https://www.linkedin.

com/in/umair-mu
naf-moon/
Experience
Umair Munaf Moon › Worked in an International GRC Firm as Risk Consultant
for MENA Region Fintech / FI.
› Worked with leading Banking Group and Banks.
› Worked as Private consultant at international banks
› 16+ years of experience in Financial Sector
› 5+ years experience in the field of Blockchain
› Professional/Corporate Trainers
› Lead Number of Training Programs
Education
› MBA - Finance, MA - Economics, PGD - Islamic Banking,
› CFA (Level 1 Passed)
› JAIBP from IBP - Chartered Banker Institute (CBI) UK,
› CBBF - Certified Blockchain Business Foundation
› Diploma in Software Engineering from NCR
› Advance Diploma in Data Science from NED Academy
Skills
Fintech, Banking & Finance, Risk Management,
Blockchain, DeFi – Decentralized Finance, Tokenomics,
Python, SQL, Machine Learning & Deep Learning.
A. BUSINESS TECHNOLOGY

• Discuss Fintech Overview including:

• AI, Blockchain, Cloud, IoT, Data, Cybersecurity.

• Discuss FinTech infrastructure including the impact of the changing technologies

• within finance and Banking.

• Discuss and identify market size and major players in the market,
• including startups, Banks, consumers and governments.
B. DIGITAL TRANSACTIONS, FUNDING AND INVESTMENTS

• Develop understanding of the digital payments and remittances:

• Discuss payment operations Processes, Procedures and Policies including settlement and
reconciliation processes.

• Identify elements of blockchain, cryptocurrencies, crowdfunding and other alternative finance

technologies (design, uses and limitations). Understand initial coin offering.

• Discuss introduction to Decentralized Finance (DeFi), how it is different from Centralized Finance.
Discuss lending and other financial operations using digital technologies.

• Discuss data-driven finance using existing case studies.

• Discuss Global and Pakistan’s FinTech landscape with the case studies.
C. FINANCIAL TRENDS AND ANALYTICS

• Perform coding using Python.

• Use Python to analyze data trends for payments, credit lending, crowdfunding and other retail
and business decisions.
• Use Python/R for basic descriptive, diagnostic and predictive analytics on financial data.
D. SECURITY, RISK AND REGULATIONS

• Discuss regulation and ecosystems for FinTech regulations. Understand key challenges relating
Digital Financial Services in Pakistan.
• Discuss overview of Risk Management Process and security standards. Discuss cyber security
framework and risk mitigation solutions for business organizations.
• Discuss threats and vulnerabilities regarding privacy and digital identities. Understand process
of penetration testing and vulnerability assessment.
• Discuss the importance of disaster recovery and business continuity in relation to FinTech
solutions.
OVERALL LEARNING GOAL

Know the Technology

• Digest key technical aspects of major fintech concepts
• Knowledge of AI, machine learning, and big data

Know the Business

• Understand the key stakeholders and practices of the “disrupted” industries.
• Connect new technological concepts to specific business applications & value propositions
• Evaluate new fintech business model.
COURSE OUTCOME

Fintech is among the most discussed topics within the finance industry, with high expectations of its
contribution to industry productivity, profitability, and benefit for society.

This course is designed for students who are interested in the transformation of banking and financial
services through financial technologies – known commonly as “Fintech”. This label covers a range of
technologies that enable consumers to access financial services over their mobile phone or the internet.

This course provides a nontechnical, in-depth treatment of recent fintech developments for those aiming
to work in this evolving sector of finance and will also lays the groundwork by which students can analyze
and identify opportunities in this emerging sector
LEARNING OBJECTIVE

By the end of this course, students will be able to:

• Learn the concepts of innovative and disruptive technologies in finance.
• Learn the terminologies of Fintech and related industry
• Understand how Fintech is being used in financial services presented through cases studies in developed
and developing markets
• Understand how the concepts interact with each other and the customers in the evolving ecosystem
• Provoke thinking and relating to how new technologies will impact customer experience and defining
digital strategies.
• Assess the impact that Fintech will have on financial services and can analyze the industry players.
• Analyze career opportunities in the fast-changing Fintech space.
HAVE YOU EVER DONE A TRANSACTION
ELECTRONICALLY?
YOU ARE ALREADY A USER OF
FINTECH
ITS SIMPLY A BETTER WAY OF DOING
FINANCE / TRANSACTIONS OR
BANKING
 TELECOMS
What they have in common?
SUPERMARKETS

AIRLINES
Dependent Upon?
INSURANCE PROVIDERS

CAR MANUFACTURERS How they will Evolve in Future

SOCIAL MEDIA GIANTS

TRAVEL COMPANIES

BIG TECHS
 TELECOMS What they have in common?

SUPERMARKETS
They all need payment Systems
AIRLINES
Dependent Upon?
INSURANCE PROVIDERS

CAR MANUFACTURERS How they will Evolve in Future

SOCIAL MEDIA GIANTS

Fintech
TRAVEL COMPANIES
They are redefining how financial
BIG TECHS services will be delivered in the future
FINANCIAL
SERVICES REFINED:

THE NEW
COMPETITIVE
LANDSCAPE
FINTECH
IS CHANGING THE WORLD WE LIVE IN

Objective of this course is to build a pyramid of

knowledge from every angle of the financial sector,
• Lending to borrowing
• Investment to crowdfunding
• Personal Finance to digital wallets & P2P
• Evolution of currencies to Stable coin and CBDC
• Blockchain technology to decentralized Finance
FINANCIAL TECHNOLOGY - FINTECH

https://www.investopedia.com/terms/f/fintech.asp
IF YOU DON’T LEARN ABOUT IT NOW,
THEN YOU RISK BEING FAR BEHIND
WHY IS FINTECH IMPORTANT AND
WHERE TO BEGIN?
THIS COURSE IS BEST ENTRY POINTS TO LEARN FINTECH.

THERE IS SOMETHING FOR EVERYONE – FINANCE, IT, MARKETING, HR

STUDENTS EVEN SENIOR MANAGEMENT OR BANKERS AND SO ON
WHAT IS FINTECH?

• Stands for "financial technology,"

• but it doesn’t just apply to financial institutions.
• It has automate & improve various financial services
employed by businesses & organizations in nearly
every field.
• As a result, many fintech start-ups have grown
quickly, with technologies like blockchain and artificial
intelligence upending traditional financial services.
MAIN GOAL OF FINTECH?

• Reducing transaction/service costs

• Reaching market segments that would otherwise be impractical or uneconomic to engage

• Creating, taking advantage of economies of scale

• Improving customer experience

• Segmenting market places

TO EMPOWER STUDENTS TO EXCEL IN
RAPIDLY CHANGING AND
TECHNOLOGY-DRIVEN FINANCIAL
PROFESSIONS
 IMPORTANCE OF FINTECH
• 5 trillion US dollars – Size of the global FinTech market.

• We are using technology in every aspect of our lives. Finance should be no different?

• Companies / investors are pouring billions into FinTech

• Lead millions of new jobs opening in the development of FinTech.

• But FinTech is not just about developing apps or web tools.

• EveryOne, Even business leaders, business owners and senior management

executives have to learn about how FinTech can help them improve business
operations, boost sales and make them more competitive in the market.
INFORMATION IS THE NEW OIL
Data is the most valuable commodity in the world.

As large companies realized the value of personal information they stockpiling the data in
centralized server and start selling browser habits, searches and shopping information to
advertisers.

All power is accumulating with big companies.

(Facebook, Google, Apple & Amazon)
Artificial Intelligenct, Machine & Deep Learning
Artificial Intelligence - AI
AI is the concept of creating smart intelligent machines.

Machine Learning - ML
ML is a subset of artificial intelligence that helps you build AI-driven applications.

Deep Learning - DL
DL is a subset of machine learning that uses vast volumes of data and complex
algorithms to train a model.
AI Vs ML Vs DL

https://www.simplilearn.com/tutorials/artificial-intelligence-tutorial/ai-vs-machine-learning-vs-deep-learning
1. Artificial Intelligence - AI
• AI is the process of imparting data, information, and human intelligence to machines.
• The main goal of AI is to develop self-reliant machines that can think and act like
humans.
• These machines can mimic human behavior and perform tasks by learning and
problem-solving.
• Most of the AI systems simulate natural intelligence to solve complex problems.

i.e. Amazon Echo is a smart speaker that uses Alexa, the virtual assistant AI technology
developed by Amazon.
1. AI - Applications
Machine Translation such as Google Translate
Self Driving Vehicles such as Google’s Waymo
AI Robots such as Sophia and Aibo
Speech Recognition applications like Apple’s Siri or OK Google or Amazon Alexa

*Alexa is capable of voice interaction, playing music, setting alarms, playing audiobooks, and
giving real-time information such as news, weather, sports, and traffic reports
2. Machine Learning - ML
ML is a discipline of computer science that uses computer algorithms and analytics to build
predictive models that can solve business problems.

As per McKinsey & Co., machine learning is based on algorithms that can learn from data
without relying on rules-based programming.

Tom Mitchell’s book on machine learning says “A computer program is said to learn from
experience E with respect to some class of tasks T and performance measure P, if its
performance at tasks in T, as measured by P, improves with experience E.”
 How does ML Works:
ML accesses vast amounts of data (both structured and unstructured) and learns from it to
predict the future. It learns from the data by using multiple algorithms and techniques.
ML Process
Types of Machine Learning
1. Supervised Learning
data is already labeled, which means you know the target variable. Using this method of learning,
systems can predict future outcomes based on past data. It requires that at least an input and output
variable be given to the model for it to be trained.

The algorithm is trained using labeled data of dogs and cats.

The trained model predicts whether the new image is that of a cat or a dog.
Some examples of supervised learning include linear regression, logistic regression, support vector
machines, Naive Bayes, and decision tree.
Types of Machine Learning
1I. Unsupervised Learning
UL algorithms employ unlabeled data to discover patterns from the data on their own. The systems are
able to identify hidden features from the input data provided. Once the data is more readable, the
patterns and similarities become more evident.

Unsupervised Learning method that trains a model using unlabeled data. In this case, the data consists
of different vehicles. The purpose of the model is to classify each kind of vehicle. Some examples of
unsupervised learning include k-means clustering, hierarchical clustering, and anomaly detection
Types of Machine Learning
1II. Reinforcement Learning
The goal of reinforcement learning is to train an agent to complete a task within an uncertain
environment. The agent receives observations and a reward from the environment and sends actions to
the environment. The reward measures how successful action is with respect to completing the task goal.
Below is an example that shows how a machine is trained to identify shapes

Examples of reinforcement learning algorithms include Q-learning and Deep Q-learning Neural Networks.
 ML - Application
• Sales forecasting for different products
• Fraud analysis in banking
• Product recommendations
• Stock price prediction
3. Deep Learning - DL
Deep learning is a subset of machine learning that deals with algorithms inspired by the
structure and function of the human brain. Deep learning algorithms can work with an
enormous amount of both structured and unstructured data. Deep learning’s core concept
lies in artificial neural networks, which enable machines to make decisions.

Major difference between deep learning vs machine

learning is the way data is presented to the machine.
ML algorithms usually require structured data, whereas
DL networks work on multiple layers of artificial neural
networks.
 How Deep Learning Works
The calculated sum of weights is passed as input to the activation function.
The activation function takes the “weighted sum of input” as the input to the function, adds a bias,
and decides whether the neuron should be fired or not.
The output layer gives the predicted output.
The model output is compared with the actual output. After training the neural network, the model
uses the backpropagation method to improve the performance of the network. The cost function
helps to reduce the error rate
Types of Deep Neural Networks
Convolutional Neural Network (CNN) - CNN is a class of deep neural networks most
commonly used for image analysis.
Recurrent Neural Network (RNN) - RNN uses sequential information to build a model. It
often works better for models that have to memorize past data.
Generative Adversarial Network (GAN) - GAN are algorithmic architectures that use two
neural networks to create new, synthetic instances of data that pass for real data. A GAN
trained on photographs can generate new photographs that look at least superficially
authentic to human observers.
Deep Belief Network (DBN) - DBN is a generative graphical model that is composed of
multiple layers of latent variables called hidden units. Each layer is interconnected, but the
units are not.
 Deep Learning Applications
• Cancer tumor detection
• Captionbot for captioning an image
• Music generation
• Image coloring
• Object detection
INTRODUCTION TO BLOCKCHAIN
TECHNOLOGY
WHAT IS BLOCKCHAIN TECHNOLOGY ?

THE NEW INTERNET?

BLOCKCHAIN & CRYPTO CURRENCIES ARE
SHAKING THE SYSTEM
BLOCKCHAIN & CRYPTO CURRENCIES ARE
SHAKING THE SYSTEM

Today Swift remains a non-profit

co-operative, with 11,000
members and facilitating payments
worth an eye-popping $1.5tn a
day. It does this not by actually
moving money, but by enabling
banks to dispatch messages that
credit or debit their accounts as
payments occur.
BLOCKCHAIN & CRYPTO CURRENCIES ARE
SHAKING THE SYSTEM
BLOCKCHAIN & CRYPTO CURRENCIES ARE
SHAKING THE SYSTEM
Investors can buy shares of an ETF
to gain exposure to those securities
without owning them directly.
In the case of Bitcoin ETFs, there
have been two main types:
Bitcoin futures are derivative
contracts speculating on the price of
the cryptocurrency.
Bitcoin spot price is its current
price.
Teucrium is the fourth Bitcoin
futures fund to be approved,
following Proshares (BITO),Valkyrie
(BTF) and VanEck (XBTF) funds that
all began trading late last year.
BLOCKCHAIN & CRYPTO CURRENCIES ARE
SHAKING THE SYSTEM
 BLOCKCHAIN & CRYPTO CURRENCIES ARE
SHAKING THE SYSTEM
Eight months after becoming the
first country in the world to
adopt bitcoin as an official
currency, El Salvador has invited
44 countries to discuss the
“rollout and benefits” of
the cryptocurrency.

32 central banks and 12 financial

El Salvador became the first country in the world to authorities (44 countries) met in
adopt bitcoin as an official currency in Sep 2021 El Salvador to discuss financial
inclusion, digital economy,
banking the unbanked, the
bitcoin rollout and its benefits in
our country,”

https://www.pwc.com/gx/en/financial-services/pdf/el-salvadors-law-a-meaningful-test-for-bitcoin.pdf
WHAT IS BLOCKCHAIN TECHNOLOGY ?
WHAT IS BLOCKCHAIN TECHNOLOGY ?

THE NEW INTERNET?

WEB 1.0 : READ-ONLY (1990-2004)
WEB 2.0: READ-WRITE (2004-NOW)

Age of “Social Media”.

YouTube, Wikipedia, Flickr &

Facebook gave voice to the
voiceless and a means for
like-minded communities to thrive
PROBLEMS IN CENTRALIZATION

The privacy/data of Internet user is at the stake.

Your data might be or may be sold…

Single point of failure – Hacking

INFORMATION IS THE NEW OIL

Data is the most valuable commodity in the world.

As large companies realized the value of personal information they stockpiling the data in
centralized server and start selling browser habits, searches and shopping information to
advertisers.

All power is accumulating with big companies.

(Facebook, Google, Apple & Amazon)
WEB 3.0 IS A NEW PARADIGN!

Most of the internet (and the data on it) that

people know and use today relies on trusting a
handful of private companies to act in the public's
best interests. They own the internet.

Web 3.0 uses blockchains, cryptocurrencies,

and NFTs to give power back to the users in the
form of ownership! It allows users to own the
internet and their own data.
 WEB 3.0: READ – WRITE - OWN

Rather than concentrating the power (and data) in

the hands of huge corporates with the questionable
motives, it would be returned the rightful owners.

Decentralization was the idea, blockchain was the

means

Blockchain can make you, owner of your data

WEB 3.0: READ – WRITE - OWN

Web 3.0 is permissionless: everyone has equal access to participate in Web3,

and no one gets excluded.

Web 3.0 has native payments: it uses cryptocurrency for spending and sending
money online instead of relying on the outdated infrastructure of banks and
payment processors.

Web 3.0 is trustless: it operates using incentives and economic mechanisms

instead of relying on trusted third parties.
WEB 3.0 DAPPS
BLOCKCHAIN
Blockchain is a decentralized and distributed ledger technology that records transactions
across multiple computers or nodes in a secure and transparent manner.
Here are some key points about blockchain:
• Decentralized
• Immutable and Transparent:
• Cryptographically Secured
• Consensus Driven
• Smart Contracts Capable
 BLOCKCHAIN
• Decentralization: Blockchain operates as a decentralized network, where transactions are recorded
and verified by multiple participants (nodes) rather than relying on a central authority. This distributed
nature ensures transparency, resilience, and prevents single points of failure.

• Immutable and Transparent: Once a transaction is recorded on the blockchain, it is extremely difficult
to alter or delete it due to the cryptographic algorithms and consensus mechanisms in place. This
immutability and transparency make blockchain an ideal technology for applications requiring trusted
and auditable records.

• Cryptography: Blockchain utilizes cryptographic techniques to secure and authenticate transactions.

Each transaction is cryptographically linked to the previous one, forming a chain of blocks, hence the
name "blockchain." This cryptographic integrity ensures the security and integrity of the data.
 BLOCKCHAIN
• Consensus Mechanisms: Blockchain networks rely on consensus mechanisms to agree on the
validity and order of transactions. Popular consensus mechanisms include Proof of Work (PoW),
and Proof of Stake (PoS). These mechanisms ensure agreement among network participants and
prevent malicious activities.

• Smart Contracts: Smart contracts are self-executing contracts with the terms of the agreement
written directly into the code on the blockchain. They automatically execute predefined actions
when certain conditions are met. Smart contracts enable automated and transparent transactions
without the need for intermediaries.
 BLOCKCHAIN
• Use Cases: Blockchain technology has numerous applications beyond cryptocurrencies like
Bitcoin. It can be used for supply chain management, identity verification, decentralized finance
(DeFi), voting systems, healthcare data management, intellectual property rights, and more.

• Challenges: Blockchain technology still faces challenges, including scalability concerns, energy
consumption in certain consensus mechanisms, regulatory and legal considerations, interoperability
among different blockchain networks, and user privacy concerns.

Overall, blockchain is a revolutionary technology that provides secure and transparent decentralized
record-keeping. Its potential for disrupting various industries and creating new business models
continues to be explored and developed.
Cloud
Computing
Cloud Computing:
Cloud computing refers to the delivery of computing services over the internet,
allowing users to access and utilize computing resources on-demand.

Instead of hosting and managing their own physical infrastructure, individuals

and organizations can leverage remote servers, storage, databases,
networking, and software applications provided by cloud service providers.
Cloud Computing:
Cloud Computing - Key Benefits
On-Demand Resource Provisioning: Cloud computing offers scalability and flexibility
by providing resources on-demand. Users can quickly and easily scale up or down
their computing resources based on their needs, without the need for upfront
investment in hardware or infrastructure.

Pay-as-You-Go Pricing Model: Cloud services typically operate on a pay-as-you-go

or subscription-based pricing model, where users only pay for the resources and
services they consume. This eliminates the need for large upfront capital expenditures
and allows for cost optimization by aligning expenses with actual usage.

Resource Pooling and Multi-Tenancy: Cloud computing enables resource pooling,

where multiple users and organizations share the same physical infrastructure while
maintaining data isolation and security. This efficient utilization of resources reduces
costs and promotes sustainability.
Cloud Computing - Key Benefits
Broad Network Access and Remote Collaboration: Cloud services are accessible over
the internet from various devices and locations, enabling remote access, collaboration,
and data sharing. Users can access their applications and data from anywhere with an
internet connection, enhancing productivity and enabling distributed teams.

High Availability and Reliability: Cloud service providers typically operate redundant
and geographically distributed data centers, ensuring high availability and fault tolerance.
This reduces the risk of service disruptions and data loss, as well as provides disaster
recovery options.

Scalable Storage and Data Management: Cloud storage services offer scalable and
cost-effective solutions for storing and managing large amounts of data. Users can
leverage storage solutions that automatically scale to accommodate growing data
volumes, without the need for local hardware upgrades.
Cloud Computing - Key Benefits
Platform as a Service (PaaS) and Software as a Service (SaaS): Cloud computing
offers platform and software solutions that can be accessed and utilized without the
need for extensive software development or infrastructure management. PaaS
provides a development platform, while SaaS offers ready-to-use software
applications.

Cloud computing has revolutionized the IT landscape by providing accessible,

scalable, and cost-effective computing resources. It has enabled businesses to focus
on their core competencies while relying on cloud providers for infrastructure and
operational support. From startups to large enterprises, cloud computing has become
a foundational technology for driving innovation, agility, and cost efficiency.
Internet
Of
Things
 Does your house have a smart TV?
Or
Do you wear a fitness tracker to help you stay
physically active?
 Does your house have a smart TV?
Or
Do you wear a fitness tracker to help you stay physically
active?

If you do, you are part of the Internet of Things, or IoT.

It’s become embedded in our lives, as well as in the
way organizations operate.
Internet of Things - IOT - Layman Definition
IoT, is a system of interrelated computing devices, mechanical and digital
machines, objects, animals or people that are provided with unique
identifiers (UIDs) and the ability to transfer data over a network without
requiring human-to-human or human-to-computer interaction.
Internet of Things - IOT - Definition
IoT refers to the network of physical objects or "things" embedded with
sensors, software, and connectivity capabilities that enable them to collect
and exchange data over the internet.

These connected objects can be everyday devices, appliances, vehicles,

industrial equipment, or even people.
IOT - Economic Impact
The potential value of IoT is large and growing. By 2030, we estimate it could amount to up
to $12.5 trillion globally. That includes the value captured by consumers and customers of
IoT products and services.

The potential economic value of IoT differs based on settings and usages, with factory
settings and human health applications representing outsize shares of this total. Factory
settings could generate $1.4 trillion to $3.3 trillion by 2030, or just over a quarter of the
total value potential.

IoT economic impact in human health settings could reach around 14 percent of the total
estimated value.
What are the benefits of IoT to organizations?

• Monitor their overall business processes;

• Improve the customer experience (CX);
• Save time and money;
• Enhance employee productivity;
• Integrate and adapt business models;
• Make better business decisions; and
• Generate more revenue.
Some of the advantages of IoT

• Ability to access information from anywhere at any time on any

device;
• Improved communication between connected electronic devices;
• Transferring data packets over a connected network saving time and
money; and
• Automating tasks helping to improve the quality of a business's
services and reducing the need for human intervention.
Where does the IoT go next?

Even those who have purchased one of the myriad smart home products – from lightbulbs, switches, to motion
sensors – will attest to the fact IoT is in its infancy. Products don't always easily connect to each other and there
are significant security issues that need to be addressed.

A report from Samsung says the need to secure every connected device by 2020 is "critical". The firm's Open
Economy document says "there is a very clear danger that technology is running ahead of the game". The firm
said more than 7.3 billion devices will need to be made secure by their manufacturers before 2020.

A Chinese firm later recalled 4.3 million unsecured connected cameras. The ease of bringing down the internet
using IoT devices was revealed when instead of malicious purposes, this was revealed to have been created to
game Minecraft.
Disadvantages of IoT

• As the number of connected devices increases and more information is shared

between devices, the potential that a hacker could steal confidential information
also increases.
• Enterprises may eventually have to deal with massive numbers -- maybe even
millions -- of IoT devices, and collecting and managing the data from all those
devices will be challenging.
• If there's a bug in the system, it's likely that every connected device will become
corrupted.
• Since there's no international standard of compatibility for IoT, it's difficult for
devices from different manufacturers to communicate with each other.
Cybersecurity
Cybersecurity

Cybersecurity refers to the practice of protecting computer systems, networks, and data
from unauthorized access, attacks, and damage. It involves implementing measures and
technologies to ensure the confidentiality, integrity, and availability of digital information.

Cybersecurity encompasses various areas, including network security, application security,

data protection, incident response, and vulnerability management.

Its primary goal is to safeguard against cyber threats, such as malware, hacking, phishing, and
data breaches, and to mitigate potential risks to individuals, organizations, and systems.
 Malware, Hacking & Phishing

Malware: short for malicious software, refers to any software designed to cause harm to computer
systems, networks, or users. It includes viruses, worms, Trojans, ransomware, and spyware. Malware can
infiltrate systems through infected emails, downloads, or compromised websites, and it can steal sensitive
information, disrupt operations, or gain unauthorized access to financial data.
Hacking: Hacking involves unauthorized access to computer systems or networks with the intent to
exploit vulnerabilities, gain unauthorized access, or disrupt operations. Hackers can exploit weaknesses in
software, networks, or human behavior to compromise systems and steal financial data, manipulate
transactions, or disrupt services.
Phishing: is a type of cyber attack where attackers use deceptive techniques, such as fraudulent emails,
messages, or websites, to trick individuals into revealing sensitive information like login credentials, credit
card details, or personal data. Phishing attacks are often designed to mimic trusted organizations, such as
banks , to deceive users into providing their information unwittingly.
Why we need to know that?

Fintech students should be aware of these threats and take preventive measures, such as using
robust antivirus software, regularly updating systems, employing strong and unique passwords,
being cautious of suspicious emails or links, and staying informed about emerging threats and
security best practices.
A.2. FinTech infrastructure including the impact of the
changing technologies within finance and Banking
Fintech Infrastructure:

FinTech infrastructure refers to the underlying technological and operational systems

that support the functioning of financial technology (FinTech) services and
applications. It encompasses various components, including
- Software,
- Hardware,
- Networks,
- Data storage,
- Security measures, and
- Regulatory frameworks.
FinTech infrastructure plays a critical role in enabling the development, deployment,
and scalability of innovative financial services and products.
Key aspects and components of FinTech
infrastructure:
Digital Platforms: FinTech companies rely on robust digital platforms to provide their
services. These platforms include websites, mobile apps, and other user interfaces that allow
customers to access and utilize financial services conveniently.

Cloud Computing: has become a fundamental element of FinTech infrastructure.

Cloud-based services provide scalability, flexibility, and cost-efficiency, enabling FinTech
companies to store and process large volumes of data, deploy applications, and deliver
services on-demand.

APIs and Open Banking: Application Programming Interfaces (APIs) facilitate seamless
integration and data exchange between different financial systems, platforms, and
institutions. APIs enable FinTech companies to connect with traditional banks, payment
networks, and other financial institutions, allowing for the development of innovative services
and enhanced customer experiences.
Key aspects and components of FinTech
infrastructure:
Data Analytics: FinTech infrastructure leverages data analytics tools and techniques to process and
analyze vast amounts of financial data. These analytics capabilities help FinTech companies gain
insights into customer behavior, identify patterns, assess risks, and make data-driven decisions.

Cybersecurity: Given the sensitive nature of financial transactions and personal information, robust
cybersecurity measures are crucial for FinTech infrastructure. Companies need to protect their
systems and data from unauthorized access, data breaches, and other cyber threats. This includes
implementing encryption protocols, secure authentication mechanisms, and ongoing monitoring and
risk assessment.

Regulatory Compliance: FinTech companies operate within a complex regulatory environment.

Infrastructure needs to incorporate compliance measures to ensure adherence to relevant financial
regulations and data privacy laws. Compliance tools and systems help monitor transactions, detect
fraud, and meet reporting requirements.
Key aspects and components of FinTech
infrastructure:
Payment Systems: Infrastructure supporting FinTech includes various payment systems and
gateways that enable secure and efficient financial transactions. These may involve traditional
payment networks, digital wallets, peer-to-peer payment platforms, or blockchain-based systems.

Scalability and Resilience: FinTech infrastructure needs to be scalable and resilient to

accommodate increasing transaction volumes and ensure uninterrupted service availability.
Cloud-based solutions, load balancing, and redundancy measures contribute to the scalability and
reliability of FinTech systems.

Overall, FinTech infrastructure forms the backbone of the modern financial services landscape,
enabling secure, efficient, and innovative solutions. It continues to evolve to meet the growing
demands of the industry and plays a crucial role in shaping the future of finance.
A.2 b)Impact Of Fintech On The Future
Of Banks And Financial Services
Fintech
Development of technologies served as an engine for the transformation of macroeconomics.

Over the past few years, the Fintech industry has developed at a significant pace, but despite
the rapid development of this phenomenon, the exact definition of fintech has not yet been
derived.

“Fintech (financial technologies) is a business direction that uses new technologies

and innovations in the financial services market, which involves such advanced areas
as digital, mobile payments and transfers, e-wallets, online lending, P2P platforms,
crowdfunding, online funds, online insurance, etc.”
Fintech - Meanings

1st meaning of fintech is presented as a new branch of the economy, consisting of

young companies that provide improved products and services to the financial market.

2nd meaning of this concept is expressed in the aggregate of new technology

companies that, on the basis of their own funds, are developing mechanisms for
introducing innovative technologies into the traditional financial sector of the economy.

3rd understanding of the essence of fintech lies in the practical activity based on the use
of software to meet the demand for products of the financial market.
Impact Of Fintech On The Future Of Banks And
Financial Services

Fintech is changing the way the traditional financial market operates and is one of
the fastest-growing segments at the intersection of financial services and
innovative technologies.

In this segment, technology startups and new market participants are applying
innovative approaches to products and services, shaping preconditions for the
effective development of fintech
 How Fintech Affects The Financial System

● The global financial crisis has exposed serious problems and weaknesses in financial
regulation and supervision.
● One of the weaknesses identified by the crisis was poor risk data collection and
reporting in banks.
● Regulator have set minimum standards for data collection and management, which
may require additional investment in technology and organization restructuring.
● Increasing complexity of the global regulatory framework, growing regulatory reporting
requirements and the risk of costly penalties as a result of tightening post-crisis
standards have contributed to higher compliance costs in financial institutions.
● This has become especially important for international banks faced with formidable
and sometimes conflicting regulations.
Most of the development of financial technology is modernizing
traditional financial services and products in several areas:
Payments and transfers: online payment operations, online transfer services, P2P currency
exchange (transfers between individuals), B2B payment and transfer services (transfers between legal
entities), cloud cash desks and smart terminals, mass payment services;
Financing: P2P consumer lending, P2P business lending, crowdfunding;
Capital management: robo-advising, programs and applications for financial planning, social trading,
algorithmic exchange trading, money-saving services.
The new wave of Fintech over the past 10 years tends to develop from the bottom up, i.e. it is born
mainly in agile startups that seek to break traditional rules, do business, compete or are acquired by
existing financial institutions.
This new startup trend has a lot of advantages and coupled with post-crisis regulatory reforms that
have spurred structural change in the industry, is pushing incumbent financial institutions to
increasingly focus on technology to compete against the threat posed by new Fintech startups.
Impact of the Changing Technologies within Finance
and Banking.
Key ways that FinTech is impacting financial services infrastructure:
Disintermediation: FinTech is enabling consumers and businesses to access financial services
directly, without the need for traditional intermediaries such as banks. This is leading to the
disintermediation of certain financial services and the emergence of new providers, such as peer-to-peer
lending platforms and digital wallets.
Digital Transformation: Digital technologies are transforming the way financial services are
delivered, consumed, and regulated. Customers are demanding more convenient and personalized
services, which are being facilitated by digital channels such as mobile banking, online trading platforms,
and robo-advisors.
Increased Competition: FinTech has intensified competition within the financial services industry,
with new entrants challenging incumbents with innovative business models and services. This
competition is driving traditional financial institutions to adapt and embrace new technologies in order
to remain competitive.
Impact of the Changing Technologies within Finance
and Banking.
Collaboration: While FinTech has disrupted traditional financial services, it has also created
opportunities for collaboration between incumbents and startups. This collaboration can help incumbents
to leverage the strengths of startups in areas such as innovation, agility, and customer experience.

Regulation: FinTech has also impacted financial services regulation, with regulators seeking to strike a
balance between promoting innovation and protecting consumers. Regulators are developing new
frameworks to ensure that FinTech providers meet the same standards of security, transparency, and
consumer protection as traditional financial institutions.

In conclusion, the emergence of FinTech is transforming the infrastructure of the financial services
industry. Disintermediation, digital transformation, increased competition, collaboration, and regulation are
just some of the ways that FinTech is changing the way financial services are delivered, consumed, and
regulated. As FinTech continues to evolve, it will likely continue to have a profound impact on the
infrastructure of the financial services industry.
How fintech affects banks?
How fintech affects banks?
Consulting experts from McKinsey & Co predict that over the next ten
years, commercial banks may lose up to 60% of profits in favor of new
financial companies.

