of these steps automatically. So, when you and the seller agree on the terms (like payment and delivery conditions), those conditions are written into the smart contract. Once both parties fulfill their obligations (you pay, the seller ‹#› delivers), the smart contract automatically executes the agreement. SIGNIFICANT AREAS IN FINTECH OPEN BANKING A concept that leans on the blockchain and posits that third-parties should have access to bank data to build applications that create a connected network of financial institutions and third-party providers. An example is the all-in-one money management tool Mint. Open banking is like sharing is caring, but for your financial information. It suggests that your bank should let other companies (with your permission, of course) access your financial data. This sharing allows these companies to create useful apps and services that connect different banks and financial providers. Imagine you have accounts with different banks, a credit card, and maybe even some investments. Open banking would let a third-party app, like Mint, gather all this information in one place. Mint can then give you a comprehensive view of your finances, helping you manage your money more effectively. So, instead of logging into multiple ‹#› accounts, everything is neatly organized in one app. SIGNIFICANT AREAS IN FINTECH INSURTECH Seeks to use technology to simplify and streamline the insurance industry. Insurtech is like giving the traditional insurance industry a tech makeover. It's all about using technology to make getting insurance, managing policies, and dealing with claims much easier and more convenient. Imagine you could use your smartphone to quickly and easily buy insurance, file claims, or even get personalized advice on the coverage you need. Insurtech companies use things like mobile apps, artificial intelligence, and data analytics to simplify and improve the whole insurance process. So, instead of dealing with a bunch of paperwork and long waits, insurtech aims to make your insurance experience smoother, faster, and ‹#› more tailored to your needs, all thanks to the magic of technology! SIGNIFICANT AREAS IN FINTECH REGTECH Seeks to help financial service firms meet industry compliance rules, especially those covering Anti-Money Laundering and Know Your Customer protocols which fight fraud. Regtech is like a superhero for financial companies, helping them follow the rules and fight financial crime. Imagine financial firms have to play by certain rules to ensure they're not involved in shady stuff like money laundering or fraud. Regtech uses technology to make sure these companies stay on the right side of the law. It's like having a digital assistant that helps them check all the boxes when it comes to following regulations. So, instead of drowning in paperwork and manual checks, regtech makes the whole process more efficient and accurate. It's like having a guardian angel for financial regulations, using tech tools to keep ‹#› everything in check and ensure that the bad guys don't get a chance to SIGNIFICANT AREAS IN FINTECH ROBO-ADVISORS Utilize algorithms to automate investment advice to lower its cost and increase accessibility. Robo-advisors are like your virtual financial advisors, but instead of a human, they're powered by computer algorithms. Imagine you want to invest your money, but you don't want to pay high fees for a traditional financial advisor. Enter the robo-advisor. It uses fancy math and computer programs to analyze your financial situation, goals, and the market trends. Then, it gives you personalized investment advice. The cool part? It's usually cheaper than having a human advisor because it's automated and doesn't have hefty human-related costs. So, it's like having a tech-savvy financial friend who helps you make smart investment decisions without breaking the bank on fees. It's all ‹#› about making investing more accessible and affordable for everyone! SIGNIFICANT AREAS IN FINTECH UNBANKED/UNDERBANKED Services that seek to serve disadvantaged or low-income individuals who are ignored or underserved by traditional banks or mainstream financial services companies. "Unbanked" or "underbanked" refers to people who don't have full access to traditional banking services or might not use them as much as others. Imagine if you didn't have a regular bank account or had limited access to financial services. You might not be able to easily save money, get a loan, or do other basic financial stuff. Services for the unbanked or underbanked are like special financial helpers designed to make things easier for people who might not have the same access to traditional banks. These services often use technology, like mobile apps or alternative ‹#› methods, to provide basic financial services to folks who might SIGNIFICANT AREAS IN FINTECH CYBERSECURITY Given the proliferation of cybercrime and the decentralized storage of data, cybersecurity and fintech are intertwined. Imagine you have a super important digital vault where you store all your sensitive financial information—like passwords, credit card details, and more. Now, there are cybercriminals out there who want to break into this vault and steal your valuable data. This is where cybersecurity comes in. It's like having a team of digital bodyguards for your information. With the rise of online financial services (fintech), where you do a lot of your banking and money management digitally, the need for strong cybersecurity becomes even more crucial. So, think of it as a partnership: Fintech and cybersecurity work hand in hand to make sure your financial data is safe from cyber bad guys. It's ‹#› like having a high-tech security system for your digital money world, SUMMARY Introducing the younger generation to fintech is like giving them a ticket to a more accessible, efficient, and tech-savvy financial future. Fintech opens up opportunities for easier banking, smarter investing, and quicker, more personalized financial services. It empowers them with tools to manage money, make informed decisions, and navigate the digital economy seamlessly. By embracing fintech, the younger generation gains valuable skills and insights that align with the evolving landscape of finance, setting them up for success in the modern world. ‹#› MALAYSIA FINTECH REPORT 2023