Among the areas of banking activities that can primarily be replaced by

fintech startups are consumer finance, microloans, and payment
services.
API - Application Programming Interface

A software intermediary that allows two applications to talk to each other.

APIs are an accessible way to extract and share data within and across organizations.

Application refers to any software with a distinct function.

Interface can be thought of as a contract of service between two applications. This contract
defines how the two communicate with each other using requests and responses.

The Google Maps API and Twitter API may be among the most widely used API examples,
but most software-as-a-service (SaaS) providers offer APIs that let developers write code
that posts data to and retrieves data from the provider's site as well
HOW API WORKS?
HOW API WORKS?
OPEN BANKING

Open banking is a banking practice that provides third-party financial service

providers open access to consumer banking, transaction, and other financial data
from banks and non-bank financial institutions through the use of application
programming interfaces (APIs).

Open banking is becoming a major source of innovation that is poised to reshape

competitive landscape and consumer experience of the banking industry.

Open banking raises the potential for both promising gains and grave risks to
consumers as more of their data is shared more widely.
A.3. Fintech Market size and Major players
Fintech Market Size

According to a report by IMARC Group, the global fintech market size reached US$
158.9 Billion in 2022 and is expected to reach US$ 449 Billion by 2028, exhibiting a
growth rate (CAGR) of 17.7% during 2023-2028.

Another report by Vantage Market Research states that the global fintech market is
valued at USD 133.84 Billion in the year 2022 and is projected to reach a value of USD
556.58 Billion by the year 2030 with a Compound Annual Growth Rate (CAGR) of
19.50% over the forecast period.
Fintech Major Players

The FinTech industry has grown rapidly in recent years, with the market
size increasing significantly.
Major players in the FinTech market include
• Startups,
• Banks,
• Consumers, and
• Governments.
Here is an overview of each of these players:
Fintech Major Players

Startups: FinTech startups are driving innovation and disruption in the financial services
industry. They are leveraging emerging technologies such as blockchain, artificial intelligence,
and machine learning to create new business models and improve customer experience.
Some of the most well-known FinTech startups include Square, Stripe, Robinhood,
TransferWise, and Revolut.
Banks: Traditional financial institutions such as banks are also major players in the FinTech
market. They are leveraging technology to improve their services and remain competitive
with FinTech startups. Many banks are partnering with FinTech startups or acquiring them
to incorporate new technology into their services. Some of the largest banks involved in
FinTech include JPMorgan Chase, Goldman Sachs, and Citigroup.
Fintech Major Players

Consumers: are also major players in the FinTech market. They are driving demand for more
convenient, accessible, and personalized financial services. Consumers are increasingly using
FinTech apps and services for activities such as mobile payments, budgeting, investing, and
peer-to-peer lending.
Governments: are also important players in the FinTech market. They are developing regulatory
frameworks to encourage innovation and protect consumers. Governments are also investing in
FinTech startups to support entrepreneurship and economic growth. For example, the UK
government has established the FinTech Delivery Panel to support the growth of the UK FinTech
industry.
In conclusion, the FinTech market has grown significantly in recent years, with major players
including startups, banks, consumers, and governments. As the market continues to evolve, it is
likely that we will see further innovation, disruption, and collaboration among these players.
 SECTION : B
Digital Transactions,
Funding & Investments
B.1. Digital Payments & Remittances
Digital Payments & Remittances

Refer to the transfer of money or financial transactions conducted electronically, typically

through online platforms or mobile applications.

This form of payment has gained significant traction in recent years, transforming the way
individuals and businesses send, receive, and manage their money.

Here's an overview of digital payments and remittances:

Digital Payments

Digital payments encompass various methods of electronic transactions, including

• Online purchases,
• Mobile payments,
• Contactless payments, and
• Peer-to-peer transfers.

They eliminate the need for physical cash or traditional payment methods like checks.
Key Players

Major players in digital payments include:

• Financial technology companies (Fintechs),
• Payment service providers (PSO) i.e. Euronet
• Mobile payment platforms (e.g., Apple Pay, Google Pay),
• E-wallets (e.g., PayPal, Alipay), and
• Traditional financial institutions that offer digital payment services.
Types of Digital Payments

Card-based Payments: Transactions using credit cards, debit cards, or prepaid cards.

Mobile Payments: Payments made using mobile devices, often using near-field
communication (NFC) technology or mobile wallets.

Online Payments: Transactions conducted through secure online platforms, usually

involving payment gateways and online banking.

Peer-to-Peer Payments: Direct transfers between individuals using mobile apps or

dedicated peer-to-peer payment platforms.
Types of Digital Payments

Card-based Payments: Transactions using credit cards, debit cards, or prepaid cards.

Mobile Payments: Payments made using mobile devices, often using near-field
communication (NFC) technology or mobile wallets.

Online Payments: Transactions conducted through secure online platforms, usually

involving payment gateways and online banking.

Peer-to-Peer Payments: Direct transfers between individuals using mobile apps or

dedicated peer-to-peer payment platforms.
Benefits and Advantages

Convenience: Digital payments provide a faster, easier, and more convenient way to make
transactions, reducing the need for physical cash or checks.

Security: Secure encryption protocols and authentication measures protect digital payment
transactions, making them less prone to fraud and theft.

Global Accessibility: Digital payments enable seamless transactions across borders, allowing
businesses and individuals to participate in the global economy.

Financial Inclusion: Digital payments increase access to financial services for unbanked or
underbanked individuals who may not have access to traditional banking systems.

Data Insights: Digital payment platforms generate data that can be leveraged for customer
analytics, improving personalized services and customer experiences
Remittances

Definition: Remittances refer to the transfer of money from a person working in a

foreign country (the sender) to their home country (the recipient).

Remittances are typically sent to support family members or contribute to the recipient's
local economy.
Channels for Remittances

1. Traditional Money Transfer Operators (MTOs):

Companies like Western Union and MoneyGram are well-established MTOs.

They have physical agent networks worldwide, allowing individuals to send and receive
money through their local branches or authorized agents.

Senders can visit these locations to initiate a remittance transaction, and recipients can
collect the funds in cash from designated agent locations.
Channels for Remittances

2. Digital Remittance Platforms:

Operates online and provide a digital solution for sending money internationally.

Examples include TransferWise, Remitly, WorldRemit, Xoom, Azimo, and Wise.

These platforms offer convenient and cost-effective transfers through their websites or
mobile applications.

Users can initiate remittance transactions online, provide necessary information, and
transfer funds directly to the recipient's bank account or mobile wallet.
Channels for Remittances

3. Mobile Money:

Mobile money services are prevalent in emerging markets, particularly in regions where
traditional banking infrastructure is limited.

Examples include M-Pesa in Kenya, Airtel Money, and Easy paisa and Jazz cash in Pakistan.

Users can send and receive remittances using their mobile wallets, which are linked to their
mobile phone numbers.

Funds can be transferred digitally between mobile wallets or converted into physical cash at
authorized agent locations.
Impact and Significance of
Remittances
Economic Development: Remittances are a vital source of income for many developing
countries, contributing to poverty reduction and local economic growth.

Financial Inclusion: Digital remittance platforms promote financial inclusion by providing

accessible and affordable transfer options to individuals with limited access to formal banking
services.

Cost and Efficiency: These platforms often offer lower fees and more competitive exchange
rates compared to traditional channels, enhancing cost-effectiveness for senders and recipients.

Technology Adoption: Remittance services drive the adoption of digital financial services in
underserved regions, encouraging individuals to use mobile money and digital wallets.
Conclusion

Digital payments and remittances have transformed the way people transfer
money, conduct transactions, and access financial services. They provide
convenience, security, and efficiency while fostering financial inclusion and
driving economic growth in various parts of the world.
B.2. Discuss payment operations Processes, Procedures and
Policies including settlement and reconciliation processes.
Payment operations Processes, Procedures and
Policies

Payment operations processes, procedures, and policies are crucial components of

financial institutions and organisations that handle a large volume of transactions.

These processes ensure efficient and secure handling of payments, accurate settlement of
funds, and effective reconciliation.
1. Payment Processing:

Receipt and Validation: Incoming payments are received and validated to ensure they
meet specific criteria, such as correct account details, proper formatting, and adherence to
anti-money laundering (AML) regulations.

Clearing: Payments are sent for clearing, which involves the exchange of transaction data
between the payer's and payee's financial institutions to authorize and initiate fund
transfers.

Settlement: Once cleared, settlement involves the actual transfer of funds between
financial institutions. Settlement can occur through various channels, such as central bank
systems, interbank networks, or payment processors.
2. Settlement Process:

Real-Time Gross Settlement (RTGS): A settlement system where funds are

transferred on an individual transaction basis in real-time, ensuring immediate and final
settlement.

Deferred Net Settlement: A settlement system where transactions are accumulated

and netted out periodically, usually at the end of the day, resulting in a single net payment
between parties.
3. Reconciliation:

Account Reconciliation: This process involves comparing and reconciling internal

records (e.g., general ledger) with external records (e.g., bank statements) to ensure
accuracy and identify discrepancies.

Transaction Reconciliation: Transaction-level reconciliation involves matching individual

payment transactions with corresponding records in both the sender's and receiver's
systems, ensuring consistency and accuracy.
4. Fraud Prevention and Risk Management:

Anti-Money Laundering (AML) Policies: Stringent policies and procedures are

implemented to detect and prevent money laundering activities, including customer due
diligence, transaction monitoring, and reporting suspicious transactions.

Fraud Monitoring and Detection: Robust systems and processes are employed to
monitor payment activities, identify potential fraudulent transactions, and take appropriate
measures to prevent and mitigate fraud risks.
5. Compliance and Regulatory Requirements:

Compliance Policies: Payment operations must adhere to various regulatory

requirements, such as data privacy, customer protection, and financial regulations specific to
the jurisdiction in which they operate.

Payment Scheme Rules: Organizations must comply with rules and guidelines set by
payment schemes (e.g., card networks, interbank networks) to ensure interoperability and
secure payment processing.
6. Business Continuity and Disaster Recovery:

Processes and plans are established to ensure continuity of payment operations in case of
disruptions, such as power outages, system failures, or natural disasters.

This includes backup systems, redundancy measures, and recovery procedures.

B.3.
- Element of Blockchain
- Cryptocurrencies,
- Crowdfunding,
- Initial Coin Offering &
- Other alternative finance
technologies
Elements of Blockchain Technology:

1. Distributed Ledger Technology (DLT):

2. Blocks:
3. Cryptography:
4. Consensus Mechanism:
5. Smart Contracts:
6. Transparency and Immutability:
7. Decentralization:
8. Tokenization:
9. Interoperability:
10. Scalability:
Elements of Blockchain:

1. Distributed Ledger Technology (DLT)

- Blockchain is built upon the concept of Distributed Ledger Technology.
- Ledger or record of transactions is distributed across multiple computers or nodes in a
network.
- Ensures transparency and decentralization.
Elements of Blockchain:

2. Blocks

- Blockchain consists of a series of blocks.

- Each block contains a batch of validated transactions.
- Blocks are linked together in a chronological order, forming a chain.
- Blocks include a unique identifier (hash), timestamp, and reference to the previous block's
hash.
Elements of Blockchain:

3. Cryptography

- Cryptography secures the integrity and privacy of data in a blockchain.

- Involves the use of advanced mathematical algorithms.
- Encrypts and verifies transactions.
- Digital signatures ensure authenticity and tamper-proof transactions.
Elements of Blockchain:

4. Consensus Mechanism

- Consensus mechanisms achieve agreement among participants.

- Determines the validity and order of transactions.
- Popular mechanisms: Proof of Work (PoW), Proof of Stake (PoS), Delegated Proof of Stake
(DPoS).
Elements of Blockchain:

5. Smart Contracts

- Self-executing contracts with predefined rules and conditions.

- Encoded on the blockchain.
- Automatically execute transactions or actions when conditions are met.
- Enable decentralized applications (DApps) and trustless transactions.
Elements of Blockchain:

6.Transparency and Immutability

- Blockchain provides transparency by allowing participants to view and verify transactions.

- Once a transaction is added, it becomes virtually impossible to alter or delete.
- Ensures immutability and data integrity.
Elements of Blockchain:

7. Decentralization

- Blockchain operates without a central authority or intermediary.

- Distributed among multiple participants.
- Enhances security, reduces the risk of a single point of failure, and
promotes trust
Elements of Blockchain:

8.Tokenization

- Creation and management of digital tokens representing assets or utility.

- Used for cryptocurrencies, ownership rights, access privileges, rewards, etc.
- Enables seamless transactions and interactions within blockchain networks.
Elements of Blockchain:

9. Interoperability

- Ability of different blockchain networks to communicate and interact.

- Facilitates transfer of assets and data across platforms.
- Enables collaboration and development of complex applications.
Elements of Blockchain:

9. Scalability

- A challenge in blockchain technology due to computational and storage requirements.

- Sharding, layer-2 solutions, and consensus algorithm improvements aim to address
scalability.
- Enhances blockchain's capacity to handle a higher volume of transactions.
Elements of Blockchain:

Conclusion

- Understanding the elements of blockchain is crucial for grasping its underlying principles
and applications.
- Cryptocurrencies, crowdfunding, and ICOs are notable applications within the blockchain
ecosystem.
What are Cryptocurrencies?

- Cryptocurrencies are Digital (Virtual) currencies that use cryptography for security.
- They are decentralized and operate on Blockchain (Distributed Ledger Technology).
CRYPTOCURRENCY
Characteristics of Cryptocurrencies

- Decentralization: No central authority or government controls cryptocurrencies.

- Security: Cryptography ensures secure transactions and protects against fraud.
- Transparency: Blockchain provides a transparent and immutable record of
transactions.
- Pseudonymity: Users can hold and transact cryptocurrencies without revealing
personal information.
How cryptocurrencies work

- Cryptocurrencies utilize blockchain technology to record transactions.

- Transactions are verified and added to the blockchain through a consensus
mechanism.
- Each participant in the network has a copy of the blockchain, ensuring transparency
and security.
Popular Cryptocurrencies

Bitcoin (BTC): First & most well-known cryptocurrency, introduced by Satoshi Nakamoto in
2009.

Ethereum (ETH): Decentralized platform that enables smart contracts & decentralized
applications (DApps).

Ripple (XRP): A cryptocurrency designed for fast and low-cost international money transfers.

Litecoin (LTC): Similar to Bitcoin, but with faster transaction confirmation times.
 Uses of Cryptocurrencies

- Digital currency: Cryptocurrencies can be used as a medium of exchange for goods

and services.
- Investment: Some people buy cryptocurrencies as an investment, hoping for price
appreciation.
- Remittances: Cryptocurrencies enable quick and low-cost cross-border money
transfers.
- Fundraising: Initial Coin Offerings (ICOs) use cryptocurrencies to raise capital for
blockchain projects.
Benefits of Cryptocurrencies

- Accessibility: Anyone with an internet connection can access and use

cryptocurrencies.
- Security: Cryptocurrencies use advanced cryptographic techniques, making them
secure and fraud-resistant.
- Global transactions: Cryptocurrencies facilitate borderless and near-instantaneous
transactions.
- Financial inclusion: Cryptocurrencies can provide financial services to the
unbanked or underbanked populations.
Challenges and Considerations

- Volatility: Cryptocurrency prices can be highly volatile, posing risks for investors and
merchants.
- Regulatory environment: The regulatory landscape for cryptocurrencies varies
across countries.
- Security risks: Users must protect their digital wallets and guard against hacking or
phishing attempts.
- Scalability: Some cryptocurrencies face challenges in scaling to handle a high volume
of transactions.
Conclusion:

- Cryptocurrencies offer an innovative and decentralized approach to digital currency

and financial transactions.
- They have gained significant attention and adoption, but challenges and considerations
remain.
Initial Coin Offerings (ICOs)
Initial Coin Offerings (ICOs)
What is an ICO?

- An Initial Coin Offering (ICO) is a fundraising method used by blockchain-based

projects or startups.
- It involves the issuance and sale of digital tokens or coins to investors in exchange for
funding.
What is an ICO?

- An Initial Coin Offering (ICO) is a fundraising method used by blockchain-based

projects or startups.
- It involves the issuance and sale of digital tokens or coins to investors in exchange for
funding.
How do ICOs work?

- The project team creates a white paper outlining the project's concept, goals, and
token details.
- Investors interested in supporting the project purchase the project's tokens using
established cryptocurrencies (e.g., Bitcoin or Ethereum) or fiat currencies (stablecoin).
- The funds raised through the ICO are typically used to develop the project, build its
infrastructure, or fund operations.
Token Types in ICOs

- Utility Tokens: These tokens provide access to a product or service within the
project's ecosystem.

- Security Tokens: These tokens represent ownership or investment in the project

and may be subject to securities regulations.
 Benefits of ICOs

- Access to Capital: ICOs provide a way for blockchain projects to raise funds quickly and globally.
- Democratization: ICOs allow both retail and institutional investors to participate in early-stage
investment opportunities.
- Liquidity: Tokens purchased through ICOs can often be traded on cryptocurrency exchanges,
providing liquidity to investors.
Risks and Challenges:

- Regulatory Environment: ICOs may face regulatory scrutiny in different

jurisdictions, potentially impacting their legality or operations.
- Investor Protection: The lack of regulation can expose investors to risks such as
fraud, scams, or project failures.
- Volatility: The value of tokens obtained through ICOs can be highly volatile, leading
to potential price fluctuations and investment risks.
ICO Success Stories

- Ethereum: One of the most successful ICOs, raising funds to develop its blockchain
platform for smart contracts and decentralized applications.
- Filecoin: Raised over $200 million to develop a decentralized cloud storage network.
- EOS: Raised over $4 billion to build a scalable blockchain platform for decentralized
applications.
Future Outlook

- Increased Regulation: Governments and regulatory bodies are developing

frameworks to regulate ICOs and protect investors.
- Evolution of Token Offerings: New token offering models, such as Security Token
Offerings (STOs) or Initial Exchange Offerings (IEOs), may gain popularity.
Conclusion

- ICOs have provided a significant avenue for blockchain projects to raise capital and
engage with a global community of investors.
- However, it is essential for investors to conduct thorough due diligence and
understand the risks involved before participating in ICOs.
CROWDFUNDING
What is Crowdfunding:

- Crowdfunding is a method of raising funds for a project or venture by collecting small

contributions from a large number of individuals, typically through an online platform
How does Crowdfunding work?

- Project Creation: The project initiator creates a campaign outlining the project's
details, goals, and funding target.
- Contribution: Individuals interested in supporting the project can make financial
contributions through the crowdfunding platform.
- Fundraising Period: The campaign runs for a specific duration, during which
contributors can make pledges.
- All-or-Nothing vs. Keep-it-All: Some platforms adopt an "all-or-nothing" approach,
where the project receives funding only if the target amount is reached. Others allow
the project to keep all funds raised regardless of the target.
Types of Crowdfunding

- Donation-based: Contributors donate funds without expecting financial returns.

Often used for charitable or social causes.
- Reward-based: Contributors receive non-financial rewards or perks in exchange for
their support (e.g., early access to a product, merchandise).
- Equity-based: Investors receive shares or equity in the project or company in return
for their investment.
- Debt-based: Contributors provide a loan to the project, which is repaid with
interest over time.
Benefits of Crowdfunding

- Access to Capital: Crowdfunding provides an alternative source of funding,

especially for early-stage projects or entrepreneurs without access to traditional
funding avenues.
- Market Validation: A successful crowdfunding campaign can demonstrate market
demand and validate the viability of a product or idea.
- Community Engagement: Crowdfunding allows project creators to engage with a
supportive community, gather feedback, and build a customer base.
Risks and Challenges:

- Funding Target: Failing to reach the funding target in an "all-or-nothing" model may
result in no funds being received.
- Reputation and Trust: Project creators must establish trust with potential
contributors, ensuring transparency and delivering on promises.
- Intellectual Property: Sharing project details during crowdfunding may expose the
creator to risks of intellectual property theft.
Crowdfunding Success Stories

- Pebble Time: A smartwatch project that raised over $20 million on Kickstarter,
paving the way for the smartwatch industry.
- Oculus Rift: A virtual reality headset project that gained early support through
Kickstarter and was later acquired by Facebook.
- Exploding Kittens: A card game project that became the most backed Kickstarter
project at the time, raising over $8 million.
Crowdfunding Success Stories
- Blockchain Based
Basic Attention Token (BAT):

- Raised around $35 million through an ICO in 2017.

- Building a blockchain-based digital advertising platform that rewards users with BAT
tokens for their attention and engagement with ads.

Polkadot:

- Raised approximately $145 million through a token sale in 2017.

- Creating a multi-chain interoperability protocol that allows different blockchain
networks to connect and communicate with each other.
Crowdfunding Success Stories
- Blockchain Based
Filecoin:

- Raised over $200 million through an Initial Coin Offering (ICO) in 2017.
- Aims to create a decentralized storage network where users can rent out their
unused storage space and earn Filecoin tokens (FIL) in return.
- Golem:
- Raised approximately $8.6 million through an ICO in 2016.
- Building a decentralized supercomputer network that enables users to rent out
computing resources or access distributed computing power for tasks such as
rendering or scientific calculations.
Conclusion

- Crowdfunding has revolutionized fundraising, empowering individuals and businesses

to bring their ideas to life and access a global community of supporters.
- It offers opportunities for innovation, market validation, and community engagement.
 Fintech and
Alternative Finance Technologies
 Fintech and Alternative Finance Technologies

- Alternative finance technologies, also known as fintech (financial technology), refer

to innovative solutions that leverage technology to disrupt traditional financial
systems and offer alternative ways of accessing and managing financial services.
- These technologies aim to provide more efficient, accessible, and inclusive financial
solutions to individuals and businesses.
- Following are some notable alternative finance technologies:
1. Peer-to-Peer (P2P) Lending.

- Peer-to-Peer lending, also known as marketplace lending, is a form of lending

that connects individual borrowers directly with lenders through online
platforms.
- Emphasize the elimination of traditional financial intermediaries like banks or
credit unions in P2P lending.
1. Peer-to-Peer (P2P) Lending - Significance

Alternative financing option: P2P lending provides an alternative source of funding for
individuals and small businesses who may have difficulty obtaining loans from traditional lenders.

Access to capital: P2P lending platforms enable borrowers to access loans quickly and easily,
often with lower interest rates compared to traditional lenders.

Diversification of investment: P2P lending allows individuals to invest their money directly in
loans, diversifying their investment portfolios beyond traditional stocks and bonds.

Disruption of the lending landscape: P2P lending has disrupted the traditional
banking industry by providing a more inclusive and efficient lending model.
1. Peer-to-Peer (P2P) Lending - Advantages

Lower interest rates: P2P lending platforms often offer competitive interest rates for
borrowers, as they have lower overhead costs compared to traditional lenders.

Faster approval process: P2P lending platforms leverage technology to streamline the
loan application and approval process, allowing borrowers to receive funds more quickly.

Accessibility: P2P lending platforms provide access to loans for individuals with limited
credit history or lower credit scores, increasing financial inclusivity.

Investment opportunities: P2P lending offers individuals the opportunity to earn

interest income by investing in loans, potentially providing higher returns compared to
traditional savings accounts.
1. Peer-to-Peer (P2P) Lending - Challenges

Credit risk assessment: P2P lending platforms rely on credit risk assessment
algorithms to evaluate borrower creditworthiness. It's important for both
borrowers and lenders to understand the risks associated with P2P lending.

Regulatory compliance: P2P lending platforms must comply with financial

regulations and consumer protection laws, and it's essential for borrowers and
lenders to use regulated and reputable platforms.

Lack of deposit insurance: Unlike traditional banks, P2P lending platforms are not
typically covered by deposit insurance, so investors should be aware of this
difference in risk protection.
 11. Crowdfunding

Crowdfunding is a financing method that involves raising funds from a large number
of individuals or businesses, typically through online platforms, to support a project,
business venture, or cause.

(Already discussed in detail in previous sections)

- Types of crowdfunding:
- Benefits of crowdfunding:
- Considerations for crowdfunding campaigns:
- Success stories of notable crowdfunding campaigns:
1I1. Digital Wallets

Digital wallets, also known as e-wallets or mobile wallets, are digital platforms that
allow users to securely store their financial information, make payments, and
transfer money electronically using a smartphone, tablet, or computer.
1I1. Digital Wallets - Key Features

Secure storage: Digital wallets securely store users' payment card information, bank
account details, and other financial data.

Contactless payments: Users can make fast and convenient payments by simply
tapping their smartphone or scanning a QR code.

Online and in-app payments: Digital wallets facilitate seamless and secure online
transactions and in-app purchases without the need to enter payment details each time.

Cont..
1I1. Digital Wallets - Key Features Cont..

Peer-to-peer transfers: Users can easily send and receive money from friends, family,
or businesses through peer-to-peer transfer features.

Loyalty and rewards integration: Some digital wallets allow users to store and
redeem loyalty cards and access personalized discounts and rewards.

Financial management tools: Certain digital wallets offer features like transaction
tracking, spending analysis, and budgeting tools to help users manage their finances.
1I1. Digital Wallets - Examples

PayPal: One of the most well-known digital wallet platforms, enabling users to make
online payments, transfer money, and link their bank accounts and credit cards.

Apple Pay: Apple's mobile payment and digital wallet service that allows users to make
contactless payments using their iPhone, Apple Watch, or iPad.

Google Pay: Google's digital wallet platform that allows users to make contactless
payments, send money, and store payment cards for online transactions.

Venmo: A popular peer-to-peer payment app that enables users to send and receive
money from friends and family, and split bills easily.
1I1. Digital Wallets - Benefits

Convenience: Digital wallets provide a seamless & convenient way to make payments,
eliminating the need to carry physical wallets or enter payment details repeatedly.

Enhanced security: Digital wallets use encryption technology and tokenization to

protect users' financial information, reducing the risk of fraud and unauthorized access.

Faster transactions: Contactless payments with digital wallets are faster compared to
traditional payment methods, saving time for both consumers and merchants.

Integration with loyalty programs: Digital wallets streamline the management of

loyalty cards, offering personalized discounts and rewards to users.
1I1. Digital Wallets - Considerations for adopting

Compatibility: Users should ensure that the digital wallet platform is compatible with
their devices and operating systems.

Security measures: Users should choose digital wallet providers with robust security
features and practices to protect their financial information.

Merchant acceptance: Users should check if the digital wallet is widely accepted by
merchants and service providers to ensure its usefulness in various transactions.

Privacy and data protection: Users should review the privacy policy & data handling
practices of the digital wallet provider to understand how their information is managed.
1I1. Digital Wallets Vs Bank Account

Function: Wallets primarily focus on payment transactions and offer convenience and
quick access to funds, while bank accounts provide a broader range of financial services
and tools for money management.

Interest Earnings: Bank accounts offer interest on deposits, allowing customers to

earn income, whereas wallets typically do not provide interest-earning capabilities.

Transaction Limits: Wallets may have lower transaction limits compared to bank
accounts, which can affect the maximum amount that can be spent or transferred.

Cont..
1I1. Digital Wallets Vs Bank Account Cont..

Regulatory Framework: Bank accounts are regulated by financial authorities and are
typically covered by deposit insurance, providing an added layer of security and
protection for customer funds.

Access to Services: Bank accounts provide access to various financial services, such as
loans, investments, and financial planning, which are not typically available through wallets

Limitations: Wallets typically have lower transaction limits compared to bank accounts
IV. Blockchain & Cryptocurrencies
Already Discussed in previous sessions
Blockchain is a distributed ledger technology that underlies cryptocurrencies. It is a
decentralized and transparent digital ledger that records and verifies transactions across
multiple computers or nodes.

Cryptocurrencies are digital or virtual currencies that use cryptography for secure and
private transactions. They are decentralized and operate on a technology called blockchain.

Examples: Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), and Litecoin (LTC) are among the
most well-known cryptocurrencies.

Characteristics: Cryptocurrencies offer peer-to-peer transactions, immutability, transparency,

and limited supply through a decentralized network of computers.
V. Robo-Advisors

Robo-advisors have emerged as a technology-driven solution in the investment industry,

combining automated algorithms with financial expertise to provide personalized and
cost-effective investment advice.

“Robo-advisors are online platforms that use algorithms and automation to

provide investment recommendations and manage investment portfolios for
individuals, typically with minimal human intervention.”
V. Robo-Advisors - How they work

Questionnaire: Users typically complete an online questionnaire that collects information

about their financial goals, risk tolerance, investment horizon, and other relevant factors.

Algorithmic Analysis: Robo-advisors use sophisticated algorithms to analyze the user's

financial information and preferences, generating personalized investment recommendations.

Portfolio Construction: Based on the analysis, robo-advisors construct and manage a

diversified investment portfolio that aligns with the user's goals and risk profile.

Automatic Rebalancing: Robo-advisors monitor the portfolio and automatically rebalance it

to maintain the desired asset allocation over time, adjusting for market fluctuations.
V. Robo-Advisors - Advantage

Accessibility: Robo-advisors provide access to professional investment advice and

portfolio management for individuals with different investment amounts, including those
with lower account balances.

Cost-Effectiveness: Robo-advisors often have lower fees compared to traditional

human financial advisors, making them a more affordable option for many investors.

Efficiency: Automation allows robo-advisors to process and analyze vast amounts of

data quickly, enabling timely and efficient portfolio management.
V. Robo-Advisors - Advantage

Diversification and Risk Management: Robo-advisors typically offer diversified

portfolios, spreading investments across different asset classes, reducing risk, and
enhancing potential returns.

Transparency: Robo-advisors provide clear information about fees, investment

strategies, and portfolio performance, enhancing transparency for investors.
V. Robo-Advisors - Examples (Popular Platforms)

Betterment: is a pioneering robo-advisor that offers a user-friendly interface, low

fees, & personalized investment strategies to help clients achieve their financial goals.

Wealthfront: stands out for its advanced tax optimization features, automated
portfolio rebalancing, and comprehensive financial planning tools, making it a popular
choice among investors seeking sophisticated investment strategies.

Wealthsimple: combines simplicity and accessibility, providing a range of investment

portfolios, including socially responsible options, along with additional services like
cryptocurrency trading and high-interest savings accounts.
V. Robo-Advisors - Examples (Popular Platforms)

Vanguard Personal Advisor Services: offers a hybrid approach, combining

automated investment management with access to human financial advisors,
providing personalized portfolios and ongoing monitoring and rebalancing.

Robinhood: Known for its commission-free trading, Robinhood also offers a

robo-advisor service called Robinhood Invest, providing pre-built portfolios,
automated rebalancing, & dividend reinvestment, all within a user-friendly platform.
V. Robo-Advisors - Considerations

Risk Assessment: Users should ensure that the robo-advisor's risk assessment aligns with
their own risk tolerance and investment objectives.

Limited Human Interaction: Robo-advisors primarily rely on algorithms, offering limited

human interaction compared to traditional financial advisors. Consider whether personal
guidance is important in your investment strategy.

Market Volatility: While robo-advisors are designed to adapt to market changes, users
should be aware that investment portfolios can still be subject to market volatility.

Financial Literacy: Users should have a basic understanding of investment principles and
the ability to interpret and evaluate robo-advisor recommendations and reports.
Insurtech
VI. Insurtech

Insurtech refers to the intersection of insurance and technology, where innovative digital
solutions are leveraged to transform and enhance the insurance industry.

“Insurtech encompasses the use of technological advancements, such as artificial

intelligence, big data analytics, machine learning, and blockchain, to improve
various aspects of the insurance value chain, including product development,
distribution, underwriting, claims processing, and customer experience.”
VI. Insurtech - Key Innovations

Customer Experience: Insurtech solutions aim to provide a seamless and user-friendly

experience for policyholders, enabling them to purchase insurance, access policy information,
and file claims digitally.

Data Analytics: Insurtech leverages advanced analytics and data-driven insights to assess
risk, price policies accurately, and personalize insurance products based on individual
customer profiles.

Telematics and IoT: The integration of telematics devices and Internet of Things (IoT)
sensors enables insurers to gather real-time data on insured assets, enabling usage-based
insurance and proactive risk management. Cont…
VI. Insurtech - Key Innovations Cont…

Automation and AI: Insurtech solutions automate manual processes, streamline

underwriting and claims handling, and utilize artificial intelligence to enhance decision-making
and risk assessment.

Peer-to-Peer Insurance: Insurtech platforms facilitate peer-to-peer insurance models,

where individuals pool their risks and share claims payouts, creating a community-based
insurance approach.

On-Demand Insurance: Insurtech enables flexible and on-demand insurance coverage,

allowing policyholders to purchase coverage for specific periods or events, aligning insurance
with evolving consumer needs.
VI. Insurtech - Benefits & Impact

Improved Efficiency: Insurtech streamlines operations, reduces paperwork, and automates

processes, leading to faster policy issuance, claims settlement, and overall operational
efficiency.
Enhanced Customer Experience: Insurtech solutions offer convenient digital interfaces,
personalized offerings, and simplified claims processes, enhancing customer satisfaction and
engagement.
Enhanced Underwriting and Risk Assessment: Advanced data analytics and AI
algorithms enable insurers to assess risk more accurately, price policies accordingly, and
identify potential fraud or risks.
Cont…
VI. Insurtech - Benefits & Impact Cont…

Cost Reduction: Insurtech reduces overhead costs, eliminates intermediaries, and

optimizes processes, leading to potential cost savings for insurers and policyholders.

Innovation and New Products: Insurtech fosters innovation by enabling the development
of new insurance products, addressing emerging risks, and expanding insurance coverage to
underserved markets.
VI. Insurtech - Challenges

Regulatory Compliance: Insurtech companies need to navigate complex regulatory

frameworks, ensuring compliance with insurance laws and data privacy regulations.

Data Security and Privacy: Insurtech relies on the collection and analysis of vast amounts
of data, requiring robust security measures to protect sensitive customer information.

Integration with Legacy Systems: Insurers may face challenges integrating new insurtech
solutions with existing legacy systems and processes.

Trust and Adoption: Building trust among customers and stakeholders and overcoming
resistance to change are important factors for the successful adoption of insurtech solutions.
VI. Insurtech - Example / Popular Platforms

Lemonade (USA): is a leading insurtech platform that offers hassle-free homeowners, renters, and
pet insurance policies through its user-friendly digital platform, providing quick policy issuance and
claims processing while emphasizing transparency and social impact through its Giveback program.

Root Insurance (USA): revolutionizes car insurance with its usage-based policies, utilizing
smartphone technology to assess driving behavior, offer personalized rates & promote safer driving
habits through its mobile app, making insurance more personalized & potentially more affordable.
Oscar Health (USA): simplifies health insurance by combining technology and member-centric
services, offering a digital platform for easy plan selection, telemedicine services, personalized health
coaching, and a user-friendly app for managing claims and accessing healthcare resources, enhancing the
overall customer experience in the healthcare industry.
VII. Open Banking

Open Banking is a concept that aims to increase competition, innovation, and consumer
choice in the financial industry by allowing customers to securely share their financial data
with authorized third-party providers

“Open Banking refers to the practice of opening up banking systems and

customer data through the use of Application Programming Interfaces (APIs),
enabling third-party developers to build new applications and services that can
access banking information with customer consent.”
VII. Open Banking - API (Application Programming Interface)
VII. Open Banking - API (Application Programming Interface)
VII. Open Banking - API (Application Programming Interface)
VII. Open Banking - Key Elements

Data Sharing: Open Banking allows customers to share their financial data, such as account
information, transaction history, and payment details, with authorized third-party providers.

APIs: Application Programming Interfaces serve as the technological bridge between banks and
third-party developers, enabling secure and standardized data exchange.

Consent and Control: emphasizes customer consent and control over their data, ensuring
that individuals have the power to grant and revoke access to their financial information.

Collaboration: Open Banking encourages collaboration between banks and third-party

providers, fostering innovation and the development of new products and services.
VII. Open Banking - Benefits

Enhanced Financial Services: promotes the development of innovative financial products

and services, such as personalized financial advice, budgeting tools, and real-time payment
solutions.

Improved Customer Experience: enables seamless and integrated financial experiences by

allowing customers to access and manage multiple accounts and services through a single
platform.

Increased Competition: encourages competition by enabling new entrants, such as fintech

startups, to enter the market and offer competitive financial solutions, fostering innovation and
driving down costs. Cont…
VII. Open Banking - Benefits Cont…

Financial Inclusion: can promote financial inclusion by providing individuals with better access
to financial services and credit, especially those who were previously underserved by traditional
banking systems.

Data-Driven Insights: allows customers and financial institutions to gain deeper insights into
financial behaviors and preferences, leading to better financial decision-making and risk
management.
VII. Open Banking - Challenges

Data Security and Privacy: Open Banking requires robust security measures and adherence to
data protection regulations to ensure the privacy and security of customer data.

Standardization and Interoperability: Establishing common standards and APIs is crucial to

ensure seamless data exchange and interoperability between different banks and third-party
providers.

Customer Trust: Building trust among customers regarding data security, privacy, and the
benefits of open banking is essential for widespread adoption.

Cont…
VII. Open Banking - Challenges Cont…

Regulatory Compliance: Open Banking initiatives are often governed by specific regulations
and frameworks, requiring financial institutions and third-party providers to comply with
applicable laws.

Education and Awareness: Educating customers about the benefits and risks of open banking
and raising awareness about their rights and options in data sharing are important considerations.
VII. Open Banking - Example Cont…

PSD2 (Revised Payment Services Directive): EU regulation requiring banks to share customer data
securely with authorized providers, driving innovation, competition, and access to new financial services.

Open Banking APIs: Standardized interfaces in the UK & other regions, enabling secure access to
customer account data, fostering innovation, & expanding customer choices in financial products and
services.

Fintech Collaborations: Partnerships between banks and fintech firms leverage Open Banking, offering
users consolidated views of finances, personalized solutions, and improved financial management tools.

Global Open Banking Initiatives: Countries like Australia and Canada embrace Open Banking to
empower customers, promote competition, and enhance control over financial data and services.
VIII. Alternative Credit Scoring

Definition: Traditional credit scoring relies primarily on credit history and credit
scores generated by credit bureaus based on factors such as payment history, credit
utilization, and length of credit history.

Limitations: Traditional credit scoring may exclude individuals or businesses with

limited or no credit history, leading to financial exclusion and inadequate assessment
of creditworthiness.
VIII. Alternative Credit Scoring - Approach

Alternative Data Sources: Alternative credit scoring utilizes a wide range of non-traditional
data sources, including utility payments, rental history, telecommunications records,
e-commerce transactions, and social media data, to assess creditworthiness.

Machine Learning and AI: Advanced algorithms and machine learning techniques are
employed to analyze the alternative data, identify patterns, and generate credit risk models that
can predict the likelihood of default or delinquency.

Financial Behavioral Analysis: Alternative credit scoring may assess financial behaviors, such
as savings patterns, investment history, or income stability, to provide additional insights into an
individual's financial habits and capacity to repay.
VIII. Alternative Credit Scoring - Benefits

Financial Inclusion: enables the assessment of creditworthiness for individuals or businesses with
limited or no credit history, facilitating access to loans and financial services for underserved populations.

Improved Accuracy: By considering a broader range of data, alternative credit scoring models may
provide a more accurate assessment of creditworthiness, capturing the individual's true financial capacity.

Speed and Efficiency: Utilizing automated algorithms and data analysis techniques, alternative credit
scoring can provide faster credit evaluations, reducing the time and effort required for loan processing.

Innovation and Flexibility: encourages innovation in the lending industry, enabling the development of
new lending products and tailored solutions based on unique credit risk models.
VIII. Alternative Credit Scoring - Challenges

Data Quality and Reliability: The accuracy and reliability of alternative data sources need to be carefully
evaluated to ensure the credibility and predictive power of the credit scoring models.

Privacy and Data Protection: Collecting and analyzing alternative data raises concerns about privacy and
data protection, necessitating compliance with relevant regulations and ensuring proper consent and data
security measures.

Regulatory Compliance: Alternative credit scoring models may be subject to regulatory oversight, requiring
compliance with fair lending practices, anti-discrimination laws, and consumer protection regulations.

Transparency and Explainability: Ensuring transparency and explainability of alternative credit scoring
models is important to build trust among lenders and borrowers, allowing individuals to understand how their
creditworthiness is assessed.
VIII. Alternative Credit Scoring (ACS)- Examples

CredoLab (Singapore): utilizes alternative data and machine learning (ML) algorithms to
provide ACS solutions. Their platform helps lenders assess creditworthiness by analyzing
smartphone and digital footprint data, enabling access to credit for underserved populations.

LenddoEFL (USA): offers ACS solutions using non-traditional data sources. By analyzing digital
footprints and social media data, their platform provides lenders with insights to make more
accurate lending decisions, expanding financial inclusion and access to credit.

Experian Boost (USA/UK): is an ACS initiative that allows individuals to add positive
payment history from utility bills and other non-traditional sources to their credit reports. This
helps individuals improve their credit scores and access better financial opportunities.
IX. Regtech (Regulatory Technology)

Regtech, short for regulatory technology, refers to the use of technology-driven solutions to
facilitate compliance with regulatory requirements in the financial industry.

“Regtech encompasses a range of tools, software, and systems that leverage

technologies such as artificial intelligence, machine learning, data analytics, and
automation to streamline regulatory processes, monitor compliance, and enhance risk
management.”
IX. Regtech - Application

Compliance Monitoring and Reporting: Regtech solutions automate the monitoring of

regulatory changes, enable real-time tracking of compliance obligations, and facilitate the
generation of accurate and timely regulatory reports.

KYC and AML: Regtech tools assist in Know Your Customer (KYC) processes by utilizing
advanced data analytics and identity verification techniques, helping to identify and mitigate
money laundering and terrorist financing risks.

Risk Management: Regtech supports risk assessment and management by providing risk
modeling, scenario analysis, and stress testing capabilities, enabling proactive risk
identification and mitigation. Cont…
IX. Regtech - Application Cont…

Data Management and Governance: Regtech solutions facilitate data management, data
quality control, and data governance processes to ensure compliance with data protection
and privacy regulations.

Regulatory Reporting and Documentation: Regtech automates the creation,

validation, and submission of regulatory reports and documentation, reducing manual effort
and increasing accuracy.

Cybersecurity and Fraud Prevention: Regtech tools employ advanced cybersecurity

measures, including threat detection, fraud analytics, and identity theft prevention, to
safeguard sensitive financial data.
IX. Regtech - Benefits

Enhanced Compliance: Regtech streamlines compliance processes, automates regulatory

reporting, and reduces the risk of non-compliance, ensuring adherence to complex and
evolving regulatory requirements.

Cost Reduction: Regtech solutions minimize manual work, reduce administrative

overhead, and optimize compliance efforts, leading to potential cost savings for financial
institutions.

Accuracy and Efficiency: Automation and advanced analytics in regtech tools enhance
accuracy, efficiency, and speed in regulatory processes, reducing errors and manual
intervention. Cont…
IX. Regtech - Benefits Cont…

Risk Mitigation: Regtech assists in identifying and managing risks through real-time
monitoring, data analysis, and proactive risk management measures.

Scalability and Adaptability: Regtech solutions can scale and adapt to changing
regulatory environments, allowing financial institutions to efficiently manage compliance as
regulations evolve.
IX. Regtech - Challenges

Data Privacy and Security: Regtech relies on the collection and processing of sensitive
financial and personal data, requiring robust security measures and compliance with data
protection regulations.

Regulatory Complexity: Financial institutions must carefully evaluate and select regtech
solutions that align with specific regulatory requirements and ensure ongoing compliance
with applicable regulations.

Integration with Legacy Systems: Integrating regtech solutions with existing legacy
systems and processes can pose challenges, requiring careful planning and implementation.
Cont…
IX. Regtech - Challenges Cont…

Regulatory Oversight: Financial institutions need to ensure that the use of regtech tools
complies with regulatory guidelines and requirements, including transparency, auditability,
and accountability.

Change Management and Training: Implementing regtech solutions may require

changes in workflows and training for employees, necessitating effective change management
strategies.
IX. Regtech - Examples

ComplyAdvantage (UK): utilizes AI & ML to provide real-time risk assessment & compliance solutions,
helping businesses automate due diligence & screening processes to detect & prevent financial crime
globally.

Onfido (USA/UK): offers advanced AI-powered identity verification solutions, enabling businesses to
remotely verify customer identities, reduce fraud, and comply with KYC and AML regulations.

Behavox (USA): leverages AI and natural language processing to provide comprehensive surveillance and
compliance solutions for FI’s, monitoring employee communications and behavior to detect and prevent
compliance breaches and misconduct.

ClauseMatch (UK): offers a collaborative platform for managing regulatory documents, policies, &
procedures, enabling FI’s to streamline compliance obligations, automate workflows, and simplify audits.
IX. Regtech - Examples

NADRA Verisys: Offers digital identity verification services integrated with the National Database and
Registration Authority (NADRA) to verify customer identities and ensure compliance with KYC regulations.

AML360: Provides anti-money laundering (AML) compliance solutions, including transaction monitoring, risk
assessment, and suspicious activity reporting, helping businesses meet AML regulatory requirements.

FusionRisk: Offers software solutions for regulatory reporting and compliance management, enabling
companies to automate reporting processes, ensure accuracy, and stay up-to-date with regulatory changes.

RapidReg: Provides a comprehensive compliance management platform that centralizes regulatory

requirements, streamlines reporting, and facilitates real-time monitoring of compliance obligations.

InfoTech: Specializes in cybersecurity solutions, offering services such as penetration testing, vulnerability
assessments, and incident response to help businesses address cybersecurity and data privacy challenges.
 IX. Microfinance Platforms

Microfinance platforms play a vital role in providing financial services to underserved individuals
and small businesses, fostering financial inclusion and economic empowerment.

Microfinance platforms are online platforms that connect lenders and borrowers,
facilitating the provision of small loans, known as microcredit, to individuals and
businesses who have limited access to traditional banking services.
IX. Microfinance Platforms - Purpose

These platforms aim to alleviate poverty, promote entrepreneurship, and support

sustainable economic development by providing affordable credit, financial literacy,
and other financial services tailored to the specific needs of underserved
communities.
IX. Microfinance Platforms - Impact

Microfinance platforms have been instrumental in empowering individuals to start or

expand their businesses, improve their livelihoods, and contribute to local
economies.

They enable borrowers to access much-needed capital and financial resources that
traditional banks may not readily offer.
IX. Microfinance Platforms - Examples

Grameen Bank: founded by Nobel laureate Muhammad Yunus, is a pioneering microfinance

institution based in Bangladesh. It provides small loans, known as microcredit, to impoverished
individuals, particularly women, to start or expand businesses and escape the cycle of poverty.

Akhuwat Foundation: based in Pakistan, is a prominent microfinance organization that

provides interest-free microcredit to individuals and small businesses. It focuses on social
upliftment, poverty alleviation, and fostering entrepreneurship within local communities.

Prodigy Finance (Global): focuses on providing educational loans to international students

pursuing higher education abroad. Their platform enables students to access affordable financing
without requiring collateral, enhancing educational opportunities for talented individuals
IX. Microfinance Platforms - Examples

Tala : operates in several developing countries, including Pakistan and India. Through their
smartphone app, Tala leverages alternative data to assess creditworthiness and offer small loans to
individuals who lack traditional credit histories, helping them meet urgent financial needs.

Ujjivan Small Finance Bank (India): provides a range of financial services to underserved
individuals and small businesses. They offer microcredit, savings accounts, and other banking
services tailored to the needs of their clients.

FINCA Microfinance Bank (Pakistan): FINCA Microfinance Bank, operating in Pakistan,

offers microfinance services to individuals and small businesses. They provide small loans, savings
accounts, and other financial products to empower clients and support their economic growth.
B.4. Decentralized Finance
(DeFi)
Decentralized Finance (DeFi)

Decentralized Finance, or DeFi, refers to a rapidly growing ecosystem of

financial applications and services built on blockchain technology.

Defi aim to provide open, permissionless, and decentralized alternatives to traditional

financial intermediaries.

DeFi leverages smart contracts and decentralized platforms to enable peer-to-peer

transactions, lending, borrowing, trading, and other financial activities without the need for
intermediaries like banks or financial institutions
aa

- aa
Decentralized Finance (DeFi) - Characteristics

Peer-to-Peer: DeFi enables direct peer-to-peer transactions, eliminating the need for
intermediaries such as banks or brokers.

Transparency: All transactions and data on DeFi platforms are recorded on a public
blockchain, ensuring transparency and immutability.

Programmability: DeFi applications are built using smart contracts, allowing for the
automation of financial processes and the creation of innovative financial products.

Open Access: DeFi platforms are typically accessible to anyone with an internet connection,
providing financial services to the unbanked and underbanked populations globally.
 Decentralized Finance (DeFi) - Benefits

Financial Inclusion: enables individuals without access to traditional financial services to

participate in a range of financial activities, such as lending, borrowing, trading, and earning interest.

Lower Costs: By eliminating intermediaries, DeFi can reduce transaction costs, making financial
services more affordable and accessible.

Increased Efficiency: Automated smart contracts streamline processes, enabling faster

transactions and reducing administrative burdens.

Innovation and Experimentation: DeFi encourages experimentation with new financial models,
allowing developers to create and launch innovative decentralized applications.
 Centralized Finance (CeFi):

Traditional System: CeFi refers to the traditional financial system where intermediaries, such
as banks and financial institutions, act as trusted authorities and facilitate transactions & services.

Control and Authority: CeFi platforms have centralized control, making decisions on behalf of
users, and managing user funds and assets.

Compliance and Regulations: CeFi platforms must comply with financial regulations and are
subject to oversight by regulatory bodies.

Accessibility: Access to centralized financial services is often restricted by geographical

boundaries, documentation requirements, and other factors.
Decentralized Finance (DeFi):

Blockchain-based System: DeFi operates on decentralized blockchain networks,

allowing for direct peer-to-peer transactions and eliminating the need for
intermediaries.

User Control: DeFi platforms give users full control over their funds and assets
through self-custody wallets and smart contracts.

Transparency and Security: DeFi transactions and data are recorded on a public
blockchain, ensuring transparency and immutability. Strong cryptographic security
mechanisms protect user assets.
Decentralized Finance (DeFi):

Open and Permissionless: DeFi platforms are accessible to anyone with an internet
connection, enabling financial inclusion without the need for traditional banking
infrastructure.

Programmability and Innovation: DeFi leverages smart contracts to automate

financial processes, enable programmable money, and facilitate the creation of new
financial products and services.
Key Difference: CeFi Vs DeFi

1. Intermediaries: In centralized finance, traditional financial intermediaries such as

banks, brokers, and clearinghouses facilitate and govern transactions. In DeFi,
transactions are executed directly between participants through smart contracts,
removing the need for intermediaries.

2. Control and Ownership: In centralized finance, users typically entrust their assets
to third-party intermediaries, which have control over users' funds and require trust in
their security measures. In DeFi, users retain ownership and control of their assets
throughout the entire transaction process, reducing reliance on trusted third parties.
Key Difference: CeFi Vs DeFi

3. Transparency and Auditability: DeFi operates on public blockchains, enabling

transparency and immutability of transactions. All transactions are recorded on the
blockchain, providing a verifiable and auditable history. Centralized finance, on the other
hand, often operates on private databases, making it harder to verify transactions.

4. Accessibility and Inclusion: DeFi aims to provide financial services to anyone with
internet access, irrespective of their geographical location or financial status. This
promotes financial inclusion by allowing individuals to participate in financial activities
without needing a traditional bank account.
Decentralized Finance (DeFi) - Examples

Decentralized exchanges (DEXs) like Uniswap and SushiSwap

Decentralized lending and borrowing platforms such as Compound and Aave

Stablecoins like DAI and USDT

Yield farming platforms like Yearn.finance

Insurance protocols such as Nexus Mutual

Prediction markets like Augur and Gnosis

Decentralized Finance (DeFi) - Challenges

Smart Contract Vulnerabilities: Flaws in smart contracts can lead to financial losses or
exploitation by malicious actors. Users must exercise caution and review audits and security
measures.

Price Volatility: DeFi tokens and assets can experience significant price volatility. Investors should
be prepared for fluctuations and understand the potential impact on their investments.

Security Breaches: DeFi platforms are not immune to security breaches or hacks. Users should
employ robust security measures and stay informed about potential vulnerabilities.

Regulatory Challenges: The decentralized and global nature of DeFi presents regulatory
challenges and uncertainty. Users must stay informed about legal and compliance requirements.
i. Lending and Borrowing Platforms - Defi

DeFi platforms enable users to lend their cryptocurrencies and earn interest or borrow assets by
collateralizing their own cryptocurrencies.

These lending protocols operate through smart contracts, automatically executing lending and
borrowing transactions.

Example: Aave is a prominent DeFi lending platform where users can deposit their crypto
assets into liquidity pools and earn interest on their holdings. Borrowers can collateralize
their assets and borrow other cryptocurrencies from the pool, with interest rates
determined by supply and demand dynamics.
More details of these platforms are in supplementary notes
ii.Yield Farming - Defi

Yield farming involves providing liquidity to decentralized exchanges or lending platforms

in return for rewards or additional tokens. Users can earn passive income by contributing
their assets to these platforms and participating in liquidity pools.

Example: Compound is a popular DeFi protocol that allows users to supply their assets
to the lending pool and earn interest. In addition to earning interest, users receive COMP
tokens as rewards, which can be used for governance participation or sold for profit.
iii. Decentralized Exchanges (DEXs)

DeFi offers decentralized exchanges where users can trade cryptocurrencies

directly with others without the need for a centralized exchange. These exchanges
leverage smart contracts to facilitate secure and transparent peer-to-peer trading.

Example: Uniswap is a leading decentralized exchange built on the Ethereum

blockchain. It uses an automated market-making (AMM) mechanism and liquidity
pools to enable users to trade tokens directly from their wallets, without relying on
intermediaries.
iv.Tokenization / Synthetic Asset/ Derivatives

DeFi enables the creation and trading of digital tokens representing real-world assets such
as stocks, commodities, or real estate. This tokenization allows for fractional ownership,
increased liquidity, and accessibility to traditionally illiquid assets.

Example: Synthetix is a DeFi protocol that allows users to create and trade synthetic
assets, or "synths," that track the value of various real-world assets. Users can gain
exposure to stocks, fiat currencies, and commodities through these synthetic assets.
v. Automated Market Makers (AMMs)

AMMs are protocols that facilitate token trading using liquidity pools and algorithms
instead of traditional order books. AMMs provide continuous liquidity and enable
decentralized trading without relying on centralized market makers.

Example: PancakeSwap is a decentralized exchange and AMM protocol built on the

Binance Smart Chain. It allows users to trade BEP-20 tokens and participate in yield
farming by providing liquidity to various pools, earning CAKE tokens as rewards.
https://www.coindesk.com/learn/what-is-an-automated-market-maker/
vi. Decentralize Insurance

Mutual is a decentralized insurance protocol that utilizes blockchain and smart

contracts to provide coverage against risks in the cryptocurrency ecosystem. Users
can purchase coverage for smart contract failures, exchange hacks, and other risks
by staking the native NXM token. Claims and payouts are determined through a
decentralized voting process, enabling transparent and community-driven insurance
solutions.
vii. Decentralized Asset Management

Yearn.finance is a decentralized ecosystem that offers yield optimization and asset management
services. The protocol automatically allocates users' funds to various DeFi platforms to maximize
yield. Yearn.finance leverages smart contracts and automation to simplify the process of yield
farming and provide users with optimized returns on their investments.

These case studies demonstrate how decentralized finance is reshaping various aspects of the
financial industry. DeFi protocols enable users to access financial services without relying on
centralized intermediaries, fostering transparency, security, and increased control over their assets.
While the DeFi ecosystem is still evolving and faces challenges such as scalability, user experience,
and regulatory frameworks, these case studies highlight the potential of decentralized finance to
revolutionize traditional financial systems.
Benefits and Challenges of DeFi:

Benefits: DeFi offers increased accessibility, lower transaction fees, faster

settlements, transparency, and financial inclusion. It allows users to maintain control
over their assets and participate in financial activities without relying on traditional
intermediaries.

Challenges: DeFi also comes with risks, such as smart contract vulnerabilities, price
volatility, and potential security breaches. Regulatory challenges and uncertainty may
arise due to the decentralized and global nature of DeFi.
Conclusion - DeFi:

Overall, DeFi introduces a paradigm shift in the financial industry by leveraging digital
technologies, blockchain, and smart contracts to provide a more open, transparent,
and inclusive financial ecosystem. While it offers numerous opportunities,
understanding the risks and conducting due diligence is essential when engaging with
DeFi protocols and services.
B.5. Discuss Data-Driven Finance
Data Driven Finance

The use of data analytics*, AI, and technology to drive financial decision-making, risk
management, and operational efficiency in the financial industry.

It involves collecting, analyzing, and interpreting vast amounts of data to gain insights,
make informed decisions, and improve financial processes. Here are some key aspects
of data-driven finance.

*Data analytics is the science of analyzing raw data to make conclusions about that information
 Data Driven Finance - Benefits

Leveraging advanced analytics techniques like data mining*, predictive modeling**, and machine learning
to extract meaningful insights from financial data.

Benefits: Identifying patterns, trends, and correlations in financial data for informed decision-making.

*Data Mining is the process of searching and analyzing a large batch of raw data in order to identify patterns and extract useful information.

**Predictive modeling is a commonly used statistical technique to predict future behavior.

***Machine Learning is a branch of AI which focuses on the use of data and algorithms to imitate the way that humans learn & gradually
improving its accuracy, it involves creating a model, which is trained on some training data and then can process additional data to make predictions
 Data Driven Finance - Key Aspect

Data Analytics:

Data-driven finance relies on advanced analytics techniques to extract meaningful insights from
financial data.

Risk Management:

Data-driven finance enhances risk management by enabling more accurate risk assessment and
mitigation. It helps identify potential risks, assess their impact, and develop risk models to make
informed decisions. By analyzing historical data and market trends, financial institutions can better
understand and manage credit risk, market risk, and operational risk.
Data Driven Finance - Key Aspect

Personalized Financial Services:

Data-driven finance enables personalized financial services tailored to individual customers. By

analyzing customer data, financial institutions can gain insights into customer preferences,
behavior, and needs. This allows them to offer personalized product recommendations, targeted
marketing campaigns, and customized financial solutions.

Fraud Detection and Security:

Data-driven finance helps identify and prevent fraudulent activities through advanced fraud
detection algorithms. By analyzing transactional data, behavioral patterns, and anomaly detection
techniques, financial institutions can identify suspicious activities and take proactive measures to
protect against fraud and security breaches.
Data Driven Finance - Key Aspect

Automation and Efficiency:

Data-driven finance streamlines financial processes and enhances operational efficiency.

Automation tools powered by data analytics can handle tasks like data entry, reconciliation, and
reporting, reducing manual effort and improving accuracy. This enables financial institutions to
streamline operations, reduce costs, and improve overall productivity.

Regulatory Compliance:

Data-driven finance assists financial institutions in meeting regulatory requirements. By leveraging

data analytics, institutions can analyze large volumes of data to ensure compliance with regulations,
such as anti-money laundering (AML), know your customer (KYC), and data privacy laws.
Data Driven Finance - Key Aspect

Real-time Insights:

Data-driven finance provides real-time insights into financial performance, market conditions, and
customer behavior. Financial institutions can access up-to-date information and make data-driven
decisions quickly, improving responsiveness and agility in a fast-paced financial environment.

Data-driven finance is transforming the financial industry, enabling institutions to make more
informed decisions, mitigate risks, deliver personalized experiences, and drive operational
efficiency. By harnessing the power of data and advanced analytics, financial institutions can unlock
new opportunities, improve customer experiences, and stay competitive in a data-centric world.
Data Driven Finance - Case Studies -
Data Analytics
Telenor Microfinance Bank (Pakistan)

utilizes data analytics to gain insights into customer behavior, assess credit risk, and develop
targeted financial products for underserved segments. By analyzing transactional data and
mobile usage patterns, Telenor Microfinance Bank can provide tailored financial services and
expand financial inclusion.

Capital One (United States)

leverages data analytics to drive its credit card business. Through sophisticated data analysis,
Capital One identifies customer spending patterns, offers personalized rewards, and develops
targeted marketing campaigns to enhance customer engagement and loyalty.
 Data Driven Finance - Case Studies -
Risk Management
Meezan Bank (Pakistan)

employs data-driven risk management practices to assess creditworthiness and manage credit risk in
Islamic finance. By analyzing customer data and historical performance, Meezan Bank ensures
responsible lending and effective risk mitigation, contributing to the stability of the Islamic banking
sector. (please also refer supplementary reading for detail case study)

HSBC (United Kingdom)

utilizes data analytics and artificial intelligence to enhance its anti-money laundering (AML) and fraud
detection capabilities. By analyzing large volumes of transactional data and employing machine learning
algorithms, HSBC improves its ability to identify suspicious activities and prevent financial crime.
Data Driven Finance - Case Studies -
Personalized Financial Services:
JazzCash (Pakistan)

leverages data analytics to offer personalized financial services to its customers. By analyzing
transactional and behavioral data, JazzCash provides tailored recommendations for financial
products, such as microloans, savings accounts, and insurance, catering to the unique needs and
preferences of each customer. (please also refer supplementary reading for detail case study)

Ally Bank (United States)

uses data-driven insights to deliver personalized financial experiences. By analyzing customer data
and preferences, Ally Bank offers customized investment portfolios, targeted financial advice, and
personalized savings goals to help customers achieve their financial objectives.
Data Driven Finance - Case Studies -
Fraud Detection and Security:
National Bank of Pakistan (NBP)

Employs data analytics and AI-powered fraud detection systems to combat financial fraud. By
analyzing transactional data, user behavior, and fraud patterns, NBP enhances its ability to identify
and prevent fraudulent activities, safeguarding customer accounts and maintaining trust in the
banking system.

JPMorgan Chase (United States)

utilizes data analytics and machine learning algorithms to detect and prevent cybersecurity threats.
By analyzing network traffic, user activity, and anomalous behavior, JPMorgan Chase enhances its
security infrastructure, proactively identifying and mitigating potential security breaches.
Data Driven Finance - Case Studies -
Automation and Efficiency:

Habib Bank Limited (HBL)

employs data-driven automation to streamline its account opening processes. By digitizing
customer data, implementing automated document verification, and utilizing machine
learning algorithms, HBL reduces manual effort, accelerates customer onboarding, and
improves operational efficiency.
ING Group (Netherlands)
utilizes data-driven automation in its mortgage loan processing. By analyzing customer data
and financial information, ING Group automates the loan underwriting process, reducing
manual effort, minimizing errors, and improving the speed and efficiency of mortgage
approvals.
Data Driven Finance - Conclusion

These case studies highlight the practical applications of data-driven finance in both
Pakistani and international contexts, showcasing how data analytics, AI, and technology can
drive:

- Innovation,
- Improve risk management,
- Deliver personalized services,
- Enhance security, and
- Optimize operational efficiency in the financial sector.
B.6. Global Fintech Landscape
Global Fintech Landscape

Fintech refers to the intersection of finance and technology, encompassing innovative

solutions and digital advancements that disrupt traditional financial services.

Global fintech industry has experienced significant growth over the years,
transforming the way financial services are accessed, delivered, and consumed. It has
become a crucial driver of financial inclusion, efficiency, and innovation worldwide.
Major Regions & Hubs in the Global Fintech Landscape

A. North America

United States: Silicon Valley, New York, and other tech hubs in the U.S. are home to numerous
fintech startups and established companies, attracting significant investments and driving fintech
advancements. i.e. Stripe, Robinhood, Square, Coinbase

Canada: Toronto and Vancouver have emerged as fintech hubs, fostering innovation in areas
such as payments, blockchain, and wealth management. i.e. Wealthsimple, Wave, TouchBistro
Company: PayPal (Founded in 1998)

Problem: Lack of secure and convenient online payment methods.

Solution: Introduced a digital payments platform for secure online transactions.
Key Innovation: Pioneered the concept of online payment processing and provided a
secure and user-friendly platform for individuals and businesses to send and receive money
electronically.
Key Product: PayPal's key product is its digital payment platform that allows users to
make online payments, send money to others, and process transactions for businesses.
Global Reach: PayPal operates in over 200 countries and supports transactions in
multiple currencies, making it a globally recognized and widely used payment platform.
Company: Square (Founded in 2009)

Problem: Limited payment options for small businesses, especially mobile payments.
Solution: Developed the Square Point of Sale (POS) system and Square Cash App for easy mobile
payments and business management.
Key Innovation: Revolutionized the point-of-sale experience for small businesses by offering
affordable and user-friendly mobile payment solutions.
Key Product: Square's key products include the Square Point of Sale (POS) system, which allows
businesses to accept credit card payments using a mobile device, and the Square Cash App, a
mobile app for individuals to send and receive money.
Global Reach: Square expanded its services beyond the United States and is now available in
several countries, including Canada, Australia, Japan, and the United Kingdom.
Company: Stripe (Founded in 2010)

Problem: Complex and fragmented online payment processing systems.

Solution: Created a seamless and developer-friendly platform for accepting online
payments.
Key Innovation: Streamlined the integration of online payment processing for businesses
by offering a simple and efficient API-driven platform.
Key Product: Stripe's key product is its developer-friendly payments platform that enables
businesses to accept online payments through customizable APIs and tools.
Global Reach: Stripe operates in over 40 countries and supports transactions in more
than 135 currencies, serving a global customer base.
Company: LendingClub (Founded in 2006)

Problem: Limited access to affordable loans and alternative lending options.

Solution: Established a peer-to-peer lending platform connecting borrowers and investors.
Key Innovation: Introduced the concept of peer-to-peer lending, allowing individuals to
borrow and invest directly, bypassing traditional financial institutions.
Key Product: LendingClub's key product is its peer-to-peer lending platform that
connects borrowers with investors, providing a streamlined and alternative lending option.
Global Reach: LendingClub primarily operates in the United States, connecting borrowers
and investors within the country.
Company: SoFi (Founded in 2011)

Problem: Student loan debt and lack of comprehensive financial services for young professionals.
Solution: Provided student loan refinancing, mortgages, personal loans, and investment services
tailored to millennials.
Key Innovation: Addressed the specific needs of young professionals by combining multiple
financial services under one platform, focusing on student loan refinancing as a primary offering.
Key Product: SoFi offers a range of financial products and services, including student loan
refinancing, mortgages, personal loans, investment services, and banking products.
Global Reach: SoFi primarily operates in the United States, serving customers within the country.
Company: Betterment (Founded in 2008)

Problem: Limited access to affordable and personalized investment advice and portfolio management.

Solution: Developed a robo-advisor platform offering automated investment advice and portfolio
management.

Key Innovation: Utilized sophisticated algorithms and automation to provide personalized investment
advice and portfolio management at a fraction of the cost of traditional wealth management services.

Key Product: Betterment's key product is its robo-advisor platform that provides automated
investment advice and portfolio management services tailored to individual goals and risk tolerance.

Global Reach: Betterment primarily operates in the United States and serves customers within the
country.
Major Regions & Hubs in the Global Fintech Landscape

B. Europe:

United Kingdom: London's Silicon Roundabout is a major fintech hub with companies like
Revolut, Monzo, TransferWise (now Wise), and Checkout.com.

Germany: Berlin and Frankfurt are prominent fintech centers with companies such as N26,
Solarisbank, and Raisin.

France: Paris has a growing fintech sector with companies like Lydia, Lemon Way, and October.

Sweden: Stockholm is a leading fintech hub with companies like Klarna, iZettle, and Trustly.

Switzerland: Zurich and Geneva are notable fintech hubs with companies like Numbrs, SEBA
Bank, and Crypto Finance Group.
 Company: Revolut (Founded in 2015)

Problem: Expensive and traditional banking services, high foreign exchange fees.

Solution: Introduced a mobile banking app with low-cost currency exchange and international money transfers.

Key Innovation: Provided a digital banking platform with built-in foreign exchange features at competitive rates.

Key Product: Revolut's key product is its mobile banking app that offers multi-currency accounts, money
transfers, and low-cost currency exchange.

Global Reach: Revolut operates in several European countries, including the United Kingdom, Germany, France,
and Spain. It has also expanded its services to other regions, such as the United States, Australia, and Singapore.
Company: N26 (Founded in 2013)

Problem: Cumbersome and inefficient traditional banking processes.

Solution: Developed a mobile banking platform with simplified and intuitive features.

Key Innovation: Created a seamless and user-friendly digital banking experience with advanced mobile
banking features.

Key Product: N26's key product is its mobile banking app that offers various banking services, including
account management, payments, and budgeting tools.

Global Reach: N26 primarily operates in European countries, including Germany, France, Italy, and Spain.
It has expanded its services to the United States and other international markets.
Company: Klarna (2005)

Problem: Inconvenient and time-consuming payment processes for online shopping.

Solution: Introduced a "buy now, pay later" service for easy and flexible online payments.

Key Innovation: Provided consumers with the option to make purchases and pay in installments
without interest or fees.

Key Product: Klarna's key product is its "buy now, pay later" platform that offers installment payment
options for online purchases.

Global Reach: Klarna operates in several European countries, including Sweden, Germany, the United
Kingdom, and France. It has also expanded its services to the United States and other international
markets.
Company: Adyen (2006)

Problem: Fragmented and complex payment processes for merchants.

Solution: Developed a unified payment platform for businesses to accept various payment methods.

Key Innovation: Streamlined payment processes by offering a single platform for multiple payment
methods and currencies.

Key Product: Adyen's key product is its payment platform that enables businesses to accept payments
from various channels, including online, in-store, and mobile.

Global Reach: Adyen operates globally, serving merchants in numerous countries across Europe, the
Americas, Asia, and other regions
Company: Monzo (2015)

Problem: Lack of transparency and control over personal finances.

Solution: Created a mobile banking app with real-time spending notifications and budgeting tools.

Key Innovation: Empowered users to take control of their finances through instant notifications and
smart budgeting features.

Key Product: Monzo's key product is its mobile banking app that provides real-time spending
notifications, budgeting tools, and other banking services.

Global Reach: Monzo primarily operates in the United Kingdom and has plans to expand its services to
other European countries and beyond.
Company: Wise (Formerly TransferWise, 2011)

Problem: Expensive and opaque international money transfers.

Solution: Introduced a peer-to-peer currency exchange platform for transparent and low-cost transfers.

Key Innovation: Disrupted the traditional remittance market by providing transparent and
cost-effective currency exchange services.

Key Product: Wise's key product is its currency exchange platform that allows users to send money
internationally with low fees and competitive exchange rates.

Global Reach: Wise operates in numerous countries across Europe, the Americas, Asia, and Australia,
making it a widely used platform for international money transfers.
Major Regions & Hubs in the Global Fintech Landscape

C. Asia

China: China has a dynamic fintech landscape, led by companies like Ant Group and Tencent.
Fintech innovations such as mobile payments, peer-to-peer lending, and digital wealth
management have gained significant traction in the Chinese market. i.e. Ant Group (Alipay),
Tencent (WeChat Pay), JD Digits, Lufax

India: India has seen rapid fintech growth, driven by digital payments, lending platforms, and
financial inclusion initiatives. Cities like Bangalore and Mumbai are notable fintech hubs in the
country. i.e. Paytm, PhonePe, PolicyBazaar, Razorpay
Company: Ant Group (Founded in 2014)

Problem: Limited access to financial services and digital payment options in China.

Solution: Developed Alipay, a mobile payment platform, and other financial services.

Key Innovation: Introduced a comprehensive digital payment ecosystem and expanded into other
financial services such as wealth management and insurance.

Key Product: Ant Group's key product is Alipay, a mobile payment platform widely used in China.

Global Reach: While Ant Group primarily operates in China, it has expanded its services to other Asian
countries and regions, including Hong Kong and Singapore.
Company: Grab Financial Group (2016)

Problem: Limited access to financial services and digital payments in Southeast Asia.

Solution: Developed a mobile app that offers financial services, including digital payments and lending.

Key Innovation: Combined ride-hailing and delivery services with financial services, providing a
comprehensive platform for users.

Key Product: Grab Financial Group's key product is the Grab app, which offers various financial
services, including digital payments, lending, and insurance.

Global Reach: Grab Financial Group primarily operates in Southeast Asian countries, including
Singapore, Malaysia, Indonesia, and the Philippines.
Company: WeChat Pay (2013)

Problem: Limited digital payment options in China.

Solution: Developed WeChat Pay, a mobile payment platform integrated into the WeChat messaging app.

Key Innovation: Integrated mobile payments seamlessly into the popular WeChat messaging app, creating a
comprehensive ecosystem.

Key Product: WeChat Pay's key product is its mobile payment platform integrated with the WeChat
messaging app.

Global Reach: While WeChat Pay primarily operates in China, it has expanded its services to other
countries, such as Malaysia and Hong Kong.
Company: Paytm (Founded in 2010)

Problem: Limited access to digital payments and financial services in India.

Solution: Developed a mobile payments platform and digital wallet.

Key Innovation: Provided a user-friendly platform for digital payments and expanded into offering
additional financial services such as lending and insurance.

Key Product: Paytm's key product is its mobile payments platform and digital wallet widely used in
India.

Global Reach: Paytm primarily operates in India but has expanded its services to other countries,
including Canada and Japan.
PhonePe (Founded in 2015)

Problem: Limited access to digital payments and financial services in India.

Solution: Developed a mobile payments platform and digital wallet.

Key Innovation: Provided a user-friendly platform for digital payments and expanded into offering
additional financial services such as mutual funds and insurance.

Key Product: PhonePe's key product is its mobile payments platform and digital wallet widely used in
India.

Global Reach: PhonePe primarily operates in India and has not expanded its services to other
countries.
Company: PolicyBazaar (2008)

Problem: Limited access to affordable insurance and comparison tools in India.

Solution: Developed an online insurance marketplace for comparing and purchasing insurance policies.

Key Innovation: Centralized insurance offerings from various providers and provided a platform for
comparing and buying insurance policies.

Key Product: PolicyBazaar's key product is its online insurance marketplace that allows users to
compare and purchase insurance policies from multiple providers.

Global Reach: PolicyBazaar primarily operates in India and has not expanded its services to other
countries.
Company: Zerodha (2010)

Problem: Limited access to affordable and user-friendly online stock trading platforms in India.

Solution: Developed a discount brokerage platform for online stock trading.

Key Innovation: Introduced a low-cost and user-friendly platform for individuals to trade stocks and
other financial instruments.

Key Product: Zerodha's key product is its online brokerage platform that provides a seamless and
cost-effective way to trade stocks and other financial instruments.

Global Reach: Zerodha primarily operates in India and has not expanded its services to other
countries.
Company: EasyPaisa (Founded in 2009)

Problem: Limited access to financial services and digital payments in Pakistan.

Solution: Developed a mobile financial services platform and digital wallet.

Key Innovation: Provided a user-friendly platform for mobile payments, money transfers, and other
financial services.

Key Product: EasyPaisa's key product is its mobile financial services platform and digital wallet widely
used in Pakistan.

Global Reach: EasyPaisa primarily operates in Pakistan and has not expanded its services to other
countries.
Company: Keenu (Founded in 2005)

Problem: Limited access to digital payment solutions for businesses in Pakistan.

Solution: Developed a range of digital payment solutions for businesses.

Key Innovation: Introduced innovative payment solutions, including mobile point-of-sale (mPOS)
devices and e-commerce payment gateways.

Key Product: Keenu's key products include its mPOS devices, payment gateways, and other digital
payment solutions for businesses.

Global Reach: Keenu primarily operates in Pakistan and has not expanded its services to other
countries.
Company:TPL Insurance (2005)

Problem: Limited access to affordable and accessible insurance services in Pakistan.

Solution: Developed an online insurance platform for easy policy issuance and claims processing.

Key Innovation: Provided a user-friendly platform for individuals and businesses to purchase insurance
policies and manage claims.

Key Product: TPL Insurance's key product is its online insurance platform offering a range of insurance
products for individuals and businesses.

Global Reach: TPL Insurance primarily operates in Pakistan and has not expanded its services to other
countries.

These summaries highlight some popular fintech firms operating in Pakistan, offering innovative solutions
to address various financial challenges and needs within the country.
Company: Bykea (Founded in 2016)

Problem: Limited access to convenient and affordable ride-hailing and delivery services in Pakistan.

Solution: Developed a multi-service platform for ride-hailing, deliveries, and payments.

Key Innovation: Integrated ride-hailing, deliveries, and digital payments in a single platform, providing
convenience for users.

Key Product: Bykea's key product is its multi-service platform for ride-hailing, deliveries, and digital
payments.

Global Reach: Bykea primarily operates in Pakistan and has not expanded its services to other
countries.
Major Regions & Hubs in the Global Fintech Landscape

D. Middle East

United Arab Emirates (UAE): Dubai has emerged as a major fintech hub in the Middle East,
attracting startups and established players. The Dubai International Financial Centre (DIFC) has
established a FinTech Hive to support fintech innovation. i.e. Beam Wallet, Tabby, NOW Money, Souqalma

Saudi Arabia: Riyadh is another notable fintech center in the Middle East, with the Saudi Arabian
Monetary Authority (SAMA) fostering the growth of fintech through regulatory initiatives and
sandboxes. i.e. STC Pay, Tamara, Hala, Telpo
Company: PayTabs (Founded in 2014)

Problem: Limited access to secure and convenient online payment solutions for businesses in the Middle
East.

Solution: Developed an online payment gateway and fraud prevention system.

Key Innovation: Provided a secure and user-friendly online payment platform tailored to the needs of
businesses in the Middle East.

Key Product: PayTabs' key product is its online payment gateway that allows businesses to accept online
payments securely.

Global Reach: PayTabs primarily operates in the Middle East, with a presence in countries such as Saudi
Arabia, the United Arab Emirates, and Bahrain.
Company: Beehive (Founded in 2014)

Problem: Limited access to alternative lending options for small and medium-sized enterprises (SMEs) in
the Middle East.

Solution: Developed a peer-to-peer lending platform connecting SMEs with investors.

Key Innovation: Introduced a crowdfunding platform to provide SMEs with access to affordable loans.

Key Product: Beehive's key product is its peer-to-peer lending platform that connects SMEs with
investors for loan funding.

Global Reach: Beehive primarily operates in the Middle East, with a presence in countries such as the
United Arab Emirates and Saudi Arabia.
Company:Tamara (Founded in 2020)

Problem: Limited access to flexible and interest-free installment payment options in the Middle East.

Solution: Developed a buy-now-pay-later platform for online and offline purchases.

Key Innovation: Provided a convenient and interest-free installment payment solution for customers in
the Middle East.

Key Product: Tamara's key product is its buy-now-pay-later platform that allows customers to make
purchases and pay in installments.

Global Reach: Tamara primarily operates in the Middle East, with a presence in countries such as Saudi
Arabia and the United Arab Emirates.
NOW Money (Founded in 2016)

Problem: Limited access to banking services for low-income migrant workers in the Middle East.

Solution: Developed a mobile banking platform tailored to the needs of migrant workers.

Key Innovation: Provided mobile banking services, including accounts, remittances, and bill payments, to
low-income migrant workers.

Key Product: NOW Money's key product is its mobile banking platform that offers banking services to
low-income migrant workers.

Global Reach: NOW Money primarily operates in the Middle East, with a presence in countries such as
the United Arab Emirates and Saudi Arabia.
Major Regions & Hubs in the Global Fintech Landscape

E. Africa

Kenya: Nairobi has become a leading fintech hub in Africa, known for mobile money innovations
such as M-Pesa. Fintech companies in Kenya have made significant strides in digital payments,
remittances, and financial inclusion. i.e. M-Pesa, Branch, Tala, BitPesa

South Africa: Johannesburg and Cape Town are important fintech centers in South Africa, driving
advancements in areas like digital banking, crowdfunding, and blockchain. i.e.Yoco, Luno, Rain, Jumo
Company: M-Pesa (Launched in 2007)

Problem: Limited access to financial services and banking infrastructure in Africa.

Solution: Developed a mobile money platform for secure and convenient financial transactions.

Key Innovation: Introduced mobile money services that allowed users to send and receive money,
make payments, and access basic financial services.

Key Product: M-Pesa's key product is its mobile money platform widely used in Kenya and Tanzania,
with expansion to other African countries.

Global Reach: M-Pesa primarily operates in Kenya and Tanzania, with limited availability in other African
countries such as Mozambique, Lesotho, and the Democratic Republic of Congo.
Company: Flutterwave (2016)

Problem: Limited access to digital payment solutions and cross-border transactions in Africa.

Solution: Developed a payment infrastructure and technology platform for seamless cross-border
payments.

Key Innovation: Provided a unified payments platform that enables businesses to accept payments
across multiple African countries and globally.

Key Product: Flutterwave's key product is its payment infrastructure platform that allows businesses to
accept payments and make transactions across Africa.

Global Reach: Flutterwave primarily operates in Africa, with a presence in several countries across the
continent, including Nigeria, Kenya, South Africa, and Ghana.
Company: Branch (Founded in 2015)

Problem: Limited access to credit and financial services for individuals and small businesses in Africa.

Solution: Developed a mobile lending platform.

Key Innovation: Utilized alternative data and technology to provide access to affordable credit to
underserved individuals and small businesses.

Key Product: Branch's key product is its mobile lending platform that offers instant loans to individuals
and small businesses.

Global Reach: Branch primarily operates in Africa, with a focus on countries such as Kenya, Nigeria, and
Tanzania. It has also expanded its services to other regions such as India and Mexico
Potential

Not more that 15% of Pakistanis has bank accounts

SBP - Payment System Review - Q3 2022

- Population 227Mn
- Bank Accounts 67Mn
- There were 9.3 million internet banking,
- Mobile phone banking user 5.3Mn
- Branchless banking account 103Mn.
- E-wallets holders reached to 1.6Mn.

https://www.sbp.org.pk/psd/reports/index.htm
ATM, POS & CDM’s

- ATM 17,678
- CDM 503
- POS 112.3,302
- Card issued 48 Mn
 Regulations Supporting Fintech Growth in Pakistan:

- SBP Regulations: Introduced regulations for electronic money institutions, payment systems, digital

wallets, and mobile banking services.

- National Payment Systems Strategy: Promotes digitization of payments, interoperability, and

innovation in the fintech sector.

- Digital Account Regulations: Facilitate digital accounts for non-resident Pakistanis, encouraging

fintech-driven investment opportunities.

 Regulations Supporting Fintech Growth in Pakistan:

- Regulatory Sandbox Framework: Allows fintech companies to test innovative products and services

with regulatory relaxations.

- Microfinance Bank Regulations: Promote financial inclusion & digital channels for microfinance services.

- AML & KYC Regulations: Ensure compliance and prevent financial crimes.

These regulations in Pakistan create an enabling environment for fintech growth, fostering innovation,

financial inclusion, and digitization of financial services.

-
REGULATED BY SBP:
• Commercial Bank
• HBL, UBL, MCB, Meezan, ABL, Faisal, Albaraka ….
• Microfinance Bank
• FINCA, Khushhalii, Advans Pakistan, Mobilink, Apna Bank , U Bank , Telenor
• Agriculture bank
• Zarai Taraqiati Bank , ADBP [Agricultural Development Bank of Pakistan]
• DFI (Development Finance Institution)
• SaudiPak, PakKuwait, PakLibya, PAIR, PakChina, PakOman, PakBrunei
• House Building Finance Corporations
• House Building Finance Company
• Digital Banks
• Easy Paisa DB (Telenor & Ali Pay), Hugo Bank (M&P Pakistan & ...), KT Bank (Fatima, City School & ..)
• Mashreq Bank (Mashreq Bank UAE), Raqami
• EMI Electronic Money Institute – (SBP has just issued draft guideline)
• NayaPay, Finja, SadaTech, Careem Payment Solution, YAP Pakistan
aa

https://insights.datadarbar.io/all-you-need-to-know-about-the-new-digital-banking-licensees
/
Non-Banking Microfinance Companies (NBMFCs)

- Akhuwat
- Kashf Foundation
- Khushhali Microfinance Bank
- FINCA Microfinance Bank
- NRSP Microfinance Bank
- PMIC (Pakistan Microfinance Investment Company)
- Apna Microfinance Bank
- The First MicroFinanceBank
Purpose of NBMFCs in Pakistan

- Financial Inclusion:
- Poverty Alleviation:
- Empowerment and Social Development:
- Sustainable Development:
- Client Protection and Social Responsibility:

Overall, NBMFCs play a vital role in promoting inclusive and sustainable economic
growth by providing financial services tailored to the needs of underserved
populations. They contribute to poverty reduction, financial empowerment, and social
development at the grassroots level.
 Pakistan's Instant Payment System

- Raast is Pakistan’s first instant payment system that will enable end-to-end digital
payments among individuals, businesses and government entities instantaneously.
- The state-of-the-art Pakistan’s Faster Payment System will be used to settle
small-value retail payments in real time while at the same time provide a cheap and
universal access to all players in the financial industry including commercial banks,
microfinance banks, government entities and fintechs (EMIs & PSPs).
 Pakistan's Instant Payment System

- Pakistan has had low electronic transactions for a number of reasons

including low banking penetration, lack of trust and awareness of digital payment
methods, limited interoperability, difficult accessibility and high cost of transactions.
- Real Time Gross Settlement System (RTGS) of Pakistan provides instant
payment settlements for large value and corporate transactions only.
- Raast: Pakistan’s Instant Payment System will facilitate retail payment settlements
with much great efficiency.
Features of RAAST

Instantaneous payments: Near real-time digital payments across individuals, merchants,

businesses, and government entities

Low-to-no transaction costs for end users: Raast is designed to operate at a cost
recovery model in order to make digital payments affordable to end users of all
socio-economic backgrounds

Full sector-wide interoperability: Raast will allow all financial institutions to seamlessly
connect to each other via a single link to the central infrastructure, making digital payments
accessible across any channel to customers of any financial institution
Features of RAAST

Customer-centric innovative products/services: Raast will be built on cutting-edge

technological standards, allowing financial institutions to develop innovative and user-friendly

digital payment products and services (e.g. payment through phone number as RAAST ID).

Reliability and enhanced security: RAAST uses more secure payment types, ensures that

each transaction is authorized by the payer, and offer enhanced data protection and fraud

detection services.
RAAST aims to address some key industry challenges within
the payment ecosystem:

Limited interoperability: Financial institutions (i.e. the providers of digital payment services) have
difficulty connecting to each other due to a lack of necessary central infrastructure

High cost of digital payments to the end user: End users are charged high fees for transferring
money digitally, making digital payments inaccessible for a large portion of the population

Poor user experience: End users must go through a complex process to make digital payments and
there are no digital modes of payment that are widely accepted by merchants

Lack of security: Currently available digital payment types and infrastructure do not offer
sufficient/adequate data protection and authentication
C. Financial Trends and Analytics
Trend analysis

Technique used to examine and predict movements of an item based on current and
historical data.You can use trend analysis to improve your business using trend data to
inform your decision-making
Financial Analysis

Aims to analyze whether an entity is stable, liquid, solvent, or profitable enough to warrant
a monetary investment. It is used to evaluate economic trends, set financial policies, build
long-term plans for business activity, and identify projects or companies for investment.
Financial Trends and Analytics

Financial trends and analytics refer to the analysis of financial data and market
trends to identify patterns, insights, and predictions that can inform financial
decision-making.

It involves leveraging various analytical tools, techniques, and technologies to

extract meaningful information from financial data sets, allowing individuals and
organizations to make informed strategic and operational choices
Financial Trends and Analytics - Key Aspects

1. Data-driven Decision Making: Financial trends and analytics enable data-driven

decision making by providing insights into historical performance, current market
conditions, and future projections. It allows businesses to assess risks, identify
opportunities, and optimize financial strategies based on objective analysis rather than
relying solely on intuition or guesswork.

i.e. Credit Scoring and Underwriting: use data analytics and machine learning algorithms to
assess creditworthiness and make lending decisions. They analyze various data points such as
credit history, transaction data, and alternative data sources to build credit scoring models. This
enables them to provide quick and accurate credit decisions to borrowers,
Financial Trends and Analytics - Key Aspects

2. Predictive Analytics: Predictive analytics utilizes statistical models and algorithms to

forecast future outcomes and trends. By analyzing historical data and identifying patterns,
financial trends, and market indicators, predictive analytics helps in making informed
predictions about factors such as customer behavior, market movements, investment
performance, and risk exposure.

i.e. Fraud Detection: By analyzing historical transactional data, user behavior patterns, and
known fraud patterns, predictive models can be built to identify potential fraudulent activities in
real-time. The models learn from historical data and are capable of detecting anomalies or
suspicious behavior that may indicate fraudulent activity.
Financial Trends and Analytics - Key Aspects

3. Risk Management: By analyzing historical and real-time data, organizations can assess
and mitigate various risks, including credit risk, market risk, operational risk, and regulatory
compliance. Analytics helps in identifying potential risk factors, understanding their impact,
and implementing effective risk management strategies.

i.e. Credit Risk Management: Firms can analyze borrower's financial data and credit history to
assess creditworthiness. This helps in making informed decisions, setting risk parameters, and
mitigating potential defaults. Effective analysis ensures sustainable lending practices and reduces
credit risk.
Financial Trends and Analytics - Key Aspects

4. Performance Measurement: Financial trends and analytics provide insights into the
performance of financial portfolios, investments, and business operations. Key performance
indicators (KPIs) and metrics are used to measure and evaluate financial performance,
assess return on investment (ROI), track profitability, and monitor financial health.

For instance, through performance analysis, they may discover that the customer onboarding
process has a high drop-off rate. They can then identify bottlenecks, streamline the onboarding
process, and enhance the user experience to improve conversion rates.
Financial Trends and Analytics - Key Aspects

4. Scenario Analysis: Scenario analysis involves assessing the potential impact of different
scenarios and events on financial outcomes. By running simulations and analyzing various
scenarios, organizations can evaluate the robustness of their financial plans, stress test their
strategies, and make contingency plans to manage potential risks and uncertainties.

For instance, a fintech investment firm assesses a startup's potential returns and risks
under best-case, base-case, and worst-case scenarios. By considering multiple scenarios, they
make informed decisions, manage risks, and prepare contingency plans to optimize financial
outcomes.
Financial Trends and Analytics - Key Aspects

5. Market Intelligence: Financial trends and analytics provide market intelligence by

analyzing market data, competitor trends, customer behavior, and industry dynamics. This
information helps organizations understand market trends, competitive positioning,
customer preferences, and emerging opportunities, enabling them to make strategic
business decisions.

For example, an investment platform analyzes financial data and trends to identify popular
investment products and anticipate market shifts. This helps them tailor their offerings,
attract investors, and stay competitive in the fintech industry.
Financial Trends and Analytics

Financial trends and analytics can be analyzed using Python,

a popular programming language for data analysis and visualization.

Python provides various libraries and tools that facilitate financial data analysis,
modeling, and forecasting.
Python

Python is a versatile and popular programming language used in various fields,

including finance. Here are some key applications of Python in finance:
Why Python:

Versatile: used in web development, data analysis, machine learning, and automation.
Easy to Learn: Python's clean syntax and readability make it beginner-friendly.
Strong Community: Benefit from a large community of developers, resources, and support.
Data Science Powerhouse: Python is widely used in data science with libraries like NumPy
and Pandas.
Career Opportunities: Python skills are in high demand across various industries.
Integration Friendly: Python seamlessly integrates with other languages and platforms.
By learning Python, you gain a versatile skill set, access to a supportive community, and open
doors to exciting career opportunities in diverse fields.
 Python - Key Applications in Finance

Data Analysis: Python's libraries such as Pandas, NumPy, and Matplotlib are widely used for data
manipulation, analysis, and visualization. Financial data, such as stock prices, market indices, and
economic indicators, can be easily imported, analyzed, and presented using these libraries.

Algorithmic Trading: Python is commonly used for developing algorithmic trading strategies.
Libraries like pandas-datareader and yfinance allow fetching real-time and historical market data,
while libraries such as NumPy and SciPy facilitate statistical analysis and modeling. Python also
integrates well with trading platforms and APIs, enabling the execution of automated trades.
Python - Key Applications in Finance

Financial Modeling: Python provides libraries like QuantLib and pyfolio, which support
financial modeling and portfolio analysis. These libraries allow for options pricing, risk
management, portfolio optimization, and backtesting of trading strategies.

Machine Learning in Finance: Python's extensive ecosystem of machine learning

libraries, including scikit-learn, TensorFlow, and PyTorch, can be utilized for financial
applications. Machine learning algorithms can be employed for credit scoring, fraud
detection, market prediction, and risk assessment.
Python - Key Applications in Finance

Risk Management: Python can be used for risk management tasks, such as calculating
Value at Risk (VaR). Libraries like scipy and pandas provide the necessary tools for statistical
analysis and simulation techniques used in risk assessment.

Financial Reporting and Dashboards: Python libraries like openpyxl and xlrd enable
the manipulation and extraction of data from spreadsheets, facilitating financial reporting
and analysis. Libraries like Dash and Plotly can be used to create interactive dashboards and
visualizations for financial data.
Python - Key Applications in Finance

Python's simplicity, readability, and extensive library ecosystem make it a preferred choice
for finance professionals and data scientists. Its flexibility and powerful data analysis
capabilities enable efficient and effective financial analysis, modeling, and decision-making
Python - Get Started

Python Syntax: Familiarize yourself with the basic syntax of Python, including variables, data
types, conditionals, loops, functions, and classes.

Python Data Structures: Learn about essential data structures in Python, such as lists, tuples,
dictionaries, and sets.

Libraries and Packages: Explore popular Python libraries and packages that extend its
functionality, such as NumPy for numerical computing, Pandas for data manipulation,
Matplotlib for data visualization, and Scikit-learn for machine learning.

Interactive Python Environments: Install an interactive Python environment, such as

Anaconda or Jupyter Notebook, which provide an interactive coding experience and facilitate
code execution, experimentation, and documentation.
Key libraries & Techniques used in trend analysis

Pandas: Pandas is a powerful library for data manipulation and analysis. It provides data
structures such as DataFrames, which allow you to handle and analyze financial data
efficiently.You can use Pandas to read and clean financial data, calculate financial metrics, and
perform time series analysis.

NumPy: NumPy is a fundamental library for scientific computing in Python. It provides

powerful numerical operations and functions that are essential for financial calculations, such
as calculating returns, volatility, and correlations.
Download Jupyter Notebook -
IDE (integrated Development Environment
https://www.anaconda.com/download
Why python if
we can do all
above in excel
Why Python if we can do all above in excel

While Excel is a powerful tool for data analysis and reporting, Python offers several advantages
for financial trends and analytics:

1. Scalability: Python is more suitable for handling large datasets and complex calculations
compared to Excel. It can efficiently process and analyze extensive financial data without the
limitations often faced by Excel, such as file size restrictions or performance issues.

2. Automation and Reproducibility: Python allows you to automate repetitive tasks and
build reusable scripts or workflows. This is particularly beneficial when dealing with recurring
financial analysis or when updating and processing large volumes of data. It helps save time and
ensures consistency in analysis.
Why Python if we can do all above in excel

3. Advanced Analytics and Machine Learning: Python has extensive libraries and
frameworks dedicated to advanced analytics, machine learning, and statistical modeling. These
tools enable you to perform sophisticated analyses, build predictive models, and derive insights
beyond what Excel can offer.

4. Flexibility and Customization: Python provides more flexibility to customize and tailor
analyses according to specific requirements. You have access to a vast ecosystem of libraries and
tools that can be integrated into your analysis pipeline, giving you greater control and flexibility
over the analysis process.

5. Integration and Data Manipulation: Python seamlessly integrates with various data
sources, APIs, and databases, allowing you to access and manipulate financial data from different
systems. This flexibility is valuable when working with diverse data sources or when combining
data from multiple platforms.
Why Python if we can do all above in Excel

6. Collaboration and Version Control: Python code is text-based, making it easier to

collaborate with others, share analysis scripts, and track changes using version control systems like
Git. This enhances collaboration, reproducibility, and enables the sharing of analysis workflows within
teams.

7. Extensive Community Support: Python has a large and active community of users,
developers, and data scientists who contribute to its libraries, documentation, and online resources.
If you encounter challenges or have specific questions related to financial analysis, you can find
extensive support and resources within the Python community.

While Excel remains a valuable tool for financial analysis, Python complements it by offering
advanced analytical capabilities, scalability, automation, and flexibility. By leveraging the strengths of
both tools, analysts can enhance their ability to perform in-depth financial analysis and gain deeper
insights from data.
Perform coding
using Python
Perform coding using Python

Performing coding using Python for financial trends and analytics involves leveraging the
language's libraries and tools to analyze and visualize financial data. Here are some examples
of tasks you can perform using Python for financial analysis:
Perform coding using Python

Data Retrieval and Cleaning:

Use libraries like Pandas to import financial data from various sources such as CSV files, APIs, or
databases.
Clean and preprocess the data by removing duplicates, handling missing values, and converting data
types if needed.

Data Visualization:
Utilize libraries like Matplotlib or Seaborn to create visualizations such as line plots, bar charts, and
scatter plots to represent financial trends, stock prices, or performance metrics.
Generate interactive visualizations using libraries like Plotly or Bokeh for more advanced analysis and
exploration.
Perform coding using Python

Financial Calculations:
Perform financial calculations such as calculating returns, mean, median, standard deviation, and
correlation coefficients using Python's mathematical libraries.
Apply statistical models and time series analysis techniques like ARIMA or GARCH to analyze stock
prices or financial data.

Portfolio Analysis:
Construct and analyze investment portfolios by calculating portfolio returns, risk measures (e.g.,
Sharpe ratio), and portfolio optimization using libraries like NumPy or SciPy.
Evaluate portfolio performance and compare against benchmark indices.
Perform coding using Python

Machine Learning in Finance:

Apply machine learning algorithms to financial data for tasks like stock price prediction, sentiment
analysis of news articles, or credit risk assessment.
Utilize machine learning libraries such as scikit-learn or TensorFlow to train and evaluate models.

Financial Reporting:
Generate reports and summaries of financial analysis using Python libraries like Jupyter Notebook,
generating HTML, PDF, or Excel reports for stakeholders.
Perform coding using Python

Python provides a robust ecosystem of libraries and tools specifically designed for financial
analysis, making it a popular choice among finance professionals and data scientists. Its
versatility and ease of use make it well-suited for tasks ranging from data preprocessing and
visualization to advanced statistical modeling and machine learning.
Comparison Operators

1. Equal to (==):
Example: 5 == 5 returns True because both sides are equal.
Example: 'hello' == 'world' returns False because the two strings are not equal.

2. Not equal to (!=):

Example: 10 != 5 returns True because 10 is not equal to 5.
Example: 'apple' != 'orange' returns True because the two strings are not equal.

3. Greater than (>):

Example: 8 > 5 returns True because 8 is greater than 5.
Example: 3 > 10 returns False because 3 is not greater than 10.
Comparison Operators

4. Less than (<):

Example: 2 < 7 returns True because 2 is less than 7.
Example: 12 < 5 returns False because 12 is not less than 5.

5. Greater than or equal to (>=):

Example: 9 >= 9 returns True because 9 is greater than or equal to 9.
Example: 4 >= 10 returns False because 4 is not greater than or equal to 10.

6. Less than or equal to (<=):

Example: 6 <= 8 returns True because 6 is less than or equal to 8.
Example: 15 <= 3 returns False because 15 is not less than or equal to 3.
List

a list is a built-in data structure that allows you to store and organize multiple values in a
single variable. Lists are defined by enclosing a comma-separated sequence of elements
within square brackets

Creating a List - Example

fruits = ['apple', 'banana', 'orange', 'grape']

we have created a list named fruits that contains four elements: 'apple', 'banana', 'orange', and 'grape'.
List - Accessing List Elements

print(fruits[0]) # Output: apple

print(fruits[2]) # Output: orange

You can access individual elements in a list by using their index, which starts from 0. In
this example, we are accessing the first and third elements of the fruits list.
List - Modifying List Elements

fruits[1] = 'mango'
print(fruits) # Output: ['apple', 'mango', 'orange', 'grape']

Lists are mutable, which means you can change the value of elements by assigning a new
value to a specific index. In this example, we have modified the second element of the
fruits list to 'mango'.
List - List Operations

fruits.append(“pear”) # insert at the end

fruits.insert(2,”pear”) # insert at the specific index number

fruits.remove(“orange”) # search and removes

del fruits[2] # removes from the specific index number
a = City.pop(2) # removes the item and allow to copy as well in another variable

len(fruits)
List

Lists in Python can contain elements of different data types, and they can be nested
within each other to create multidimensional structures.

They are widely used for storing and manipulating collections of data in an ordered
manner.
Basic Syntax of For Loop in Python

fruits = ["apple," "banana," "orange"]

for i in fruits:
print(i)
Range Function and For Loop in Python

The range() function is commonly used for loops in Python. It creates a sequence of
numbers that help determine the number of times the loop iterates. The three
arguments for the range() function are as follows:

range(Start, Stop,Step)

x = range(3, 20, 2)
for n in x:
print(n)
While Loop
Getting information from the user - Chapter # 24

Getting information from the user and converting strings and numbers

UserName = input(“Enter Your Name: “)

Python then waits for the user to type a input and press Enter.
The input typed by the user is assigned to the variable “UserName”
Monthly income as integers

a = input(“enter your monthly income”)

monthly_income = int(a)

str()
 Functions

• A function is a block of Python code that robotically does the same thing again and again,
whenever you invoke its name.
• It saves you repetitive coding and makes your code easier to understand.
• a function is a reusable block of code that performs a specific task.
• Functions help in organizing your code into logical units, improving code reusability.

def functionName(parameters):
# function body
return result # optional, if the function returns a value

# Parameters are placeholders for values that the function expects to receive when it's called.
# Arguments are the actual values passed to the function when calling it.
Returning Values:

Functions can return values using the return statement.

If the return statement is absent, the function returns None

def add(a, b):

return a + b
result = add(3, 5)
print(result) # Output: 8
Default Parameters:

You can set default values for parameters. If the caller doesn't provide a value for such
parameters, the default value will be used.

def power(base, exponent=2):

return base ** exponent

print(power(3)) # Output: 9 (using default exponent)

print(power(3, 3)) # Output: 27 (using provided exponent)
Changing Case

city_to_check = city_to_check.lower() # to convert into lower case

.upper() # to convert into upper case
.title() # to convert into title case

# more detail can be found in Chapter 24 of the Book

Financial Trends and Analytics

Financial Trends and Analytics encompass a wide range of techniques and tools used to
analyze financial data and extract valuable insights.

It involves examining historical and current financial data to identify patterns, trends, and
anomalies, which can aid in making informed business decisions.

First step to start any analysis is Data Collection and Cleansing

Data Collection and Cleaning - Financial

It involve gathering relevant financial data from various sources, organizing it, and ensuring
its accuracy for analysis. Python offers a range of libraries and tools to assist in these tasks.
Here's how you can perform financial data collection and cleaning using Python:

1. Data Collection:
You may collect financial data from various sources, such as APIs, databases, spreadsheets, or
web scraping. Let's consider an example of collecting stock price data using the yfinance
library (Yahoo Finance API).
1. Data Collection: - PIP Install

Pip is the standard package manager for Python.

It enables the installation and management of third party packages that provide features and
functionality not contained in the Python standard library.

pip install yfinance #Download market data from Yahoo! Finance API.
# Yfinance is a Python library that provides convenient access to the Yahoo Finance API. It
allows users to download historical stock data, get real-time stock quotes, and obtain
information about stock symbols, such as company name and stock exchange.
1. Data Collection: - Example

import yfinance as yf

# Define stock symbols

stocks = ['AAPL', 'MSFT', 'GOOGL']

# Download historical stock data

data = yf.download(stocks, start='2020-01-01', end='2023-01-01')
print(data.head())
2. Data Cleaning:

Cleaned data is essential for accurate analysis. This involves handling missing values,
removing duplicates, and converting data types.

# Handling missing values

data_cleaned = data.dropna()
# Removing duplicates
data_cleaned = data_cleaned.drop_duplicates()
# Converting data types
data_cleaned['Close'] = data_cleaned['Close'].astype(float)
3. Handling Dates:

In financial analysis, date-time manipulation is common.You might need to resample data

for different time frames.

# Resample data to monthly frequency

data_monthly = data_cleaned.resample('M').last()

https://pandas.pydata.org/docs/reference/api/pandas.core.resample.Resampler.last.html#
4. Data Visualization:

Before and after data cleaning, visualization helps in understanding the data.

Matplotlib is a python library used to create 2D graphs and plots by using python scripts. It has a
module named pyplot which makes things easy for plotting by providing feature to control line styles,
font properties, formatting axes etc.
5. Exporting Data:

Once your data is cleaned, you can export it for further analysis.

data_monthly.to_csv('cleaned_data.csv')

Python's versatility in data handling and manipulation, along with libraries like pandas,
NumPy, and others, makes it a powerful tool for financial data collection and cleaning.
This lays the foundation for accurate and insightful financial analysis.
NUMPY

• NumPy is a Python library used for working with arrays.

• It also has functions for working in domain of linear algebra and matrices.

• NumPy was created in 2005 by Travis Oliphant.

• It is an open source project and you can use it freely.

• NumPy stands for Numerical Python.

WHY USE NUMPY?

• In Python we have lists that serve the purpose of arrays, but they are slow to process.

• NumPy aims to provide an array object that is up to 50x faster than traditional Python

lists.

• The array object in NumPy is called ndarray, it provides a lot of supporting functions that

make working with ndarray very easy.

• Arrays are very frequently used in data science, where speed and resources are very

important.
Installation of NumPy

If you have Python and PIP already installed on a system, then installation of NumPy is very easy.

Install it using this command:

C:\Users\Your Name>pip install numpy

Numpy - Example

import numpy

arr = numpy.array([1, 2, 3, 4, 5])

print(arr)
NumPy as np

NumPy is usually imported under the np alias.

alias: In Python alias are an alternate name for referring to the same thing.

Create an alias with the as keyword while importing:

import numpy as np
Now the NumPy package can be referred to as np instead of numpy.
NumPy - Array Example
NumPy is used to work with arrays. The array object in NumPy is called ndarray.
We can create a NumPy ndarray object by using the array() function.

import numpy as np
arr = np.array([1, 2, 3, 4, 5])
print(arr)
print(type(arr))

To create an ndarray, we can pass a list, tuple or any array-like object into the array() method, and
it will be converted into an ndarray:
https://www.w3schools.com/python/numpy/numpy_creating_arrays.asp
Check Number of Dimensions?
NumPy Arrays provides the ndim attribute that returns an integer that tells us how many
dimensions the array have.

Example
https://www.w3schools.com/python/numpy/numpy_creating_arrays.asp
Data Types in Python
By default Python have these data types:

strings - used to represent text data, the text is given under quote marks. e.g. "ABCD"
integer - used to represent integer numbers. e.g. -1, -2, -3
float - used to represent real numbers. e.g. 1.2, 42.42
boolean - used to represent True or False.
complex - used to represent complex numbers. e.g. 1.0 + 2.0j, 1.5 + 2.5j
Data Types in NumPy
NumPy has some extra data types, and refer to data types with one character, like i for integers, u
for unsigned integers etc.
Below is a list of all data types in NumPy and the characters used to represent them.
i - integer M - datetime
b - boolean O - object
u - unsigned integer S - string
f - float U - unicode string
c - complex float V - fixed chunk of memory for
m - timedelta other type ( void )
 MATPLOTLIB - Data Visualization:

• Matplotlib is a popular data visualization library in Python that provides a wide range of
tools for creating various types of static, interactive, and animated visualizations.

• It is commonly used for generating charts, plots, graphs, histograms, and other graphical
representations of data.

• Matplotlib is flexible and can be used in different contexts, from basic data exploration to
complex data analysis and presentation.
 MATPLOTLIB - Key Concepts & Functionalities:
• Figure and Axes: In Matplotlib, a figure represents the entire
graphical window or canvas, while axes are the individual plots
within the figure.You can create multiple plots (axes) within a
single figure.

• Plots: Matplotlib supports a variety of plots, including line plots,

scatter plots, bar plots, histograms, pie charts, and more.

• Customization: Matplotlib allows extensive customization of

plots.You can control aspects such as colors, labels, titles,
legends, grid lines, and annotations.
MATPLOTLIB - Key Concepts & Functionalities:

• Plots: Matplotlib supports a variety of plots, including bar plots, histograms, scatter
plots, area plots, pie charts, and more.
• Customization: Matplotlib allows extensive customization of plots. You can
control aspects such as colors, labels, titles, legends, grid lines, and annotations.
MATPLOTLIB - Key Functions

plt.figure(): Creates a new figure to which you can add axes and plots.

plt.plot(): Creates various types of plots, including line plots and scatter plots.

plt.xlabel(), plt.ylabel(), plt.title(): Add labels to x-axis, y-axis, & plot title, respectively.

plt.legend(): Add a legend to the plot to distinguish between different data series.

plt.show(): Displays the plot.

MATPLOTLIB - Example:
import matplotlib.pyplot as plt
x = [1, 2, 3, 4, 5]
y = [10, 25, 18, 12, 30]
plt.figure() # Create a figure and axes
plt.plot(x, y, marker='o', linestyle='-', color='b', label='Sales') # Create a line plot
plt.xlabel('Day') # Adding labels and title
plt.ylabel('Revenue')
plt.title('Daily Sales Trend')
plt.legend() # Adding a legend
plt.show() # Show the plot
Data Visualization - MATPLOTLIB

https://matplotlib.org/stable/gallery/lines_bars_and_markers/bar_colors.html#sphx-glr-galle
ry-lines-bars-and-markers-bar-colors-py
Financial Trend & Analytics

Financial Trends and Analytics encompass a wide range of techniques and tools used to analyze
financial data and extract valuable insights. It involves examining historical and current financial data
to identify patterns, trends, and anomalies, which can aid in making informed business decisions.
Here are some key components that come under Financial Trends and Analytics:

Financial Data Collection and Cleaning: Gathering relevant financial data from various
sources, such as financial statements, transaction records, market data, and economic indicators.
Cleaning and preprocessing the data to ensure accuracy and consistency.

Descriptive Analytics: Summarizing and presenting historical financial data to understand past
performance. It include measures like mean, median, standard deviation, and graphical
representations like histograms and line charts.
Financial Trend & Analytics

Time Series Analysis: Analyzing data collected at different points in time to identify trends,
seasonal patterns, and cyclical fluctuations. Techniques include moving averages, exponential
smoothing, and decomposition.

Financial Ratios and Metrics: Calculating and analyzing financial ratios (e.g., liquidity ratios,
profitability ratios) and metrics to evaluate the financial health and performance of a company.

Predictive Analytics: Using historical data to create models that can predict future outcomes.
Techniques like regression analysis, time series forecasting, and machine learning algorithms are
employed.

Scenario Analysis: Examining the potential impact of different scenarios on financial performance,
often involving sensitivity analysis and stress testing.
Financial Trend & Analytics

Risk Management: Utilizing analytics to assess and manage financial risks, including credit risk,
market risk, and operational risk.

Market Intelligence: Analyzing market trends, competitor behavior, and customer preferences
to make informed strategic decisions.

Investment Analysis: Evaluating potential investments based on factors like risk, return, and
market trends.

Portfolio Management: Using analytics to optimize investment portfolios, balancing risk and
return based on historical performance and future expectations.
Financial Trend & Analytics

Fraud Detection: Applying analytics to identify unusual patterns and behaviors that could indicate
fraudulent activities.
Financial Modelling: Creating mathematical models to simulate financial scenarios and predict
outcomes.
Data Visualization: Presenting complex financial data using charts, graphs, and dashboards to facilitate
better understanding and decision-making.
Machine Learning (ML) in Finance:
Employing ML algorithms to analyze large datasets and make predictions, e.g., credit scoring, algorithmic
trading.
Regulatory Compliance:Using analytics to ensure compliance with financial regulations and reporting
standards.
Financial Trend & Analytics

Financial Trends and Analytics provide organizations with insights that can drive strategic
planning, risk management, investment decisions, and overall business performance. The
availability of data, coupled with advanced analytics techniques, has significantly enhanced the
ability to extract meaningful insights from financial information.
Data Science:

is a branch of computer science where we study how to store, use and analyze

data for deriving information from it.

D. Security, Risk and Regulations
1. SECURITY:
- Encryption Techniques:
- Data at Rest:
- Encryption is the process of converting data into a code to prevent unauthorized access.
- Sensitive data, such as customer account information and transaction records, is often
stored in databases or on servers.
- Encryption ensures that even if someone gains physical access to these storage devices, they
cannot decipher the data without the encryption key.
- Data in Transit:
- When data is transmitted over networks, encryption ensures that it remains confidential.
- Secure communication channels use encryption to protect financial transactions, customer
login credentials, and other sensitive information from eavesdropping during transmission.
- Common encryption protocols include SSL/TLS for web traffic and VPNs for secure
network connections.
1. SECURITY:
- Secure Communication Protocols:

- Secure communication protocols, such as HTTPS for web traffic, provide a secure channel
for data to travel between a user's device and the fintech company's server.
-
- When a user accesses their fintech account via a web browser or mobile app, HTTPS
encrypts the data transmission.
-
- This prevents unauthorized parties from intercepting and deciphering sensitive information
like login credentials or financial transactions.
-
- Secure communication protocols are a fundamental aspect of maintaining data integrity and
privacy.
1. SECURITY:
- Access Controls:

- Access controls refer to the mechanisms and policies that regulate who can access specific
systems or data within a fintech company.

- Fintech firms implement stringent access controls to ensure that only authorized personnel
can access sensitive data or critical systems.

- Access controls include role-based access, where employees are granted access privileges
based on their job responsibilities.

- Multi-factor authentication (MFA) may also be employed for additional security, ensuring
that even if login credentials are compromised, unauthorized access is still prevented.
1. SECURITY:
- Regular Security Audits:

- Security audits are systematic evaluations of a company's security measures to identify

vulnerabilities and assess compliance with security policies and standards.

- Regular security audits are conducted by internal or external cybersecurity experts. These
audits involve a comprehensive review of security protocols, systems, and processes.
-
- By proactively identifying weaknesses or non-compliance, fintech companies can take
corrective actions to strengthen their security posture and protect against potential threats
1. SECURITY:
- Vulnerability Assessments:

- Vulnerability assessments are proactive efforts to identify weaknesses or vulnerabilities in a

fintech company's IT infrastructure or applications.

- Fintech firms use vulnerability scanning tools to pinpoint potential vulnerabilities in their
systems.

- Once identified, these vulnerabilities can be addressed through patches, updates, or system
reconfigurations.

- Timely vulnerability assessments help preemptively address security risks before they can
be exploited.
1. SECURITY:
- Penetration Testing:

- Penetration testing, often referred to as ethical hacking, involves simulating cyberattacks on

a fintech company's systems to evaluate their security effectiveness.

- Ethical hackers, sometimes hired externally, attempt to exploit vulnerabilities within the
fintech system.

- This process helps identify vulnerabilities that automated scans might miss.

- Fintech companies can then remediate these vulnerabilities, strengthening their defenses
against real-world attacks.
D.2. Risk Management:
D.2. Risk Management:

FinTech companies need effective risk management to:

• Identify,
• Assess, and
• Mitigate
potential risks associated with their operations.

Risk management is a critical aspect of the FinTech industry,

aimed at identifying, assessing, and mitigating various risks
that could impact the business's operations, reputation, and
financial stability.
D.2. Risk Management:
- i) Risk Identification:

Credit Risk:
This arises when borrowers or users fail to meet their financial obligations,
leading to potential losses for the FinTech company. Robust credit risk
assessment models are employed to evaluate the creditworthiness of
borrowers.
D.2. Risk Management:
- i) Risk Identification:

Operational Risk:
Operational risks stem from internal processes, systems, or human errors. It
includes risks associated with technology failures, data breaches, fraud, and
compliance issues. A comprehensive internal control framework is essential to
manage operational risk.
D.2. Risk Management:
- i) Risk Identification:

Market Risk:
Market risk is related to the potential losses due to adverse market
movements, such as fluctuations in interest rates, exchange rates, or asset
prices. FinTech firms must be prepared for market volatility.
D.2. Risk Management:
- i) Risk Identification:

Liquidity Risk:
Liquidity risk arises when a company cannot
meet its short-term financial obligations.
FinTech firms need to manage their cash flows
effectively to mitigate liquidity risk.
D.2. Risk Management:
- i) Risk Identification:

Operational Risk:
Operational risk is the risk of loss as a
result of ineffective or failed internal
processes, people, systems, or external
events which can disrupt the flow of
business operations
D.2. Risk Management:
- ii) Risk Assessment:

Quantitative Assessment:

Some risks, like credit and market risks,

can be quantified using mathematical
models. This involves assessing the
probability and potential impact of
specific events.
D.2. Risk Management:
- ii) Risk Assessment:

Quantitative Assessment:

1. Objective Measurement: In fintech, quantitative risk

assessment involves precisely measuring and quantifying
various risks, including market risk, credit risk, and liquidity
risk.

2. Financial Metrics: It employs financial metrics and

mathematical models to estimate the potential losses
associated with different risk factors. For example, Value at
Risk (VaR) quantifies the maximum potential loss within a
specific confidence interval.
D.2. Risk Management:
- ii) Risk Assessment:

3. Data-Driven: Fintech companies rely on vast amounts of

transaction and market data. Quantitative assessment uses this
data to calculate risk probabilities, model asset price movements,
and simulate potential losses under different scenarios.

4. Advanced Tools: Fintechs often use sophisticated quantitative

tools such as Monte Carlo simulations, stochastic calculus, and
time-series analysis to model risk. These tools help in
understanding complex financial products and markets.

5. Regulatory Compliance: Quantitative risk assessments are crucial

for fintechs to meet regulatory requirements, such as Basel III for
capital adequacy. Accurate risk quantification ensures that
adequate capital reserves are maintained.
D.2. Risk Management:
- ii) Risk Assessment:

Qualitative Assessment:

Operational and reputational risks may not

be easily quantifiable. Qualitative
assessment relies on expert judgment,
scenario analysis, and risk matrices.
D.2. Risk Management:
- ii) Risk Assessment:

Qualitative Assessment:

1. Expert Judgment: Qualitative risk assessment in fintech

relies on expert judgment, industry knowledge, and
experience. It's often used when historical data is limited
or when assessing non-financial risks like cybersecurity.

2. Risk Categorization: Risks are categorized based on their

nature and potential impact on the fintech business. These
categories might include legal and compliance risks,
reputational risks, and strategic risks.
 D.2. Risk Management:
- ii) Risk Assessment:

3. Scalable for Startups: For fintech startups, qualitative assessment

can be a practical starting point for risk management. It allows them
to identify and prioritize risks without the need for extensive
historical data.

4. Early Risk Identification: Qualitative assessments help fintechs

identify emerging risks and trends in the industry. This early
detection can be vital for proactive risk management.

5. Supplemental to Quantitative Analysis: Qualitative assessments

often complement quantitative approaches. While QRA provides
precise risk quantification, QlRA adds context by evaluating the
significance of these risks from a business perspective.
D.2. Risk Management:
- iii) Risk Mitigation:

Diversification:
Diversifying the portfolio of loans and
investments helps spread risk. FinTech
companies often use risk-based pricing to
adjust interest rates or terms based on the
risk profile of borrowers.
D.2. Risk Management:
- iii) Risk Mitigation:

Insurance:
Transferring some risks to insurance providers can
provide coverage for losses due to data breaches,
for example, through cyber insurance.
D.2. Risk Management:
- iii) Risk Mitigation:

Robust Compliance:

Compliance with relevant regulations and industry

standards is a primary risk mitigation measure.
FinTech firms need to stay updated with changing
regulatory landscapes.
D.2. Risk Management:
- iii) Risk Mitigation:

Technology and Security

Investing in robust cybersecurity measures helps

mitigate operational and data security risks.
Regular security audits and penetration testing aid
in identifying vulnerabilities.
D.2. Risk Management:
- iii) Risk Mitigation:

Customer Due Diligence:

For lending and financial services, conducting

thorough background checks and credit
assessments can reduce credit risk.
D.2. Risk Management:
- iii) Risk Mitigation:

Contingency Planning:

Developing contingency plans for various risk

scenarios ensures a swift response when risks
materialize.
D.2. Risk Management:
- iv) Risk Monitoring & Reporting:

Key Risk Indicators

Establishing a system for continuous risk

monitoring is crucial. Regular risk reports and key
risk indicators (KRIs) provide insights into emerging
risks.
D.2. Risk Management:
- v) Risk Culture

Building a risk-aware culture within the

organization is vital. All employees should be
educated about risks and encouraged to report any
issues or concerns.
D.2. Risk Management:
- v) Regulatory Compliance

Compliance with financial regulations and data

protection laws is a risk management strategy in
itself. It helps avoid legal consequences associated
with non-compliance.
D.2. Risk Management:
- vii. Stress Testing and Scenario Analysis:

Conducting stress tests and scenario analyses helps

assess how the firm would perform under adverse
conditions. It's a proactive way to identify vulnerabilities.
D.2. Risk Management:
- vii. External Partnerships:

Collaborating with external partners,

including regulators and industry
associations, can provide valuable
insights into emerging risks and best
practices.
Benefits of Effective Risk Management
D3. Discuss Threats and Vulnerabilities
regarding Privacy and Digital identities
Privacy

Privacy refers to an individual's right to control their personal information and how
it is collected, stored, used, and shared.

In the context of FinTech, privacy involves safeguarding sensitive financial and

personal data from unauthorized access, ensuring data security and confidentiality,
and respecting individuals' preferences regarding the use of their information.
Privacy

Privacy is all about individuals having the right to:

Control: They should be able to decide who collects their personal information, how it's
stored, what it's used for, and who it's shared with.

Consent: Individuals should give explicit permission or consent for their data to be used,
and they should know how it will be used.

Transparency: It should be clear to individuals what data is being collected and for what
purposes. They should know where their data is going.
Privacy

Security: Their personal information should be securely stored and only accessible
by authorized parties.

Ownership: People should understand who owns and controls their data,
whether it's themselves, a financial institution, or a third party.

In the context of FinTech, where sensitive financial information is

frequently involved, privacy becomes even more critical. Protecting
customers' financial data and respecting their privacy preferences are
key elements of building trust in FinTech services
Digital Identity

Digital identity represents a person's online or

digital presence, allowing them to interact and
transact in the digital world.
It is the collection of attributes, information, and
credentials that uniquely identify an individual.
In the context of FinTech, digital identity is
crucial for secure and convenient online financial
activities.
Digital Identity

Key aspects of digital identity in FinTech:

Identity Verification: Using digital means to confirm the identity of users, often
involving government-issued identification, biometric data (fingerprint, facial
recognition), or digital tokens.

Authentication: The process of proving that a person or entity is who they claim to
be. Multi-factor authentication (MFA) is often used for added security.

Identity Theft Prevention: Implementing measures to safeguard against identity

theft, where someone impersonates another individual for fraudulent purposes.

Privacy and Consent: Ensuring that users have control over their digital identity and
provide consent for its use. Privacy-enhancing technologies (PETs) play a role here.
Digital Identity

Cross-Border Transactions: In a global financial context, digital identity solutions

should work across borders, adhering to international standards.

Self-Sovereign Identity: This emerging concept empowers individuals to own and

control their digital identity without relying on a central authority.

Data Portability: Allowing users to move their digital identity and associated data
between different service providers securely.

Understanding and managing privacy and digital identity are paramount in the FinTech
industry to build trust, ensure data security, and facilitate secure and seamless digital
financial services. Privacy policies, encryption, and strong authentication are just a few
of the tools used to address these concerns.
D.3. Threats & Vulnerabilities regarding
Privacy and Digital identities
Threats: are potential dangers or harmful
events that can adversely impact
financial technology systems, operations,
or services.
D.3. Threats & Vulnerabilities regarding
Privacy and Digital identities

Asset: What you are protecting

https://www.sectigo.com/resource-library/what-is-the-difference-between-a-threat-a-vulnerability-and-a-risk
D.3. Threats & Vulnerabilities regarding
Privacy and Digital identities
In the FinTech sector, (A) Threats include:

A1. Cybersecurity Threats: These encompass a wide range of attacks and malicious
activities such as hacking, data breaches, distributed denial of service (DDoS) attacks,
and phishing.

A2. Data Privacy Threats: Threats to the privacy of sensitive financial and personal
data, including unauthorized access, data leaks, and breaches of confidentiality.

A3. Regulatory and Compliance Threats: Risks associated with non-compliance with
financial regulations, which can lead to legal and financial penalties.
D.3. Threats & Vulnerabilities regarding
Privacy and Digital identities
A4. Operational Risks: Threats to the operational aspects of a FinTech company,
including internal errors, system failures, and supply chain disruptions.

A5. Reputation Risks: Negative publicity or customer dissatisfaction can harm the
reputation of a FinTech firm.

A6. Market Risks: Economic changes, market fluctuations, and geopolitical events can
impact the stability and performance of financial technologies.
D.3.Threats & Vulnerabilities regarding
Privacy and Digital identities
(B) Vulnerabilities refer to weaknesses or gaps in the systems, processes, or
infrastructure of a FinTech organization that can be exploited by threats.
In FinTech, vulnerabilities include:

B1. Software Vulnerabilities: Weaknesses in the code or software applications used

by FinTech companies can be exploited by cyber threats.

B2. Insufficient Security Measures: Inadequate cybersecurity measures, such as weak

access controls, lack of encryption, or unpatched software, create vulnerabilities.
D.3.Threats & Vulnerabilities regarding
Privacy and Digital identities
B3. Human Errors: Employee mistakes or negligence can lead to vulnerabilities, such
as accidental data exposure or misconfigurations.

B4. Third-Party Risks: Relying on third-party vendors for services or technology can
introduce vulnerabilities if those vendors have inadequate security measures.

B5. Regulatory Compliance Gaps: Failure to adhere to financial regulations or data

protection laws can create vulnerabilities related to compliance risks.
D.3.Threats & Vulnerabilities regarding
Privacy and Digital identities
B6. Supply Chain Risks: Vulnerabilities in the supply chain, including software components
or hardware, can affect the security and integrity of FinTech products and services.

B7. Lack of Monitoring and Response: Inadequate monitoring and response mechanisms
can lead to vulnerabilities, as threats may go undetected or unaddressed.

FinTech companies must actively identify and address vulnerabilities to mitigate potential
threats effectively. This involves implementing robust security measures, conducting risk
assessments, complying with financial regulations, and continually monitoring for emerging
threats to maintain the integrity and security of financial technology systems and services.
Kinds of Hacking

Black Hat Hacking: This type of hacking is carried out with malicious intent and
is often associated with cybercrime. Black hat hackers use their skills to gain
unauthorized access to systems and networks, steal data, and cause damage to
computer systems.

White Hat Hacking: Also known as ethical hacking, this type of hacking is
carried out with the goal of identifying vulnerabilities in computer systems and
networks. White hat hackers work to improve security by finding and fixing
weaknesses before they can be exploited by black hat hackers.
Distributed Denial-Of-Service (DDOS) Attack

A Distributed Denial of Service (DDoS) attack is a type of cyber attack that aims to
make a website or online service unavailable by overwhelming it with traffic from
multiple sources
Distributed Denial-Of-Service (DDOS) Attack

Imagine a popular restaurant, and they can serve a lot of people at once. Now, think of a
mischievous group that really doesn't like that restaurant. They decide to send in hundreds of
people all at once, way more than the restaurant can handle. It's like a huge crowd trying to get
in through the door, blocking the entrance for real customers.

In the digital world, a DDoS attack is kind of like that. It's when a website or an online service
gets bombarded with way too much traffic at once, more than it can handle. This isn't regular
traffic; it's a flood of fake or unwanted visitors sent by troublemakers.

As a result, the website or service gets overwhelmed and can't function properly. It's like the
restaurant being so packed that no one can get in or out. DDoS attacks are a way to disrupt or
shut down websites temporarily, often used by hackers or cybercriminals.
Phishing Attack

Phishing is a type of cyber attack that

involves tricking people into providing
sensitive information, such as:
• login credentials,
• credit card numbers, or
• other personal data.
Phishing Attack

• Phishing attacks are fraudulent attempts to obtain sensitive information such as credit
card details, login credentials, or other personal data by posing as a trustworthy entity.

• These attacks are usually carried out through email and can be used to install malware
on the victim’s device. It is important to be cautious of suspicious emails and avoid
clicking on any links or downloading any attachments from unknown sources.

• If you suspect that you have received a phishing email, do not respond to it or provide
any personal information. Instead, report it to your email provider and delete it
Phishing Attack - Example

• Imagine you receive an email, and it looks like it's from your bank or a trusted company. They say
there's a problem with your account, and you need to click a link to fix it. But here's the catch:
that email isn't really from your bank. It's from a trickster who wants your personal information.

• Phishing is like someone trying to lure you into a trap. They create a message that seems
trustworthy and urgent, so you'll act without thinking. If you click that link and provide your
details, they can steal your information or do something harmful.

• So, in the digital world, phishing is when you get fake messages that pretend to be from reliable
sources, but they're actually trying to fool you into revealing your secrets. It's important to be
cautious and double-check before clicking on links or sharing personal info online.
Phishing - is a kind of Social Engineering Attack

• Phishing is a kind of Social engineering attacks

• in which psychological manipulation of human behavior to disclose sensitive data,

share credentials, grant access to a personal device, or otherwise compromise
digital security
D3. b) Understand Process of Penetration Testing &
Vulnerability Assessment
Penetration Testing:

Penetration testing, also known as ethical hacking, involves simulating real-world attacks
on an organization's systems, networks, or applications to identify vulnerabilities and
weaknesses.

The process typically includes vulnerability scanning, exploitation, and reporting (with
the objective of exploring weaknesses).

Skilled security professionals use various tools and techniques to identify potential entry
points and exploit vulnerabilities without causing harm.

The goal of penetration testing is to identify security flaws and provide actionable
recommendations to mitigate risks and enhance security measures.
Vulnerability Assessment:

• Vulnerability assessment focuses on identifying and categorizing vulnerabilities in an

organization's systems, networks, and applications.

• It involves scanning and analyzing systems to detect known vulnerabilities,

misconfigurations, or weak security controls.

• Vulnerability assessments provide insights into the potential risks an organization

faces and serve as a basis for remediation actions.

• Automated scanning tools and manual analysis by security experts are commonly
used in vulnerability assessments.
Penetration Testing Vs Vulnerability Assessment:

Both penetration testing and vulnerability assessment are essential components of a

comprehensive security strategy.

While vulnerability assessment focuses on identifying weaknesses, penetration testing

goes a step further by simulating actual attacks to evaluate an organization's ability to
withstand and respond to threats.

By conducting these assessments regularly, organizations can proactively identify and

address vulnerabilities, strengthen their security posture, and protect privacy and digital
identities.
 Penetration Testing Vs Vulnerability Assessment:

Both penetration testing and vulnerability assessment are essential components of a comprehensive
security strategy.
While vulnerability assessment focuses on identifying weaknesses, penetration testing goes a step further
by simulating actual attacks to evaluate an organization's ability to withstand and respond to threats.
By conducting these assessments regularly, organizations can proactively identify and address
vulnerabilities, strengthen their security posture, and protect privacy and digital identities.
Penetration Testing Vs Vulnerability Assessment:
D.4. Discuss the importance of Disaster Recovery
and Business Continuity in relation to FinTech.
Business Continuity Planning (BCP)

• BCP is like having a backup plan for a business.

• It involves preparing for unexpected events, such as natural disasters, cyberattacks, or
any situation that might disrupt normal business operations.
• BCP ensures that a company has strategies in place to keep things running, even
during tough times.
• It involves identifying risks, creating plans to reduce the impact of those risks, and
outlining steps to quickly recover if something unexpected happens.
• The goal is to minimize any harm or interruptions to the business and keep it going,
even when facing unexpected challenges.
Disaster Recovery (DR) Planning

• DR refers to a set of policies, tools, and procedures designed to reinstate critical

business operations and IT infrastructure following a natural or human-induced
disaster.
• It's a subset of business continuity, focused specifically on the IT aspect.
• Disaster recovery measures aim to recover, restore, and resume business
operations with minimal downtime and data loss in the event of unforeseen
disruptions such as cyber-attacks, system crashes, natural disasters, or other
emergency scenarios.
• This involves creating and implementing a comprehensive plan to restore IT services
and data after these incidents occur.
Disaster Recovery (DR) Planning
Business Continuity Plan (BCP)
- How to structure it according to ISO 22301

Optimal structure for the BCP for smaller and midsize companies, and what each section
should include:

Purpose, scope and users – why this plan is developed, its objectives, which parts of the
organization it covers, and who should read it.

Reference documents – to which documents does this plan relate? Normally, these are
Business Continuity Policy, Business Impact Analysis, Disaster Recovery Plan.

Roles and responsibilities – who will be responsible for managing the disruptive incident, and
who is authorized to perform certain activities in case of a disruptive incident – e.g. activation
of the plans, urgent purchases, communication with media, etc.
Business Continuity Plan (BCP)
- How to structure it according to ISO 22301

Key contacts – contact details for persons who will participate in the execution of the
business continuity plan – this is usually one of the annexes of the plan.

Plan activation and deactivation – in which cases can the plan be activated, and the method of
activation; which conditions need to exist to deactivate the plan.

Communication – which communication means will be used between different teams and
with other interested parties during the disruptive incident. Who is in charge of
communicating with each interested party, and the special rules of communication with media
and government agencies.
Business Continuity Plan (BCP)
- How to structure it according to ISO 22301

Incident response – how to react initially to an incident in order to reduce the damage – this
is very often an annex to the main plan.

Physical sites and transportation – which are the primary and alternative sites, where the
assembly points are, and how to get from primary to alternative sites.

Order of recovery for activities – list of all the activities, with precise Recovery Time
Objective (RTO) for each.
Business Continuity Plan (BCP)
- How to structure it according to ISO 22301

Recovery plans for activities – description of step-by-step actions and responsibilities for
recovering manpower, facilities, infrastructure, software, information, and processes, including
interdependencies and interactions with other activities and external interested parties –
these are very often annexes to the main plan.

Required resources – a list of all the employees, third-party services, facilities, infrastructure,
information, equipment, etc. that are necessary to perform the recovery, and who is
responsible to provide each of them.

Restoring and resuming activities from temporary measures – how to restore business
activities back to business-as-usual once the disruptive incident has been resolved.
Business Continuity Planning Process
SBP - Enterprise Technology Governance Framework

1. Business Impact Analysis

a) Assess and prioritize all business functions and processes, including their interdependencies, as part
of a work flow analysis,
b) Identify potential impact of business disruptions resulting from uncontrolled, non-specific events on
the institution's business functions and processes,
c) Identify legal and regulatory requirements for the FI(s) business functions and processes
d) Estimate maximum allowable downtime as well as the acceptable level of losses, associated with
business functions and processes and
e) Estimate recovery time objectives (RTOs), recovery point objectives (RPOs) and recovery of the
critical path.
Business Continuity Planning Process
SBP - Enterprise Technology Governance Framework

1. Business Impact Analysis

a) Assess and prioritize all business functions and processes, including their interdependencies, as part
of a work flow analysis,
b) Identify potential impact of business disruptions resulting from uncontrolled, non-specific events on
the institution's business functions and processes,
c) Identify legal and regulatory requirements for the FI(s) business functions and processes
d) Estimate maximum allowable downtime as well as the acceptable level of losses, associated with
business functions and processes and
e) Estimate recovery time objectives (RTOs), recovery point objectives (RPOs) and recovery of the
critical path.
Business Continuity Planning Process
SBP - Enterprise Technology Governance Framework

II. Risk Assessment

a) Evaluate the BIA assumptions using various threat scenarios;
b) Analyze threats based upon the impact to the institution, its customers and other
relevant stakeholders;
c) Prioritize potential business disruptions based on their severity; and
d) Perform a "gap analysis" to compare existing BCP to the policies and procedures which
shall be implemented based on prioritized disruptions identified and their resulting impact on the FI(s).
Business Continuity Planning Process
SBP - Enterprise Technology Governance Framework

III. Risk Monitoring and Testing

Risk monitoring and testing is the final step in the BCP Process. Risk monitoring and testing ensures
that the institution's business continuity planning process remains viable through the:

a) Incorporation of the BIA and risk assessment into the BCP and testing program;

b) Development of an enterprise-wide testing program;

c) Assignment of roles and responsibilities for implementation of the testing program;

d) Completion of annual, or more frequent, tests of the BCP;

Business Continuity Planning Process
SBP - Enterprise Technology Governance Framework

III. Risk Monitoring and Testing

e) Evaluation of the testing program and the test results by senior management and the board;

f) Assessment of the testing program and test results by an independent party; and

g) Revision of the BCP and testing program based upon changes in business operations,

audit recommendations and test results.

Importance of BCP for Fintech Firm’s

In the context of Fintech, the reliance on technology and digital platforms is paramount. BCP
specifically addresses potential disruptions in financial operations.

Fintech companies operate in a dynamic, fast-paced, and technologically reliant environment, offering
various financial services. The critical need for business continuity stems from:

Technology-Dependent Services: Fintech services primarily rely on digital infrastructure and

technology. Ensuring the availability of these systems during adverse situations is critical for
continued service provision.

Financial Transactions & Services: Constant flow of financial transactions & services requires
uninterrupted operations. BCP is vital to ensure these services remain available despite unforeseen
events.
Importance of BCP for Fintech Firm’s

Data Protection and Security: Fintech companies handle sensitive financial data. BCP focuses on protecting
customer information, ensuring data integrity, and preventing any potential breaches or cyberattacks.

Regulatory Compliance: The financial industry is highly regulated. Fintech firms need to adhere to industry
standards and regulations, necessitating robust BCP strategies to comply with these requirements.

Customer Trust: Maintaining services during crises, whether due to technical failures, cyberattacks, or
natural disasters, is crucial for maintaining trust and confidence among customers.
In essence, BCP for Fintech is about safeguarding technology, ensuring continuous financial transactions,
securing customer data, adhering to regulations, and building customer trust by assuring uninterrupted
financial services even in adverse situations.
 Disaster Recovery (DR) Planning
SBP - Enterprise Technology Governance Framework

• Evaluate the DR Plan at least annually and update them as and when changes to business operations,
systems and networks occur.
• Implement replication, rapid backup and recovery capabilities at the individual system or application cluster
level.
• Consider inter-dependencies between critical systems in drawing up its recovery plan and conducting
contingency tests.
• Define system recovery, business resumption priorities and establish specific recovery objectives including
Recovery Time Objectives (RTO) and Recovery Point Objective (RPO) for IT systems and applications.
• Establish a recovery site that is geographically separated from the primary site to enable the restoration of
critical systems and resumption of business operations in case of disruption at the primary site.
Disaster Recovery (DR) Planning
SBP - Enterprise Technology Governance Framework

• Evaluate the DR Plan at least annually and update them as and when changes to business
operations, systems and networks occur.
• Implement replication, rapid backup and recovery capabilities at the individual system or
application cluster level.
• Consider inter-dependencies between critical systems in drawing up its recovery plan and
conducting contingency tests.
• Define system recovery, business resumption priorities and establish specific recovery objectives
including Recovery Time Objectives (RTO) and Recovery Point Objective (RPO) for IT systems
and applications.
Disaster Recovery (DR) Planning
SBP - Enterprise Technology Governance Framework

• Establish a recovery site that is geographically separated from the primary site to enable the
restoration of critical systems and resumption of business operations in case of disruption at the
primary site.
• The selection of DR specifications shall be made according to the BIA to address the identified
threats and to meet the recovery objectives
Importance of Disaster Recovery (DR) Planning

DR and BCP are of paramount importance in the realm of FinTech. Here's why:

Data is Critical: FinTech companies deal with enormous volumes of financial data. In the event of a
disaster, data loss can be catastrophic. Robust disaster recovery plans ensure that data can be restored
quickly, minimizing disruptions.

Uptime is Money: Financial transactions occur 24/7. Even a short downtime can result in significant
financial losses and damage a FinTech company's reputation. Business continuity strategies aim to keep
services up and running, even during disasters.

Compliance Demands: The financial sector is heavily regulated. Many regulations require firms to have
comprehensive disaster recovery and business continuity plans in place to ensure data integrity,
security, and availability.
Importance of Disaster Recovery (DR) Planning

Customer Trust: In FinTech, trust is everything. If customers perceive that their financial data isn't secure
and services aren't reliable, they'll look elsewhere. Robust disaster recovery and business continuity
measures build customer trust.

Operational Resilience: FinTech companies must anticipate all types of disasters, from technical outages to
natural disasters. Ensuring operations can continue even in the face of adversity is crucial.

Competitive Advantage: Having solid disaster recovery and business continuity plans can be a significant
selling point. Businesses that can demonstrate their ability to operate without disruptions may have a
competitive edge.
Importance of Disaster Recovery (DR) Planning

Cost of Downtime: Downtime can be incredibly costly in the financial industry. Beyond immediate
revenue loss, there are costs associated with recovering data, regulatory fines, and damage to reputation.

Third-Party Risk: Many FinTech firms rely on third-party service providers. It's essential to ensure these
providers also have strong disaster recovery and business continuity plans in place to prevent
dependencies that can lead to catastrophic failures.

In conclusion, disaster recovery and business continuity are fundamental for the FinTech industry. They
not only safeguard data and operations but also support compliance, customer trust, and competitive
advantage. A proactive approach to risk management is crucial in this dynamic and highly regulated sector.
ADDITIONAL CONCEPTS
 E1

E1. Blockchain Ecosystem

E1
 E1

Blockchain Ecosystem

Refers to the network of interconnected actors, technologies, and protocols operating within the broader
realm of blockchain technology. It encompasses various components that contribute to the functioning,
development, and growth of blockchain-based systems. The ecosystem includes:

I. Blockchain Networks: These are the decentralized, distributed ledgers where transactions and data
are recorded in blocks. Well-known blockchain networks include Bitcoin, Ethereum, and others.

II. Cryptocurrencies and Tokens: Digital assets or tokens that exist on blockchain networks. Examples
include Bitcoin (BTC), Ether (ETH), and a wide array of tokens representing various utilities, services, or
assets.
 E1

Blockchain Ecosystem

III. Blockchain Developers: Individuals or groups who create and maintain blockchain networks, smart
contracts, decentralized applications (dApps), and other blockchain-related software.

IV. Miners and Validators: Participants responsible for validating and confirming transactions on
blockchain networks. Miners (in proof-of-work systems) and validators (in proof-of-stake systems) play
crucial roles in maintaining the network.

V. Smart Contracts: Self-executing contracts with the terms directly written into code. They automate,
verify, or enforce the performance of contract obligations without intermediaries.

VI. Wallets and Exchanges: Platforms and applications that allow users to store, manage, and exchange
cryptocurrencies and tokens securely.
 E1

Blockchain Ecosystem

VII. Decentralized Applications (dApps): Applications that run on a blockchain or P2P network of
computers instead of a single computer. They have no central point of control and often provide services
across various industries.

VIII. Regulatory Bodies and Standards: Governments, institutions, and organizations involved in
creating guidelines, regulations, and standards for the blockchain space.

IX. Communities and Users: People involved in the blockchain space, which includes developers,
investors, users, and enthusiasts.

Blockchain ecosystem is continually evolving, driven by technological advancements, new innovations, and
increasing adoption across various sectors. It has the potential to disrupt traditional systems by offering
transparent, decentralized, and secure solutions for a variety of applications beyond just finance.
 E2

E2. Initial Coin Offering (ICO)

E2
 E2

Initial Coin Offering (ICO)

is a fundraising method used by new companies, often related to blockchain or cryptocurrency

projects, to raise capital. Here's an explanation of ICOs:

I. Fundraising Mechanism: ICOs allow companies or startups to raise funds by issuing their
cryptocurrency tokens to investors. Investors purchase these tokens, expecting their value to rise if
the project succeeds.

II.Tokens as Investment: Investors buy ICO tokens based on the potential of the project or the
utility of the tokens within the platform. They anticipate that if the company succeeds, the value of
the tokens they purchased during the ICO will increase.

III.Token Utility: ICO tokens can serve various purposes. They might represent access to a
service, voting rights, or a means of purchasing goods or services within the company's ecosystem.
 E2

Initial Coin Offering (ICO)

IV. High Risk and Volatility: ICOs carry higher risk due to the speculative nature of investing in
new, unproven ventures. The value of the tokens might fluctuate greatly based on market conditions
and the success of the project.

V. Regulatory Concerns: There are regulatory concerns surrounding ICOs due to the lack of
investor protection, fraudulent activities, and scams. Governments in many countries are creating
guidelines or regulations to govern ICOs.

ICOs are known for being an innovative yet risky method for startups to raise capital, but they've
also faced criticism due to their unregulated nature, leading to both success stories and fraudulent
schemes.
 E2

Initial Coin Offering (ICO)

Ethereum (ETH): One of the most prominent examples of a successful ICO is Ethereum. In 2014,
Ethereum conducted its ICO to fund the development of its blockchain platform, offering Ether
(ETH) tokens. Ethereum's ICO raised around $18 million, and the Ether tokens became an essential
part of the Ethereum ecosystem, used for transactions and smart contracts within the network.

Filecoin (FIL): Filecoin held one of the largest ICOs, raising over $200 million in 2017. It aimed to
build a decentralized storage network that would allow users to buy and sell unused storage space.
Investors purchased Filecoin tokens during the ICO, and these tokens became integral for users to
store or access data within the Filecoin network.

ICOs can generate substantial capital for blockchain projects, but they also emphasize the speculative
nature of investments in ICO tokens and their potential value in a project's ecosystem.
 E3

E3. Crowdfunding
E3
 E3

Crowdfunding

Crowdfunding is a way of raising money to finance projects and

businesses.

It enables fundraisers to collect money from a large number of

people via online platforms.

Crowdfunding is most often used by startup companies or

growing businesses as a way of accessing alternative funds
 E3

Crowdfunding

Crowdfunding is a financing method that involves raising small amounts of money from a
large number of people, typically via the internet.

It's a way for individuals, entrepreneurs, or small businesses to raise funds for their projects,
ventures, or social causes.

There are several types of crowdfunding, including donation-based, reward-based,

peer-to-peer lending, and equity crowdfunding.
 E3

Types of Crowdfunding

I. Donation-Based Crowdfunding:
In this type, people contribute funds to a project or cause without expecting anything in return.
Donors support the project out of goodwill, charity, or belief in the cause.

GoFundMe:
It's a platform where individuals, charities, or organizations can create campaigns for various causes
like medical expenses, disaster relief, education, or personal needs. People donate money without
expecting any returns.
 E3

Types of Crowdfunding

II. Reward-Based Crowdfunding:

Funders receive a non-monetary reward, such as a product, service, or token of appreciation in
return for their contribution.
Projects on platforms like Kickstarter or Indiegogo often use this method.

Kickstarter: This platform supports creative projects, where backers pledge money to support the
project, and in return, they receive rewards like the product itself, early access, or other incentives.
For instance, supporting the creation of a new video game and receiving a copy once it's developed.
 E3

Types of Crowdfunding

III. Peer-to-Peer (P2P) Lending:

Individuals lend money to others or small businesses in exchange for a potential return on
investment, typically with interest.
Platforms like Prosper and Lending Club facilitate P2P lending.

Lending Club: It's one of the largest P2P lending platforms that allows individuals to lend money to
other individuals or small businesses. Investors receive the loan amount plus interest over time. For
example, an individual might seek a personal loan to consolidate debt.
 E3

Types of Crowdfunding

IV. Equity Crowdfunding:

Investors receive shares or ownership in a company in exchange for their investment.
This method allows small businesses or startups to raise capital without involving traditional financial
institutions.

SeedInvest: This platform allows investors to buy shares in startups or early-stage companies.
Investors have an equity stake in the company and share in its profits if it succeeds. A tech startup
seeking investment to develop new software could use such a platform.
 E3

How Crowdfunding Works:

Project Proposal: The person or entity seeking funds creates a project proposal, outlining the
objectives, the amount needed, and the intended use of funds.

Crowdfunding Platform: They then post the proposal on a crowdfunding platform (such as
Kickstarter, GoFundMe, Indiegogo, etc.).

Public Appeal: The proposal is presented to the public, and individuals or backers can contribute
funds to the project.

Funding Goal: Usually, there's a target amount the project must reach to receive the funds. If the
target is not met within a set timeframe, funds may be returned to the contributors.

Fulfillment of Promises: Project creator is responsible for delivering the promised return/outcome
 E3

Benefits of Crowdfunding:

Access to Capital: Provides access to funding for innovative projects or startups that might struggle
to get funding through traditional routes.

Market Validation: It can be a way to gauge public interest in a product or concept.

Networking and Marketing: Crowdfunding also provides an opportunity to engage with potential
customers or investors, creating a fan base or customer community.

Crowdfunding has gained popularity due to its ability to democratize access to funding, enabling a
wider range of projects to seek financial support and backing from a larger pool of interested parties.
 E4

E4. Information Security Lifecycle

 E4

Information Security Lifecycle

is a structured approach that organizations employ to maintain, manage, and enhance information
security measures across the entire lifespan of data and systems. It encompasses various stages to
ensure the protection, confidentiality, integrity, and availability of critical data within an organization.

Key Stages in the Information Security Lifecycle:

1. Asset Identification: The first step involves identifying and cataloging all information assets within an
organization, including databases, networks, servers, applications, and data repositories.

2. Risk Assessment and Analysis: Once assets are identified, a thorough risk assessment is conducted
to analyze potential vulnerabilities, threats, and risks that may impact these assets.
This stage evaluates the impact, likelihood, and consequences of potential security incidents.
 E4

Information Security Lifecycle

3. Risk Mitigation and Control Implementation: Based on the assessment, appropriate security controls,
measures, and countermeasures are developed and implemented to mitigate identified risks. These could
include firewalls, encryption, intrusion detection systems, access controls, etc.

4. Monitoring and Detection: Continuous monitoring of the systems and data is performed to identify
and detect any potential security incidents or breaches.
Security Information and Event Management (SIEM) tools, intrusion detection systems, and other
monitoring tools are used to maintain vigilance.

5. Incident Response: If a security incident occurs, an incident response plan is activated to contain,
eradicate, and recover from the incident.
This involves following a predetermined set of actions to manage & mitigate the impact of the incident.
 E4

Information Security Lifecycle

6. Review and Improvement: Regular review and evaluation of the security measures and controls are
crucial to ensure they remain effective and relevant.
Changes or improvements in security systems, processes, and policies are implemented based on these
reviews.

7. Disposal and Destruction: When data or systems are no longer needed, a secure and systematic
disposal process is necessary to prevent data breaches or unauthorized access.
This step involves securely deleting or destroying data and assets.
 E4

Importance of Information Security Lifecycle (ISL)

Preventive Approach: It helps in proactively managing and mitigating risks before they manifest into
incidents.
Compliance and Standards: It ensures compliance with regulatory requirements and industry
standards in protecting data and systems.
Adaptability: Allows for the continual adaptation and improvement of security measures to respond
to changing threats and vulnerabilities.
Data Protection: Ensures the confidentiality, integrity, and availability of critical organizational data
and systems.
ISL is a systematic approach designed to protect an organization's digital assets throughout their
lifecycle, considering the evolving nature of cybersecurity threats and technological advancements.
 E5

E5. Regulatory Environment &

Challenges for Fintech in Pakistan
 E5

Regulatory Environment in Pakistan

- Digital Financial Services
 E5

What are Digital Financial Services (DFS)?

• Digital Financial Services (DFS) include a broad range of financial services accessed and delivered
through digital channels, including payments, credit, savings, remittances and insurance.
• Digital channels refers to the internet, mobile phones, ATMs, POS terminals etc.
• DFS concept includes mobile financial services (MFS).

• MFS is the use of a mobile phone to access financial services and execute financial transactions.
• Includes both transactional services and non-transactional services
• MFS include M-Banking, M-payments, M-money.

• M-Money is a mobile based service facilitating electronic transfers and other transactional and non
transactional services using mobile networks

• M-Banking is the use of a mobile phone to access banking services and execute financial transactions.
• Often used to refer only to customers with bank accounts.
 E5

Why Digital Financial Services?

• Reach larger audience of customers untapped by the existing banking infrastructure

• Increases financial inclusion
• Increase efficiency of delivery
• Improve quality of service
• Revenue growth
• Reaching new market segments
• Offering new products and services enabled by technology
• Cost reduction to companies and customers
• Operational cost by reducing branch costs and manpower costs
• Reducing transaction costs by being accurate and context aware
E5
 E5

Basic Banking Account: The regulation covers aspects

related to basic banking accounts.

Prudential Regulation M-1: The regulation addresses

specifically related to obtaining Computerized National Identity
Cards (CNIC)

Branchless banking account: a current deposit, saving

deposit, or any other account maintained by a consumer in a
Financial Institution in which credits and debits may be effected
by virtue of Electronic Fund Transfers;

Branchless Banking Agent: means agents providing basic

banking services (as described in these guidelines) to the
customers of an FI on behalf of the FI under a valid agency
agreement and does not include third party technology service
providers.

Branchless Banking activities as a new delivery channel to

offer banking services in a cost effective manner.
In 2009, Telenor Pakistan launched its mobile money platform, E5
Easypaisa, in partnership with Tameer Microfinance Bank, to
provide basic financial services to the unbanked population of Pakistan
Easypaisa allowed customers to deposit and withdraw cash, transfer
money, and pay bills using their mobile phones. The service quickly
gained popularity, with over 1 million active users by the end of 2010.
In 2009, Telenor Pakistan launched its mobile money platform, E5
Easypaisa, in partnership with Tameer Microfinance Bank, to
provide basic financial services to the unbanked population of Pakistan
Easypaisa allowed customers to deposit and withdraw cash, transfer
money, and pay bills using their mobile phones. The service quickly
gained popularity, with over 1 million active users by the end of 2010.

In April 2010, UBL launched UBL Omni, an in-house developed project

designed to provide banking facilities to the unbanked population of
Pakistan.
As of June 2014 UBL Omni had a customer base in excess of 6.8 million,
with over 1.5 million active cards in issue and 5 million monthly
transactions valued at over US$253 million.
Through the success of UBL Omni 1.55 million previously unbanked
individuals have opened mobile bank accounts with UBL in Pakistan.
Today, Omni Dukaan network has grown to 42,100 agents in Pakistan.
 E5 E5

JazzCash, formerly known as MobiCash, is a

Pakistani mobile wallet, mobile payments, and
branchless banking services provider. It was
launched in 2012 as MobiCash by Mobilink (now
Jazz) in partnership with their subsidiary bank
Mobilink Microfinance Bank and in collaboration
with the National Bank of Pakistan (NBP).
JazzCash allowed customers to open mobile
accounts, deposit and withdraw cash, transfer money,
and pay bills using their mobile phones. The platform
also offered international remittance services,
allowing overseas Pakistanis to send money to their
families back home.
 E5

JazzCash, formerly known as MobiCash, is a Pakistani Discontinuing Timepey in 2017,

mobile wallet, mobile payments, and branchless banking Zong relaunched its mobile financial services
with a new brand "PayMax" in association
services provider. It was launched in 2012 as MobiCash by
with Askari Bank Limited.
Mobilink (now Jazz) in partnership with their subsidiary
bank Mobilink Microfinance Bank and in collaboration PayMax lets users pay utility bills, transfer
with the National Bank of Pakistan (NBP). money to specified recipients anywhere in the
country, deposit and withdraw cash and carry
JazzCash allowed customers to open mobile accounts, out account transfers
deposit and withdraw cash, transfer money, and pay bills
using their mobile phones. The platform also offered
international remittance services, allowing overseas
Pakistanis to send money to their families back home.
 E5
Warid Telecom launched its mobile financial services in 2014,
under the brand name Mobile Paisa. Partnering with Bank
Alfalah, Warid is the last telecom company in Pakistan to add
branchless banking services to its portfolio

HBL Express has grown rapidly since its launch and has become
one of the leading branchless banking providers in Pakistan. The
service has a significant presence in rural areas, where traditional
banking services are often limited or inaccessible. As of 2023,
HBL Express has a network of over 100,000 Konnect Shops
across Pakistan and serves over 20 million customers.

UPaisa a joint collaboration between U Microfinance bank &

Ufone launched innovative branchless banking solutions for the
masses of Pakistan back in 2013.
UPaisa is widely accessible through a network of over 120,000
retail agents across Pakistan
E5
E5
 E5

Regulatory Environment
 E5

Regulatory Environment & Challenges for FinTech in Pakistan

The use of fintech to improve financial inclusion has gained significant attention in recent years.
Fintech has the potential to provide access to financial services to people who are excluded from the
traditional banking system. In Pakistan, where a significant portion of the population is unbanked,
fintech has emerged as a potential solution to this problem

Fintech in Pakistan has a relatively short history, starting in the early 2000s with the launch of the first
mobile financial services.
 E5

Regulatory Challenges

- Microfinance Institutions Ordinance - 2001

- Electronic Transactions Ordinance - 2002
- Payment Systems and Electronic Fund Transfers Act, 2007
- SBP - Regulatory Framework For Mobile Banking - 2007
- SBP - Branchless Banking Guidelines - 2008
- Regulations for Mobile Banking Interoperability 2007.
 E5

Regulatory infrastructure

- National Financial Inclusion Strategy (NFIS) Pakistan - 2015

- Regulations for Mobile Banking Interoperability 2016 (amendment to 2007 act)

- National Payment Systems Strategy - 2019.
- Regulations for Electronic Money Institution (EMI) - 2019 (revised on 2023)
- RAAST launch - 2021
- Customers’ Digital Onboarding Framework - 2021 (with Dec 2022 deadline)
- Roshan Digital Account (RDA) - 2021
- Pakistan Remittance Initiative (PRI) - 2021
- Licensing and Regulatory Framework for Digital Banks - 2022
- SBP Vision 2023 - Strategic Plan
 E5

What is National Financial Inclusion Strategy

- In General
 E5

National Financial Inclusion Strategy (NFIS)

NFIS is a comprehensive framework aimed at promoting financial inclusion and expanding access to
financial services for all segments of the population.

It's part of the broader global initiative to ensure that individuals and businesses have access to
affordable and appropriate financial products and services..
Key Aspects:

Government Initiatives: Involves initiatives led by the government, regulatory authorities, and
financial institutions.

Digital Financial Services: leveraging digital technologies to enhance financial inclusion. This
includes promoting mobile banking, digital payments, and other technology-driven financial services.
 E5

National Financial Inclusion Strategy (NFIS)

Credit Access: Facilitating access to credit for small and medium-sized enterprises (SMEs) and
individuals is often a priority, fostering entrepreneurship and economic development.

Financial Literacy and Education: Financial education programs are often part of the strategy to
enhance the understanding of financial products and services among the population.

Regulatory Framework: The regulatory framework is likely to be adapted to accommodate

innovations in financial services while ensuring stability and consumer protection.
 E5

National Financial Inclusion Strategy (NFIS)

Access to Banking Services: The strategy aims to improve access to basic banking services, such as
savings accounts and payment services, especially in rural and underserved areas.

Collaboration: Collaboration among various stakeholders, including government agencies, financial

institutions, and technology providers, is a common feature to achieve the goals of the NFIS.

Monitoring and Evaluation: There's usually a focus on establishing mechanisms for monitoring and
evaluating the progress of financial inclusion initiatives, ensuring that the strategy's objectives are being met.
 E5

National Financial Inclusions Strategy (NFIS)

SBP through World Bank’s Financial Inclusion Support Framework (FISF) program, prepared
a strategy for the Pakistan’s NPS which would support both the NFIS and the financial
stability of the country.
The objectives of this National Payments System Strategy are to make recommendations to
design a National Payments System complying with international standards and best
practices, and tailored for the specific circumstances and needs for a safe, efficient and
inclusive National Payment Systems in Pakistan.
 E5

The World Bank has estimated Pakistan’s digital finance

potential at $36 Billion resulting in 7% increase in the
GDP and creating around 4 Million Jobs
 E5

Challenges
for FinTech in
Pakistan
 E5

What Problems exist in the DFS space in Pakistan?

• Inadequate digital ecosystem and processes to drive digital payments adoption

• Difficulty to integrate with existing financial and non-financial systems.
• High cost of digital transactions (not suitable when you want bottom of pyramid inclusion)
• End user experience, limiting convenience vs cash (consumers, merchants, etc.)
• No full sector wide interoperability.
 E5

Government Initiatives
 E5

Regulatory infrastructure

- National Financial Inclusion Strategy (NFIS) Pakistan - 2015

- Regulations for Mobile Banking Interoperability 2016 (amendment to 2007 act)

- National Payment Systems Strategy - 2019.
- Regulations for Electronic Money Institution (EMI) - 2019 (revised on 2023)
- RAAST launch - 2021
- Customers’ Digital Onboarding Framework - 2021 (with Dec 2022 deadline)
- Roshan Digital Account (RDA) - 2021
- Pakistan Remittance Initiative (PRI) - 2021
- Licensing and Regulatory Framework for Digital Banks - 2022
- SBP Vision 2023 - Strategic Plan
E5
 E5

National Financial Inclusion Strategy (NFIS) Pakistan 2015:

https://www.sbp.org.pk/ACMFD/National-Financial-Inclusion-Strategy-Pakistan.pdf
https://www.finance.gov.pk/NFIS.pdf

In order to address the challenges of low level of financial inclusion, Pakistan has developed a
broader National Financial Inclusion Strategy (NFIS) in collaboration with stakeholders. The
strategy was formally launched and adopted by Government of Pakistan in May 2015.

The objective of the Strategy is to set national vision for achieving universal financial inclusion in
Pakistan. The NFIS lays out the vision, framework, action plan, and target outcomes for financial
inclusion. The strategy aims to enhance formal financial access to 50 percent of the adult
population by 2020.
 E5

National Financial Inclusion Strategy (NFIS) Pakistan 2015:

https://www.sbp.org.pk/ACMFD/National-Financial-Inclusion-Strategy-Pakistan.pdf
https://www.finance.gov.pk/NFIS.pdf

1. Introduction:
• Financial inclusion: Access to and use of affordable and appropriate financial products and services by
all segments of the population, especially those who are currently excluded.

• Challenges: Low financial literacy, lack of access to formal financial services, high cost of financial
services, cultural and religious barriers to financial inclusion.
• Opportunities: Growing mobile phone penetration, increasing demand for financial services,
government commitment to financial inclusion.
 E5

National Financial Inclusion Strategy (NFIS) Pakistan 2015:

https://www.sbp.org.pk/ACMFD/National-Financial-Inclusion-Strategy-Pakistan.pdf
https://www.finance.gov.pk/NFIS.pdf

2.Vision and Goals

• Vision: A financially inclusive society where all individuals and businesses have access to and use of
affordable and appropriate financial products and services.

• Goals:
• Increase the number of financially included individuals from 51% to 80% by 2020.
• Increase the number of financially included MSMEs from 20% to 50% by 2020.
• Reduce the gender gap in financial inclusion from 20% to 10% by 2020.
 E5

National Financial Inclusion Strategy (NFIS) Pakistan 2015:

https://www.sbp.org.pk/ACMFD/National-Financial-Inclusion-Strategy-Pakistan.pdf
https://www.finance.gov.pk/NFIS.pdf

3. Pillars of Financial Inclusion

• Access to financial services: Expanding the reach of the formal financial sector through branchless
banking, mobile banking, and other innovative delivery channels.

• Usage of financial services: Promoting the use of financial services for savings, payments, insurance, and
other purposes.
• Financial literacy: Providing financial education and awareness programs to enhance financial literacy
among the population.
• Consumer protection: Establishing strong consumer protection measures to safeguard the interests of
financial consumers.
• Enabling environment: Creating an enabling environment for financial inclusion through supportive
policies, regulations, and infrastructure.
 E5

National Financial Inclusion Strategy (NFIS) Pakistan 2015:

https://www.sbp.org.pk/ACMFD/National-Financial-Inclusion-Strategy-Pakistan.pdf
https://www.finance.gov.pk/NFIS.pdf

4. Strategies for Financial Inclusion

• Expanding the reach of formal financial services:
• Promoting branchless banking and mobile banking.
• Leveraging agent banking networks to reach underserved areas.
• Utilizing digital technologies to provide financial services.
• Developing innovative financial products and services:
• Designing financial products tailored to the needs of low-income individuals and MSMEs.
• Promoting Shariah-compliant financial products and services.
• Developing micro-insurance products to protect against financial shocks.
• Promoting financial literacy and consumer protection:
• Implementing financial literacy programs in schools, communities, and workplaces.
• Raising awareness about consumer rights and protections.
• Establishing strong consumer protection institutions and frameworks.
• Strengthening the enabling environment for financial inclusion:
• Developing a supportive regulatory framework for financial inclusion.
• Investing in financial infrastructure, such as payment systems and credit bureaus.
• Promoting financial inclusion through public-private partnerships.
 E5

National Financial Inclusion Strategy (NFIS) Pakistan 2015:

https://www.sbp.org.pk/ACMFD/National-Financial-Inclusion-Strategy-Pakistan.pdf
https://www.finance.gov.pk/NFIS.pdf

5. Monitoring and Evaluation

• Establishing a framework for monitoring and evaluating progress towards achieving NFIS goals:
• Setting clear and measurable targets for financial inclusion.
• Collecting and analyzing data on financial inclusion indicators.
• Conducting periodic reviews of progress towards achieving NFIS goals.
• Key indicators for monitoring financial inclusion:
• % of adults with access & using formal financial services for savings, payments, and other purposes.
• % of MSMEs with access to formal financial services.
• Gender gap in financial inclusion.
The successful implementation of the NFIS will require a concerted effort from all stakeholders, including the
government, the private sector, and civil society. The government should provide leadership and coordination, the
private sector should develop innovative financial products and services, and civil society should promote
financial literacy and consumer protection.
 E5

Regulatory infrastructure

- National Financial Inclusion Strategy (NFIS) Pakistan - 2015

- Regulations for Mobile Banking Interoperability 2016 (amendment to 2007 act)

- National Payment Systems Strategy - 2019.
- Regulations for Electronic Money Institution (EMI) - 2019 (revised on 2023)
- RAAST launch - 2021
- Customers’ Digital Onboarding Framework - 2021 (with Dec 2022 deadline)
- Roshan Digital Account (RDA) - 2021
- Pakistan Remittance Initiative (PRI) - 2021
- Licensing and Regulatory Framework for Digital Banks - 2022
- SBP Vision 2023 - Strategic Plan
 E5

Regulations for Mobile Banking Interoperability 2016 - Objective

Creating an enabling regulatory environment: aimed to establish a conducive framework

for mobile banking interoperability, promoting a seamless and unified experience for
customers across different banks & mobile network operators.

Bringing systemic harmony: By standardizing and regulating mobile banking practices, the
regulations sought to foster consistency and compatibility within the branchless banking
ecosystem.

Introducing standardization and setting benchmarks: The regulations established clear

standards and guidelines for mobile banking interoperability, ensuring a level playing field for
all participants and promoting efficient and secure transactions.
 E5

Regulations for Mobile Banking Interoperability 2016 - Objective

Maximizing outreach and connectivity: The Third Party Service Provider (TPSP) model,
introduced by the regulations, aimed to expand the reach of mobile banking services by
enabling all banks and mobile network operators to serve each other's customers.

Facilitating branchless banking services: The regulations were designed to facilitate the
growth and adoption of branchless banking services, particularly the Asaan Mobile Account
(AMA) scheme, by promoting interoperability and collaboration among financial institutions,
telecom operators, and technology service providers.

In essence, the SBP's Mobile Banking Interoperability Regulations of 2016 aimed to create a
more inclusive, efficient, and secure mobile banking landscape in Pakistan.
 E5

Regulatory infrastructure

- National Financial Inclusion Strategy (NFIS) Pakistan - 2015

- Regulations for Mobile Banking Interoperability 2016 (amendment to 2007 act)

- National Payment Systems Strategy - 2019.
- Regulations for Electronic Money Institution (EMI) - 2019 (revised on 2023)
- RAAST launch - 2021
- Customers’ Digital Onboarding Framework - 2021 (with Dec 2022 deadline)
- Roshan Digital Account (RDA) - 2021
- Pakistan Remittance Initiative (PRI) - 2021
- Licensing and Regulatory Framework for Digital Banks - 2022
- SBP Vision 2023 - Strategic Plan
 National Payment Systems Strategy (NPSS)
E5
On 1st November, 2019 Governor State Bank of Pakistan Dr. Reza Baqir launched the National Payment Systems Strategy.

The National Payment Systems Strategy (NPSS) was launched in 2019. It gives a roadmap and
recommendations to design a digital National Payments System that complies with international standards and
best practices related to safety, efficiency and inclusiveness
 E5

Pakistani Market Analysis

With a population of more than 220 million people, Pakistan is one of the largest unbanked
countries in the world with only 30% of all adults being financially included
In recent years, teledensity in Pakistan has increased many fold. It is estimated that
presently, the country has 183 million cellular subscribers, 99 million 3G/4G subscribers,
and 101 million broadband subscribers.
Appreciating this changed scenario, the government, and the regulators also stepped-up
their efforts to enhance financial inclusion in the country by creating an enabling regulatory
environment for digital echo-system.
These efforts were spearheaded by Pakistan’s corporate regulator, the Securities and
Exchange Commission of Pakistan (“SECP”), and its central bank, the State Bank of Pakistan
(“SBP”).
E5
 E5

Regulatory infrastructure

- National Financial Inclusion Strategy (NFIS) Pakistan - 2015

- Regulations for Mobile Banking Interoperability 2016 (amendment to 2007 act)

- National Payment Systems Strategy - 2019.
- Regulations for Electronic Money Institution (EMI) - 2019 (revised on 2023)
- RAAST launch - 2021
- Customers’ Digital Onboarding Framework - 2021 (with Dec 2022 deadline)
- Roshan Digital Account (RDA) - 2021
- Pakistan Remittance Initiative (PRI) - 2021
- Licensing and Regulatory Framework for Digital Banks - 2022
- SBP Vision 2023 - Strategic Plan
 E5

Regulations for Electronic Money Institutions, 2019

Application Process and Requirements:
• To obtain an EMI license, applicants must submit a comprehensive application to the SBP,
demonstrating their financial resources, technical capabilities, and adherence to the regulations.

• Applicants must establish a robust risk management framework, ensuring compliance with
anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.

• EMIs must maintain adequate capital levels and liquidity to meet their operational needs and
protect their customers' funds.
 E5

Regulations for Electronic Money Institutions, 2019

Operational Requirements:
• EMIs must issue e-money payment instruments that are interoperable with other EMIs and banks,
enabling seamless transactions across different platforms.
• EMIs must implement robust security measures to safeguard customer information and
transactions, including encryption, access controls, and data integrity protections.
• EMIs must maintain clear and transparent customer onboarding and transaction processes,
providing customers with adequate information and protection.
• EMIs must establish effective grievance redressal mechanisms to handle customer complaints
promptly and fairly.
 E5

Regulations for Electronic Money Institutions, 2019

Supervision and Regulatory Oversight:
• The SBP maintains ongoing supervision of EMIs, conducting regular inspections and audits to
ensure compliance with the regulations.
• The SBP has the authority to impose penalties, suspend, or revoke EMI licenses if found to be in
violation of the regulations.
• EMIs must submit regular financial and operational reports to the SBP, providing transparent
information on their activities and performance.
In summary, the SBP EMI license regulations aim to foster a responsible and secure environment for
EMIs to operate, promoting financial inclusion, innovation, and consumer protection in the digital
payments landscape of Pakistan.
 E5

EMI (Electronic Money Institutions) in Pakistan

https://www.sbp.org.pk/ps/PDF/List-of-EMIs.pdf

1. M/s NayaPay Pvt. Ltd. (August, 2021 - Live) One wallet for all your everyday payments. Send
- E-money wallet for Consumers money, pay bills, chat with friends and shop
- E-money wallet for Merchants worldwide with a free Visa debit card

2. M/s Finja Pvt. Ltd. (September, 2021 Live) https://finja.pk/

- E-money wallet for Consumers
- E-money wallet for Merchants

3. M/s CMPECC Ltd (March, 2022 Live) CMPak’s PayMax Withdraws EMI License for Closure
- E-money wallet for Consumers of Business (Oct 2023)
- E-money wallet for Merchants

4. M/s SadaTech Pakistan Pvt. Ltd. (April, 2022 Live) Sign up today to get your Mastercard debit card and
- E-money wallet for Consumers digital wallet. Easily request funds, top up mobile
- E-money wallet for Freelancers balance, manage remittances and more through our
easy-to-use app!
 E5

Regulatory infrastructure

- National Financial Inclusion Strategy (NFIS) Pakistan - 2015

- Regulations for Mobile Banking Interoperability 2016 (amendment to 2007 act)

- National Payment Systems Strategy - 2019.
- Regulations for Electronic Money Institution (EMI) - 2019 (revised on 2023)
- RAAST launch - 2021
- Customers’ Digital Onboarding Framework - 2021 (with Dec 2022 deadline)
- Roshan Digital Account (RDA) - 2021
- Pakistan Remittance Initiative (PRI) - 2021
- Licensing and Regulatory Framework for Digital Banks - 2022
- SBP Vision 2023 - Strategic Plan
 E5

Lessons learned from other countries

Looking at the experiences of other countries can provide valuable lessons for the development of the
fintech industry in Pakistan.
For example, in countries such as Kenya and India, mobile money services have been successful in
promoting financial inclusion among the unbanked population.
In Kenya, M-Pesa, a mobile money platform, has been widely adopted and has significantly increased
financial inclusion by allowing people to send and receive money through their mobile phones .
Similarly, in India, the government's push for digital payments and the adoption of the Unified
Payments Interface (UPI) have led to a significant increase in digital payments and financial
inclusion. The UPI has enabled individuals to transfer money instantly from one bank account to
another, and has made it easier for people to access digital financial services.
E5
 E5

RAAST
Raast is an instant payment system developed by the SBP.

It operates using the state-of-the-art Pakistan Faster Payment System (PFPS), facilitating real-time settlement of
small-value retail payments, including inter-bank peer-to-peer (P2P) and person-to-merchant (P2M) transactions.

It also enables digital payments between banks, businesses, and individuals, offering a free, fast, and reliable
person-to-person (P2P) service within Pakistan.

Users can conveniently send or receive money using Raast IDs, which are linked to their mobile numbers and
bank accounts, making the process seamless and cost-free.

- Raast began its development in 2018.

- Bulk/Batch payments (e.g., dividend disbursements from CDC) went live in Jan 2021.

- Raast P2P was launched in Feb 2022 to enable free person-to-person digital transactions
E5
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 E5

What to Expect from RAAST

1. Real time transfers:

- Instant availability of funds and near real time settlement of low value payments
2. Sector wide interoperability and open governance:
- Connectivity across all licensed & other entities (Banks, MFBs, PSPs, relevant government entities)
removing need for bi-lateral tie ups
3. Simple, account-agnostic payment forms:
- Alias-based (e.g. phone number) simple payments, standardized across the industry
 E5

What to Expect from RAAST

4. Drive new product introductions and innovation:
New message standard, request to pay, sector wide bulk payments) supported by a dedicated testing
environment

5. Easy and cost effective participant on-boarding:

API architecture allowing quick and efficient on-boarding mechanisms and integration requirements

6. Low to no transaction cost for end-users:

Cost recovery model, maximising benefit to end-users and participants

7. Built in security and authentication:

Robust end-user data verification and security
E5
 E5

If all goes to Plan then what happens?

 E5

Regulatory Infrastructure
- National Financial Inclusion Strategy (NFIS) Pakistan - 2015

- Regulations for Mobile Banking Interoperability 2016 (amendment to 2007 act)

- National Payment Systems Strategy - 2019.
- Regulations for Electronic Money Institution (EMI) - 2019 (revised on 2023)
- RAAST launch - 2021
- Customers’ Digital Onboarding Framework - 2021 (with Dec 2022 deadline)
- Roshan Digital Account (RDA) - 2021
- Pakistan Remittance Initiative (PRI) - 2021
- Licensing and Regulatory Framework for Digital Banks - 2022
- SBP Vision 2023 - Strategic Plan
E5
 E5

Digital Onboarding

In 2018, the State Bank of Pakistan (SBP) introduced the Digital

Onboarding System (DOS) to allow customers to open bank accounts
remotely using their smartphones.
 E5

Digital Onboarding

In 2018, the State Bank of Pakistan (SBP) introduced the Digital

Onboarding System (DOS) to allow customers to open bank accounts
remotely using their smartphones.
E5
 E5

Regulatory infrastructure

- National Financial Inclusion Strategy (NFIS) Pakistan - 2015

- Regulations for Mobile Banking Interoperability 2016 (amendment to 2007 act)

- National Payment Systems Strategy - 2019.
- Regulations for Electronic Money Institution (EMI) - 2019 (revised on 2023)
- RAAST launch - 2021
- Customers’ Digital Onboarding Framework - 2021 (with Dec 2022 deadline)
- Roshan Digital Account (RDA) - 2021
- Pakistan Remittance Initiative (PRI) - 2021
- Licensing and Regulatory Framework for Digital Banks - 2022
- SBP Vision 2023 - Strategic Plan
 E5

Roshan Digital Account (RDA)

SBP Initiative for Digital Onboarding of Overseas Pakistanis

RDA is a major initiative of SBP, in collaboration with commercial banks

These accounts provide innovative banking solutions for millions of Non Resident Pakistanis (NRPs), including
Non-Resident Pakistan Origin Card (POC) holders,

seeking to undertake banking, payment and investment activities in Pakistan.

https://www.sbp.org.pk/rda/index.html
 E5

Pakistan Remittance Initiative (PRI) - 2009

• PRI is a joint initiative of the SBP , the Ministry of Overseas Pakistanis, and the Ministry of Finance.
• Its aim is to make remittances into Pakistan faster, cheaper, and more convenient.
• The PRI has been instrumental in increasing remittances to Pakistan, which have become a vital
source of foreign exchange and economic growth for the country.

Key Objectives of the PRI:

1. Facilitate and support the efficient flow of workers' remittances: The PRI aims to streamline the
remittance process, reduce transaction costs, and make it easier for overseas Pakistanis to send money
home.
 E5

Pakistan Remittance Initiative (PRI) - 2009

2. Cater to the financial services needs of overseas Pakistanis and their families back home: The PRI
promotes financial inclusion by providing access to financial services for overseas Pakistanis and their
families, including remittance accounts, savings products, and insurance solutions.

3. Create investment opportunities in Pakistan for overseas Pakistanis: The PRI encourages overseas
Pakistanis to invest in Pakistan by providing information about investment opportunities and facilitating
the process of investing in the country.
 E5

Pakistan Remittance Initiative (PRI) - 2009

Key Achievements of the PRI:

Significant increase in remittances: Remittances to Pakistan have increased significantly since the launch of
the PRI, from US$ 6.4 billion in FY 2007-08 to US$ 31.5 billion in FY 2021-22.

Reduction in transaction costs: Transaction costs for remittances have been reduced, making it more
affordable for overseas Pakistanis to send money home.

Expansion of remittance channels: has facilitated the expansion of remittance channels, including mobile
banking and online remittances, making it more convenient for overseas Pakistanis to send money home.

Increased financial inclusion: has contributed to increased financial inclusion for overseas Pakistanis & their
families back home, providing them with access to financial services that they may not have had before.
 E5

Pakistan Remittance Initiative (PRI) - 2009

Key Achievements of the PRI:

The PRI has played a significant role in promoting economic growth and development in Pakistan.
Remittances from overseas Pakistanis have become a major source of foreign exchange and have helped
to finance infrastructure projects, poverty reduction programs, and other initiatives that have improved
the lives of millions of Pakistanis.
 E5

Regulatory infrastructure

- National Financial Inclusion Strategy (NFIS) Pakistan - 2015

- Regulations for Mobile Banking Interoperability 2016 (amendment to 2007 act)

- National Payment Systems Strategy - 2019.
- Regulations for Electronic Money Institution (EMI) - 2019 (revised on 2023)
- RAAST launch - 2021
- Customers’ Digital Onboarding Framework - 2021 (with Dec 2022 deadline)
- Roshan Digital Account (RDA) - 2021
- Pakistan Remittance Initiative (PRI) - 2021
- Licensing and Regulatory Framework for Digital Banks - 2022
- SBP Vision 2023 - Strategic Plan
E5
 E5

Digital Bank - License (SBP)

State Bank of Pakistan (SBP) has launched licensing and regulatory framework for setting up
digital banks in Pakistan as a separate and distinct category in the banking business.
Digital bank is defined as a bank which offers all kinds of financial products and services
primarily through digital platforms or electronic channels instead of physical branches.
 E5

Digital Bank - License (SBP)

 E5

Digital Bank - Licensing Stage

 E5

Digital Bank - Licensing Stage

 E5

Digital Bank – Licenses Type

Under this framework, SBP may grant two types of digital bank licenses:

1) Digital Retail Bank (DRB); and,

2) Digital Full Bank (DFB).

DRBs will primarily focus on retail customers and DFBs can deal with retail customers as well as
business and corporate entities. Minimum capital requirement for DRBs is set at PKR 1.5 billion during
the pilot phase that will gradually increase to PKR 4 billion over a transition period of three years.
 E5

Digital Bank – Licenses Type

Subsequent to completion of transition phase, DRBs may graduate to receive license of a DFB subject to
fulfillment of applicable minimum capital requirement and completion of a two-years progression phase.

This framework is primarily designed for setting-up of a new digital bank. However, based on a viable
business case and satisfactory Digital Financial Services (DFS) experience, traditional banks/Microfinance
Banks (MFBs) may request SBP for conversion of their institution into a digital bank.

Applications will be accepted until March 31, 2022.

SBP has decided to initially limit the number of digital banks’ license up to five (05).
 E5

Digital Bank - Sponsors

The following will be eligible to form and seek a license for a proposed digital bank:

• A traditional bank having minimum one-year experience of delivering Digital Financial Services
(DFS) in the retail customer segments, may apply either individually or with other equity
participants. However, SBP may advise an extended period of experience if the traditional bank’s
performance is not considered satisfactory by SBP.

• An Electronic Money Institution (EMI) seeking conversion into a digital bank having minimum
one-year experience of delivering DFS in the retail customer segments. However, SBP may advise
an extended period of experience if the EMI’s performance is not considered satisfactory by SBP.
Further, pilot phase operation period of an EMI may be counted towards one year operations
requirement for an EMI seeking to transform into a digital bank.
 E5

Digital Bank - Sponsors

• An international bank or international DFS entity having a successful track record of a minimum of three
years of delivering DFS in the retail customer segments, may apply either individually or with other
equity participants.

• Those holding majority stake in or exercising control over a MFB, EMI, international bank or
international DFS entity having a successful track record of a minimum of three years of delivering DFS
in the retail customer segments, may apply either individually or with other equity participants.

• Any other person having a minimum of three years of experience in the financial services, financial
technology, telecommunication, merchant aggregation technology platforms, Information
Communication Technology (ICT), or other pertinent digital or innovative financial and non-financial
domains, when applying to form a digital bank with a minimum of 5% equity in the proposed digital bank,
either individually or preferably with at least one of the individuals or entities, as the case may be, listed
in sub-clause (a), (b) and (d) being a minimum 5% equity participant in the proposed digital bank.
E5
 E5

Regulatory infrastructure

- National Financial Inclusion Strategy (NFIS) Pakistan - 2015

- Regulations for Mobile Banking Interoperability 2016 (amendment to 2007 act)

- National Payment Systems Strategy - 2019.
- Regulations for Electronic Money Institution (EMI) - 2019 (revised on 2023)
- RAAST launch - 2021
- Customers’ Digital Onboarding Framework - 2021 (with Dec 2022 deadline)
- Roshan Digital Account (RDA) - 2021
- Pakistan Remittance Initiative (PRI) - 2021
- Licensing and Regulatory Framework for Digital Banks - 2022
- SBP Vision 2023 - Strategic Plan
 E5

Karandaaz Financial Inclusion Survey

The Karandaaz Financial Inclusion Survey (K-FIS) responds to the need identified by multiple
stakeholders for timely demand-side data and practical insights into the state of financial inclusion in
Pakistan, including traditional banking, mobile money, and the potential for their expanded use among
the poor. The aim is to:

● Track access to and demand for financial services, with special emphasis on digital financial
services (DFS);
● Measure adoption and use of financial services among key underserved groups (females, youth,
poor, rural, and the financially excluded);
● Identify drivers and barriers to adoption of financial services and DFS; and
● Produce actionable, forward-looking insights based on rigorous data to support product and
service development and delivery.

https://karandaazmain.wpenginepowered.com/wp-content/uploads/2023/02/Karandaaz-Financial-Inclusion-Survey-2.pdf
 E5

Lessons learned from other countries

Another example is China, where fintech has had a significant impact on the financial sector. The
success of companies such as Alibaba's Ant Group and Tencent's WeChat Pay has led to a significant
increase in the adoption of digital payments and online lending.
Pakistan can benefit from the lessons learned in other countries by creating a fintech landscape that
supports innovation while managing the potential risks associated with rapid growth.
Collaboration between government, regulators, and fintech companies is crucial to ensure that the
regulatory environment evolves alongside the industry.
Additionally, the promotion of digital literacy and the expansion of financial services in remote areas
can help increase access to fintech products and services, resulting in broader financial inclusion. This
approach will require targeted educational initiatives, as well as investments in digital infrastructure, to
ensure that individuals can take full advantage of the opportunities provided by fintech.
 E5

https://www.sbp.org.pk/SBPVision/Index.html
E5
E5
 E5

Government Initiatives and Regulatory Framework

https://www.sbp.org.pk/spd/Strategic.pdf

The State Bank of Pakistan (SBP) in Nov 2023 launched its fourth five-year strategic plan titled
“SBP Vision 2028”, aimed at ensuring financial stability and sustainable economic growth
through navigating new challenges and capitalising on opportunities including climate change,
rapid digital innovations, disruptions and cyber security threats.

The strategic plan covering the period 2023-28 revolves around six goals.
These include:
E5
 E5

Government Initiatives and Regulatory Framework

In his message in the comprehensive plan, SBP Governor Jameel Ahmed said the central bank’s
first and foremost focus under the vision would be on achieving and maintaining price stability.

“This entails bringing down and maintaining inflation within its medium-term target range of 5% to
7%, which we believe is essential to achieve sustainable economic growth, alleviate poverty and
enhance economic wellbeing of our people.”

A strong and resilient financial system is pivotal for macroeconomic stability and sustainable
economic growth, “thus ensuring the financial system stability remains a key priority area of the
SBP Vision 2028.”
 E5

Government Initiatives and Regulatory Framework

These strategic goals are built to cover five cross-cutting themes

● Strategic communication,
● Climate change,
● Technological innovation,
● Diversity and inclusion,
● Productivity and competitiveness.

In his message in the comprehensive plan, SBP Governor Jameel Ahmed said the central bank’s
first and foremost focus under the vision would be on achieving and maintaining price stability.
 E5

Government Initiatives and Regulatory Framework

https://tribune.com.pk/story/2446897/sbp-unveils-fourth-strategic-plan

The plan says the domestic banking system has shown great resilience against several shocks in
the past. “However, the shocks are getting increasingly complex, with climate change, technological
advancements, cyber security threats, and financial innovations adding new dimensions in the risks
to financial stability.”

The vision envisages enhancing the banks’ capacity to better manage all such shocks. It calls for
enhancing the bank accounts coverage to 75% of adult population, and increasing the depth,
breadth and quality of financial services, particularly for the low-income clientele, SMEs (small and
medium enterprises) and farmers.

“The microfinance sector has contributed significantly in expanding the outreach of financial services
to the low-income segment,” it said.

During the last 10 years, the bank accounts coverage reached over 50% of adult population. The
improvement in financial inclusion will remain a key strategic goal during the next five years as well.
 E6

E6. FINTECH INNOVATION

The Future of Payment Technologies

By : Umair Munaf Moon

 E6

FINTECH INNOVATIONS

1. PayTech
2. CryptoFinance
3. CreditTech
4. InvestTech

By : Umair Munaf Moon

 E6

FINTECH INNOVATIONS

1. PayTech
• Current practices in payment & capital transfer
• Front-end innovations e.g. digital wallets and payment ecosystem
• System-wide innovations

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech

A. Solution that do not rely on decentralizations

1. Current practices in payment & capital transfer, Front-end innovations
a. Digital wallets
b. Payment ecosystem
c. Credit Card Processing Innovations
2. New Integrated System Developed Completely from Scratch
a. M-Pesa,
b. Unified Payment Interface UPI i.e. RAAST
B. Decentralized Solutions
1. Blockchain & Cryptocurrencies
2. Smart Contracts & Radical marketplaces

By : Umair Munaf Moon

 E6

INTRODUCTION TO FINTECH
Innovations in the Payment Sector

By : Umair Munaf Moon

 E6

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1. Current practices in payment & capital transfer, Front-end innovations

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1. Current practices in payment & capital transfer, Front-end innovations

THE CHECKING SYSTEM AND THE IMPORTANCE OF

FINANCIAL INTERMEDIATION

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1. Current practices in payment & capital transfer, Front-end innovations

CHECKING SYSTEM

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1. Current practices in payment & capital transfer, Front-end innovations
Importance of Financial Intermediaries

- Economic Growth Required transactions between Untrusted Parties

- This results in adverse selection that could lead to Market collapse

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1. Current practices in payment & capital transfer, Front-end innovations

Importance of Financial Intermediaries

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech CHECKING SYSTEM

1. Current practices in payment & capital transfer, Front-end innovations

CHECKING SYSTEM

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1. Current practices in payment & capital transfer, Front-end innovations

NATIONAL INSTITUTIONAL FACILITATION TECHNOLOGIES is the only Automated Cheque Clearing House
and the prominent Payment System Operator in Pakistan for Cheque Clearing and Digital Payment Gateway.

The Automated Clearing House (ACH) commenced operation in 1997 from Karachi and gradually spread its
network to 27 centers in major cities of Pakistan and Azad Kashmir, hence serving over 13,400 banks-branches of
42 Commercial / Microfinance Banks and National Saving Centers (CDNS) in over 530 cities and towns

NIFT is responsible for the efficient and safe operation of Automated Cheque Clearing System and to offer
Payment Gateway services which bring efficiency and convenience in the digital operations of our customers.

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.1. Digital Wallets

Example of UI (User interface) innovation

Raast is Pakistan's first instant payment system that will

enable end-to-end digital payments among individuals,
businesses and government entities instantaneously.

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.1. Digital Wallets
Pure Digital Wallet - PayPal

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.1. Digital Wallets
Pure Digital Wallet - PayPal

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.1. Digital Wallets
Pure Digital Wallet - PayPal

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.1. Digital Wallets
Pure Digital Wallet - PayPal

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.1. Digital Wallets

The Business Model of Digital Wallets

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.1. Digital Wallets

The Business Model of Digital Wallets

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech

FROM PURE WALLET TO

PAYMENT ECOSYSTEM

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.2. Payment Ecosystem

Building a PayTech Ecosystem

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.2. Payment Ecosystem

Building a PayTech Ecosystem - Ali Pay’s Innovation # 1

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.2. Payment Ecosystem

Building a PayTech Ecosystem - Ali Pay’s Innovation # 1

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.2. Payment Ecosystem

Building a PayTech Ecosystem - Ali Pay’s Innovation # 1

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.2. Payment Ecosystem

Building a PayTech Ecosystem - Ali Pay’s Innovation # 1

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.2. Payment Ecosystem

Building a PayTech Ecosystem - Ali Pay’s Innovation # 2 - Offline Users

By : Umair Munaf Moon

 E6

By : Umair Munaf Moon

 E6

SOCIAL-NETWORK-BASED PAYMENT INNOVATIONS

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
SOCIAL-NETWORK-BASED
1.2. Payment Ecosystem PAYMENT INNOVATIONS
PayTech & Social Network

By : Umair Munaf Moon

 E6

By : Umair Munaf Moon

 E6

By : Umair Munaf Moon

 E6

By : Umair Munaf Moon

 E6

ORIGIN OF CREDIT CARD NETWORK

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.3 Credit Card Processing Innovation

Origin of Credit Card Network

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.3 Credit Card Processing Innovation

Origin of Credit Card Network

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.3 Credit Card Processing Innovation

Origin of Credit Card Network

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.3 Credit Card Processing Innovation

Origin of Credit Card Network

By : Umair Munaf Moon

 E6

CREDIT CARD NETWORK :

KEY STAKEHOLDERS & BUSINESS MODELS

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.3 Credit Card Processing Innovation

Key Stakeholders in Credit Card Transaction

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.3 Credit Card Processing Innovation

Key Stakeholders in Credit Card Transaction

By : Umair Munaf Moon

 E6

By : Umair Munaf Moon

 E6

By : Umair Munaf Moon

 E6

By : Umair Munaf Moon

 E6

By : Umair Munaf Moon

 E6

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.3 Credit Card Processing Innovation

Business Model : Roles & Fees

By : Umair Munaf Moon

 E6

By : Umair Munaf Moon

 E6

By : Umair Munaf Moon

 E6

By : Umair Munaf Moon

 E6

THE CREDIT CARD NETWORK:

ADVANTAGES & INEFFICIENCIES

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.3 Credit Card Processing Innovation

Advantages and Inefficiencies

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.3 Credit Card Processing Innovation

Advantages and Inefficiencies

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.3 Credit Card Processing Innovation

Advantages and Inefficiencies

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.3 Credit Card Processing Innovation

Advantages and Inefficiencies

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.3 Credit Card Processing Innovation

Advantages and Inefficiencies

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.3 Credit Card Processing Innovation

Advantages and Inefficiencies

By : Umair Munaf Moon

 E6

INNOVATIONS THAT MAKE CREDIT

CARD TRANSACTION MORE SECURE

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.3 Credit Card Processing Innovation

Securing Credit Card Transaction

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

1. PayTech
1.3 Credit Card Processing Innovation

Securing Credit Card Transaction

By : Umair Munaf Moon

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1. PayTech
1.3 Credit Card Processing Innovation

Securing Credit Card Transaction

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1. PayTech
1.3 Credit Card Processing Innovation

Securing Credit Card Transaction

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INNOVATIONS THAT EXPAND CREDIT

CARDS’ CUSTOMER BASE

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M-PESA:
PayTech in Developing Markets

By : Umair Munaf Moon

FINTECH INNOVATIONS - PayTech E6

1. PayTech
- New Integrated System Developed Completely from Scratch

M-PESA (M for mobile, PESA for money in Swahili)

- is a mobile phone-based money transfer, payment, and micro-financing service

launched in Kenya in 2007 by Safaricom, the country's largest mobile network
operator.

- It has since become one of the world's most successful and widely used mobile
money services, transforming the financial landscape in Kenya and beyond.

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M- Pesa - Origins:

• Target audience: Initially designed to serve unbanked or underbanked residents of Kenya,

where access to traditional banking services was limited.
• Initial concept: To facilitate convenient and secure microfinance loan repayment for borrowers
using Safaricom's network of airtime resellers.
• Evolution: M-PESA quickly evolved beyond microfinance to offer a broader range of services,
including money transfer, bill payments, and merchant payments.

By : Umair Munaf Moon

FINTECH INNOVATIONS - PayTech E6

M- Pesa - Business Model:

• Transaction fees: Charges fees for various transactions, such as sending and receiving money,
depositing and withdrawing funds, and paying bills.
• Interoperability: Partnerships with other mobile money providers and financial institutions enable
wider reach and facilitate cross-network transactions.
• Widespread agent network: Established a vast network of agents (often small businesses) across
the country, enabling users to deposit and withdraw cash even in remote areas without formal banks.
• Cash-in/cash-out flexibility: The service allowed users to easily convert between digital money
and physical cash through the agent network.
• Value-added services: offers additional services like savings and loan products, insurance, and
merchant payment solutions, diversifying revenue streams.

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M- Pesa - Key Success Factors:

• Leverage of existing infrastructure: Utilized the existing mobile network infrastructure,

bypassing the need for expensive physical banking infrastructure.
• Simplicity: The service is user-friendly and requires minimal technical knowledge, making it
accessible to a broad range of users.
• Local language support: M-PESA offered menus and prompts in local languages, further enhancing
accessibility for diverse populations.
• Security: M-PESA utilizes secure mobile technology and PIN authentication, protecting users
from fraud and unauthorized access.
• Trust and brand recognition: Safaricom's reputation and established brand trust contributed
to M-PESA's widespread adoption.

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M- Pesa - Impact:

• Financial inclusion: M-PESA has significantly improved financial inclusion in Kenya, enabling
millions of people to access financial services previously unavailable to them.
• Economic growth: The service has boosted the Kenyan economy by facilitating easier and
faster transactions, stimulating entrepreneurship and investment.
• Social development: M-PESA has empowered women and rural communities, providing them
with greater control over their finances and promoting economic independence.

By : Umair Munaf Moon

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Innovations in the Blockchain Sector

2. CryptoFinance

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FINTECH INNOVATIONS

2. CryptoFinance
2.1. Introduction to distributed-ledger technology
2.2. Blockchain as an asset: market for cryptocurrencies
2.3. Blockchain as a business: existing users & launching new business ideas

By : Umair Munaf Moon

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2. Crypto Finance
2.1. Introduction to distributed-ledger technology (DLT)

DLT is a revolutionary approach to record-keeping and data management. Unlike traditional

centralized systems, where a single entity controls the ledger, DLT distributes the ledger among
multiple nodes in a network. This decentralized nature provides several advantages, including:
•

• Immutability: Once data is recorded on the ledger, it cannot be altered or deleted without
consensus among the network participants.

• Transparency: All transactions on the ledger are visible to all participants, ensuring
transparency and accountability.

• Security: The decentralized nature of DLT makes it highly resistant to hacking and manipulation.

By : Umair Munaf Moon

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2. Crypto Finance
2.2. Blockchain as an Asset: Market for Cryptocurrencies
Cryptocurrencies are digital or virtual tokens that use cryptography for security. They are built on
blockchain technology and operate independently of traditional central banks. Cryptocurrencies have
gained significant attention due to their potential for:
• Decentralization: Cryptocurrencies are not controlled by any single entity, reducing the risk of
manipulation and censorship.
• Borderless payments: Cryptocurrencies can be sent and received globally without the need for
intermediaries, reducing costs and transaction times.
• Increased security: Blockchain technology provides a high level of security for cryptocurrency
transactions.
Bitcoin, the first and most well-known cryptocurrency, has attracted significant investment and trading
activity. Other notable cryptocurrencies include Ethereum, Litecoin, and Ripple.

By : Umair Munaf Moon

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2. Crypto Finance
2.3. Blockchain as a Business: Existing Users & Launching New Business Ideas

Blockchain technology is being explored and adopted by businesses across various industries, including
finance, supply chain, and healthcare. Here are some examples of existing blockchain use cases:
• Cross-border payments: Blockchain-based payment solutions offer faster and more
cost-effective cross-border transactions, reducing friction in global commerce.

• Trade finance: Blockchain can streamline trade finance processes, reducing paperwork, enhancing
transparency, and improving efficiency.

• Supply chain management: Blockchain can track goods and products throughout the supply
chain, ensuring authenticity, provenance, and visibility.

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2. Crypto Finance
2.3. Blockchain as a Business: Existing Users & Launching New Business Ideas

New business ideas are constantly emerging in the blockchain space, such as:

• Decentralized finance (DeFi): DeFi aims to create a decentralized financial ecosystem, offering
lending, borrowing, and trading services without intermediaries.

• Non-fungible tokens (NFTs): NFTs represent unique digital assets, such as artwork,
collectibles, and virtual items, providing ownership and authenticity in the digital realm.

• Tokenized securities: Tokenized securities represent traditional financial assets, such as stocks
and bonds, on a blockchain, potentially enhancing liquidity and accessibility.
As blockchain technology matures and regulatory frameworks evolve, the potential for innovative
business models in CryptoFinance is immense.

By : Umair Munaf Moon

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Blockchain Collaboration with Fintech

FINTECH INNOVATIONS - CryptoFinance E6

Blockchain Collaboration with Fintech for Financial Solutions

Blockchain and Fintech are two powerful technologies with the potential to revolutionize
the financial landscape. When they collaborate, they can offer a range of innovative solutions
that address inefficiencies and provide new opportunities.

Here's how blockchain collaborates with other fintech innovations for comprehensive
financial solutions:
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Blockchain Collaboration with Fintech for Financial Solutions

1. Payments:
Faster and cheaper cross-border payments: Blockchain can eliminate intermediaries and
reduce transaction costs for international payments.
Instant settlements: Real-time settlements are possible with blockchain, eliminating delays
and improving cash flow.
Micropayments: Secure and scalable micropayments become feasible, enabling new business
models and use cases.
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Blockchain Collaboration with Fintech for Financial Solutions

1. Payments: - Use Case:

Cross-border remittance: A migrant worker in Singapore needs to send money home to their
family in the Philippines. Traditionally, this would involve using a money transfer service, incurring
high fees and delays.
Solution: Blockchain-based remittance platforms enable instant, low-cost cross-border payments.
The worker can use a mobile app to send funds directly to their family's digital wallet, with the
transaction securely recorded on the blockchain.
Benefits: Faster settlements, reduced costs, increased transparency, improved financial inclusion.
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Blockchain Collaboration with Fintech for Financial Solutions

1. Payments: - Example

RippleNet: is a global payment network that uses blockchain technology to facilitate faster and
cheaper cross-border payments. Several banks and financial institutions, including Santander and
MoneyGram, are using RippleNet to send and receive international payments

SBI Remit: a Japanese remittance service that uses blockchain to send money from Japan to the
Philippines.
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Blockchain Collaboration with Fintech for Financial Solutions

2.Trade Finance:
Simplified and automated trade finance processes: Blockchain can automate document
verification and streamline the trade finance process.
Enhanced transparency and traceability: All parties involved in a trade finance transaction can
track its progress in real-time.
Reduced fraud and risk: Blockchain's immutability and security features help mitigate fraud risks
associated with trade finance.
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Blockchain Collaboration with Fintech for Financial Solutions

2.Trade Finance: use cases

A small exporter in Ghana needs to ship goods to a buyer in the United States. Trade finance can
facilitate the transaction, but the process is often paper-based and riddled with delays and inefficiencies.

Solution: Blockchain-based trade finance platforms streamline the process by automating document
verification and approvals. All parties involved can track the progress of the transaction in real-time on
the blockchain, reducing risk and improving efficiency.

Benefits: Simplified trade finance process, enhanced transparency, reduced fraud and risk, improved cash
flow.
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Blockchain Collaboration with Fintech for Financial Solutions

2.Trade Finance: Example

WeTrade: is a blockchain-based platform that simplifies trade finance by automating document verification
and approvals. The platform is being used by several companies, including Deutsche Bank and Standard
Chartered Bank, to streamline their trade finance operations.

TradeLens: is a blockchain-based platform developed by Maersk and IBM to improve transparency and
efficiency in the global shipping industry. The platform is used by major shipping companies, ports, and
customs authorities to track and manage cargo shipments.
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Blockchain Collaboration with Fintech for Financial Solutions

3. Lending and Borrowing:

Peer-to-peer lending and borrowing platforms: Blockchain allows individuals and businesses
to borrow and lend directly to each other without intermediaries.
Fractional ownership of assets: Blockchain enables fractional ownership of assets, opening
up new investment opportunities.
Automated loan approvals and servicing: Smart contracts can automate the loan approval
and servicing process, reducing administrative costs.
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Blockchain Collaboration with Fintech for Financial Solutions

3. Lending and Borrowing: Use cases

A small business owner needs a loan to expand their operations but doesn't have access to
traditional bank loans.

Solution: Decentralized lending platforms enable peer-to-peer lending and borrowing,

eliminating the need for intermediaries and opening up access to capital for underserved
communities. The borrower can issue a tokenized bond on the platform, and investors can
choose to contribute funds.

Benefits: Increased access to capital, lower interest rates, more flexible loan terms, greater
control for investors.
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Blockchain Collaboration with Fintech for Financial Solutions

3. Lending and Borrowing: Example

MakerDAO: MakerDAO is a decentralized lending platform that allows users to borrow

and lend cryptocurrencies without the need for intermediaries. The platform uses Dai, a
stablecoin pegged to the US dollar, to ensure stable lending rates.

Compound Finance: Compound Finance is another decentralized lending platform that

allows users to earn interest on their cryptocurrencies by lending them out to other users.
The platform uses a unique algorithm to automatically adjust interest rates based on supply
and demand.
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Blockchain Collaboration with Fintech for Financial Solutions

4. Wealth Management:

Tokenized securities: Blockchain can tokenize traditional assets, making them more
accessible and liquid.

Decentralized asset management: Blockchain enables the creation of decentralized asset

management platforms, offering greater transparency and control for investors.

Automated investment strategies: Smart contracts can be used to implement automated

investment strategies based on predetermined rules.
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Blockchain Collaboration with Fintech for Financial Solutions

4. Wealth Management:Use Case:

An investor wants to invest in a diversified portfolio of assets but finds the traditional
investment process complex and expensive.

Solution: Blockchain-based asset management platforms offer fractional ownership of assets,

allowing investors to invest in a variety of assets with smaller amounts of capital. Smart
contracts can automate investment strategies, reducing costs and administrative overhead.

Benefits: Greater access to investment opportunities, increased diversification, lower

investment minimums, automated investment strategies.
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Blockchain Collaboration with Fintech for Financial Solutions

4. Wealth Management: Example

Securitize: is a platform that allows companies to tokenize traditional assets, such as real
estate and private equity, and sell them to investors. This makes it easier for investors to
access these types of assets and for companies to raise capital.
Polymath: is a platform that allows companies to issue and manage security tokens. Security
tokens are blockchain-based tokens that represent ownership of an asset or a right to a
future income stream.
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Blockchain Collaboration with Fintech for Financial Solutions

5. Identity and Access Management:

Self-sovereign identity: Blockchain allows individuals to control their own digital identities,
improving security and privacy.

Secure and seamless KYC/AML: Blockchain can streamline KYC/AML processes, reducing
costs and improving compliance.

Enhanced data control and privacy: Users have greater control over their personal data and
can choose what information to share with different entities.
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Blockchain Collaboration with Fintech for Financial Solutions

5. Identity and Access Management: Use Case:

A user wants to access financial services from multiple providers but needs to go through
lengthy KYC/AML procedures for each one.

Solution: Self-sovereign identity solutions allow users to control their own digital identities
and share them selectively with different entities. This eliminates the need for repeated
KYC/AML checks and simplifies the onboarding process.

Benefits: Improved privacy and security, reduced administrative burden, easier access to
financial services.
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Blockchain Collaboration with Fintech for Financial Solutions

5. Identity and Access Management: Example

Civic: Civic is a platform that allows users to create and manage their digital identities. The
platform uses blockchain technology to ensure the security and privacy of user data.

Evernym: Evernym is another platform that allows users to create and manage their digital
identities. The platform uses a self-sovereign identity approach, which gives users complete
control over their data.
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Blockchain Collaboration with Fintech for Financial Solutions

6. Regulatory Compliance:

Automated regulatory reporting: Blockchain can automate regulatory reporting processes,

reducing costs and improving compliance.

Enhanced transparency and auditability: Blockchain provides a transparent and auditable

record of transactions, making it easier for regulators to monitor and oversee financial
activities.

Reduced risk of financial crime: Blockchain's security features can help prevent financial
crime and money laundering.
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Blockchain Collaboration with Fintech for Financial Solutions

6. Regulatory Compliance: Use Case

A financial institution needs to comply with complex regulatory requirements for reporting
and auditing.

Solution: Blockchain can automate regulatory reporting processes by providing a secure

and auditable record of transactions. This can significantly reduce the cost and complexity
of compliance for financial institutions.

Benefits: Reduced compliance costs, improved transparency and auditability, mitigated risk
of regulatory fines.
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Blockchain Collaboration with Fintech for Financial Solutions

6. Regulatory Compliance: Example

Chainalysis: Chainalysis is a blockchain analysis company that helps financial institutions

comply with anti-money laundering and know-your-customer regulations. The company
provides tools and data that help financial institutions identify and track suspicious activity.

Elliptic: Elliptic is another blockchain analysis company that helps financial institutions
comply with regulatory requirements. The company provides similar tools and data to
Chainalysis.
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Innovations in the Credit Sector

3. CreditTech

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FINTECH INNOVATIONS

3. CreditTech
3.1. The evolution of credit and lending
3.2. Peer to peer lending and equity crowdfunding
3.3. Crypto based fundraising : ICO , STO, IEO
3.4. Banking as a Service

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

3. CreditTech
3.1.The Evolution of Credit and Lending

• The financial industry has witnessed a significant transformation in credit and lending practices
due to fintech innovation.
• Traditional lending models relied heavily on credit scores, financial statements, and collateral,
limiting access to credit for many individuals and businesses.
• Fintech has introduced alternative data sources, automated underwriting algorithms, and digital
lending platforms, expanding access to credit and tailoring financial solutions to individual needs.

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

3. CreditTech
3.1.The Evolution of Credit and Lending - USE CASES
• Faster loan approvals: AI-powered credit scoring analyzes alternative data (gig economy income,
social media, etc.) to offer quick loan decisions and improve financial inclusion.
• Microloans for underserved communities: Fintech platforms provide small loans to
individuals and entrepreneurs who may not qualify for traditional bank loans.
• Dynamic interest rates: Personalized risk assessment allows for more flexible interest rates
based on individual borrowers' profiles.
Examples:
• Upstart (AI-powered lending),
• Zidisha (microlending for women),
• Avant (flexible personal loans).

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

3. CreditTech
3.2. Peer-to-Peer (P2P) Lending and Equity Crowdfunding

• P2P lending platforms connect borrowers directly with investors, bypassing traditional financial
institutions.
• This approach democratizes access to capital and offers borrowers more competitive interest
rates.
• Equity crowdfunding platforms, on the other hand, enable businesses to raise capital by selling
shares to a large pool of investors. These platforms have democratized fundraising and provided
alternative funding options for entrepreneurs.

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

3. CreditTech
3.2. Peer-to-Peer (P2P) Lending and Equity Crowdfunding - USE CASES

• Borrowers access lower interest rates: Investors compete for loans, driving down interest
rates for borrowers compared to traditional banks.
• Startups and small businesses raise capital: Equity crowdfunding platforms connect
businesses with individual investors for funding without large VC firms.
• Alternative investment opportunities: Investors gain access to a wider range of investments
beyond traditional stocks and bonds.
Examples:
• LendingClub (P2P loans),
• Kickstarter (equity crowdfunding),
• SeedInvest (investment platform for high-growth startups).

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

3. CreditTech
3.3. Crypto-Based Fundraising: ICO, STO, IEO

• Initial coin offerings (ICOs) emerged as a novel fundraising method for blockchain-based projects.
ICOs involved issuing new cryptocurrencies to investors in exchange for funds. While ICOs faced
regulatory scrutiny and potential scams, they introduced the concept of tokenizing assets and
raising capital through digital offerings.
• Security token offerings (STOs) aimed to address regulatory concerns by issuing tokens
representing regulated securities, such as stocks or bonds.
• Initial exchange offerings (IEOs) involve listing new tokens on established cryptocurrency
exchanges, providing a more regulated and transparent fundraising approach.

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

3. CreditTech
3.3. Crypto-Based Fundraising: ICO, STO, IEO - USE CASES

• Startups raise capital quickly and globally: Crypto fundraising bypasses geographical and
regulatory limitations, attracting a wider pool of investors.
• Investors access new asset classes: STOs offer tokenized securities like equity or debt,
providing exposure to innovative projects and potential high returns.
• Increased transparency and efficiency: Blockchain technology enables secure and transparent
record-keeping for fundraising transactions.
Examples:
• Filecoin (ICO for decentralized storage network),
• Polymath (STO platform for tokenized securities),
• Binance Launchpad (IEO platform for vetted crypto projects).

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

3. CreditTech
3.4. Banking as a Service (BaaS)

• BaaS enables non-bank entities to integrate financial services, such as payments, account
management, and lending, into their platforms.
• This allows companies to provide financial services to their customers without the need to
establish a full-fledged bank.
• BaaS has fueled innovation in various sectors, such as e-commerce, retail, and telecommunications.

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

3. CreditTech
3.4. Banking as a Service (BaaS) - Use Cases

• Fintech startups build innovative financial products: Banks provide APIs and infrastructure
to allow startups to develop and offer financial services without needing a banking license.
• Traditional banks modernize their offerings: BaaS helps incumbent banks integrate new
technologies and features into their existing platforms.
• Improved customer experience: Personalized financial products and seamless integration with
everyday apps create a more convenient banking experience.
Examples:
• Plaid (API platform for fintech),
• Mambu (core banking platform),
• Temenos (cloud-based banking platform)..

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

3. CreditTech
Impact of CreditTech Innovation

CreditTech innovation has had a profound impact on the financial landscape:

• Increased Access to Credit: Fintech solutions have expanded access to credit for
individuals and businesses traditionally underserved by traditional lenders.
• Enhanced Customer Experience: Digital lending platforms and automated processes have
streamlined the credit application and approval process, improving the customer experience.
• Data-Driven Risk Management: Alternative data sources and machine learning algorithms
have enabled lenders to make more informed risk assessments and reduce defaults.
• Reduced Costs and Improved Efficiency: Fintech solutions have reduced transaction
costs and improved operational efficiency in the credit and lending space.
CreditTech innovation is continuously evolving, with new technologies and solutions emerging to
address financial inclusion, improve risk management, and enhance customer experiences.

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

3. CreditTech - Conclusion

These are just a few use cases & examples of the many ways CreditTech is changing the
landscape of finance.
By leveraging technology and data, CreditTech is making financial services more accessible,
efficient, and personalized for both borrowers and investors.

By : Umair Munaf Moon

 E6

Innovations in the Investment Sector

4. InvestTech

By : Umair Munaf Moon

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FINTECH INNOVATIONS

4. InvestTech
• Robo-Advising
• AI-based stock selection and asset management
• Big Data in investing, and wealth management

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

4. InvestTech
4.1 Robo-Advising

Robo-advisors are automated investment platforms that provide personalized investment advice and
portfolio management services.
They utilize algorithms and machine learning to analyze investor risk tolerance, financial goals, and
market conditions to create tailored investment portfolios.
Robo-advisors have democratized wealth management,

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

4. InvestTech
4.1 Robo-Advising - Use Cases:

• Automated portfolio management: Algorithms invest and rebalance your portfolio based
on your risk tolerance and financial goals.
• Low-cost investment solutions: Robo-advisors often have lower fees than traditional
advisors, making them accessible to a wider range of investors.
• Convenience and accessibility: Easy-to-use online platforms make investing effortless, ideal
for busy individuals.
Examples:
• Wealthfront,
• Betterment,
• Vanguard Digital Advisor.

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

4. InvestTech
4.2 AI-based stock selection and asset management

Artificial intelligence (AI) is revolutionizing stock selection and asset management strategies.

AI-powered algorithms can analyze vast amounts of data, including market trends, company financials, and
investor sentiment, to identify promising investment opportunities and optimize portfolio allocations.

These AI-driven approaches are helping investors make more informed investment decisions and achieve
their financial goals.

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

4. InvestTech
4.2 AI-Based Stock Selection and Asset Management - Use Cases:

• Identifying hidden patterns and alpha: AI analyzes vast amounts of financial data to predict
market trends and find undervalued assets.
• Dynamically adjusting asset allocation: Algorithms automatically adjust your portfolio based on
real-time market changes and emerging risk factors.
• Personalizing investment strategies: AI tailors investment decisions to your unique risk profile,
goals, and financial situation.

Examples:

• Quantopian,
• Kensho,
• Sentient Technologies.

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

4. InvestTech
4.3 “Big Data” in Investing and Wealth Management

Big data analytics is playing a crucial role in transforming investing and wealth management.
By analyzing large datasets of financial data, firms can gain valuable insights into market dynamics, investor
behavior, and risk factors.
These insights enable them to develop sophisticated investment strategies, optimize asset allocation, and
provide personalized financial advice.
Big data is also being used to detect fraud and anomalies in financial markets, enhancing the overall
integrity of the investment ecosystem.

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

4. InvestTech
4.3 “Big Data” in Investing and Wealth Management

• Enhanced risk analysis: Analyzing customer data, market trends, and economic indicators helps
predict potential risks and optimize portfolio allocations.
• Targeted financial advice: Big data allows for personalized recommendations based on individual
financial profiles and behaviors.
• Fraud detection and anti-money laundering: Identifying anomalous patterns in transactions
and client behavior helps to protect against financial crime.

Examples:

• BlackRock Aladdin,
• Morgan Stanley Wealth Management,
• UBS Evidence-Based Investing.

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

4. InvestTech
Impact of InvestTech Innovation

• Increased Access to Investment Opportunities: InvestTech solutions have democratized

investing, making it more accessible and affordable for a broader range of individuals.
• Personalized Investment Strategies: AI-powered robo-advisors and data-driven investment
platforms can tailor investment strategies to individual risk profiles, financial goals, and preferences.
• Enhanced Investment Outcomes: AI-driven stock selection and big data analytics are helping
investors make more informed decisions, potentially leading to improved investment outcomes.
• Reduced Costs and Improved Efficiency: InvestTech solutions are reducing transaction costs,
improving operational efficiency, and making investment services more accessible.

As InvestTech innovation continues to evolve, we can expect to see even more sophisticated tools and
strategies that empower individuals and institutions to make informed investment decisions and achieve
their financial goals.

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

4. InvestTech
Impact of InvestTech Innovation

• Increased Access to Investment Opportunities: InvestTech solutions have democratized

investing, making it more accessible and affordable for a broader range of individuals.
• Personalized Investment Strategies: AI-powered robo-advisors and data-driven investment
platforms can tailor investment strategies to individual risk profiles, financial goals, and preferences.
• Enhanced Investment Outcomes: AI-driven stock selection and big data analytics are helping
investors make more informed decisions, potentially leading to improved investment outcomes.
• Reduced Costs and Improved Efficiency: InvestTech solutions are reducing transaction costs,
improving operational efficiency, and making investment services more accessible.

As InvestTech innovation continues to evolve, we can expect to see even more sophisticated tools and
strategies that empower individuals and institutions to make informed investment decisions and achieve
their financial goals.

By : Umair Munaf Moon

FINTECH INNOVATIONS E6

4. InvestTech - Conclusion

• InvestTech is revolutionizing the investment landscape by making it more

accessible, efficient, and data-driven.
• Robo-advisors provide easy-to-use platforms for building diversified portfolios,
while AI and Big Data empower investors with deeper insights and more
personalized strategies.
• As technology continues to evolve, InvestTech holds the potential to democratize
investing and improve financial outcomes for everyone.

By : Umair Munaf Moon

 E7

E7 - 1link, 1Bill, PayPak, RaastP2M & QR Payments

E7
 E7

1Link - History

Early Years (1999-2004):

• Formation: Founded in 1999 as a consortium of leading Pakistani banks, primarily to

address the fragmented ATM network and facilitate interbank transactions.
• Initial Services: Focused on establishing a shared ATM network, enabling customers
of different banks to withdraw cash from any 1LINK-branded ATM across the country.
• Challenges: Overcoming technological and regulatory hurdles, building trust among
member banks, and competing with established financial institutions.
 E7

1Link - History

Growth and Expansion (2005-2010):

• Technological Advancements: Introduced innovative solutions like online interbank
funds transfer (IBFT) and bill payment services, diversifying their offerings beyond ATM
networks.
• Partnerships: Collaborated with international payment brands like Visa and
MasterCard, providing access to global payment networks for Pakistani users.
• Market Leadership: Solidified their position as the leading shared switch and payment
gateway in Pakistan, serving a growing customer base.
 E7

1Link - History

Innovation and Diversification (2011-Present):

• Fintech Focus: Embraced digital transformation, venturing into mobile banking,
e-commerce payments, and other fintech initiatives.
• Financial Inclusion: Launched programs to cater to unbanked and underbanked
populations, promoting financial literacy and access to essential services.
• Expansion and Recognition: Increased their network, partnered with new fintech
companies, and earned recognition for their contributions to the Pakistani financial
landscape.
 E7

1Link - History

Key Milestones:
• 2004: Incorporated as a Guarantee Limited Company under the SECP.
• 2006: Launched Inter Bank Funds Transfer (IBFT) service.
• 2007: Launched Utility Bill Payment Service (UBPS). (ATM, OTC, Online & Mobile Banking)
• 2015: Licensed as Pakistan's first Payment System Operator and Payment Service Provider by
the SBP
• 2016: Launched PayPak, Pakistan's first domestic payment scheme and debit card system.
• 2023: Over 37 member banks, 14,000+ ATMs, and millions of customers served across
Pakistan.
E7
 E7

1BiIL i) One Bill Payment Service:

This is 1LINK's bill payment platform that allows customers to pay various bills through
multiple channels, including ATMs, online banking, mobile banking, and over-the-counter at
designated agent locations. It covers a wide range of utilities, telecommunications,
government services, and educational institutions.

Target audience: Individuals and consumers.

Function: Enables individuals to pay various bills (utilities, telecom, government, etc.)
through multiple channels (ATMs, online banking, mobile banking, OTC).
 E7

1BiIL i) One Bill Payment Service:

Benefits:
• Convenience: Pay bills anytime, anywhere, through preferred channels.
• Security: Secure transactions with PIN authentication and encrypted data transfer.
• Efficiency: No need to queue at billing offices or wait for paper bills.
• Time-saving: Save time and effort by paying bills electronically.
• Transparency: Track past payments and view bill details easily.
• Record-keeping: Maintain a digital record of all bill payments.

How it works: Customers choose bills they want to pay, select preferred payment channel, and
complete the transaction using their bank credentials or other payment methods.
 E7

1BiILL - ii) One Bill Direct:

This is a specific product within the 1BILL service targeted towards businesses and transaction
initiators. It provides a plug-and-play solution for integrating bill payment functionalities into
their systems, allowing their customers to easily pay bills directly through their platforms.

Target audience: Businesses and transaction initiators (e.g., online marketplaces, utility
companies, mobile apps).

Function: Provides a ready-made API integration solution for businesses to embed bill payment
functionality into their own platforms.
 E7

1BiILL - ii) One Bill Direct:

Benefits:
• Increased customer satisfaction: Offer convenient bill payment options directly within your
platform.
• Improved billing efficiency: Streamline bill payments and reduce manual processing work.
• Increased revenue potential: Offer additional services and attract new customers.
• Brand differentiation: Stand out by offering a convenient and integrated bill payment
experience.

How it works: Businesses integrate the One Bill Direct API into their platform, allowing their
customers to pay bills directly through their interface using various payment methods.
 E7

One BILL Payment Service Vs One Bill Direct

One BILL Payment Service is ideal for individuals looking for a convenient and secure way
to pay their bills.

One Bill Direct is ideal for businesses wanting to enhance their customer experience and
streamline bill payments within their platforms.
E7
E7
 E7

What is PayPak?

• Pakistan's first and only domestic payment scheme, launched by 1LINK under SBP.
• Aims to promote financial inclusion and digitization across the country.
• Offers debit cards accepted at ATMs, shops, restaurants, malls, and e-commerce
websites throughout Pakistan.
• Transactions are routed locally, keeping customer data secure and avoiding
cross-border data transfers.
 E7

Benefits of PayPak:

• Convenience: Access your funds through ATMs and various merchants nationwide.
• Security: Chip-based cards offer secure PIN and contactless payment options.
• Affordability: Typically lower transaction fees compared to international cards.
• Financial Inclusion: Promotes access to financial services for unbanked and
underbanked populations.
• Domestic Economy: Supports local businesses and keeps financial resources within
Pakistan.
 E7

Additional features:

PayPak Loyalty Program: Earn rewards and discounts at partner merchants.

PayPak QIV: Win gold prizes through quarterly draws based on PayPak card transactions.

Golootlo App: Access exclusive deals and discounts at participating merchants.

PayPak Life Insurance/Takaful: Complimentary life insurance coverage for active

cardholders.

UPI and JCB co-branded cards: International payment options for PayPak users.
 E7

Resources:

Official website: https://1link.net.pk/paypak/

PayPak Loyalty Program: https://1link.net.pk/paypak/loyalty-program-2/

PayPak QIV: https://1link.net.pk/paypak/

Golootlo App: https://golootlo.pk/

PayPak Life Insurance/Takaful: https://1link.net.pk/paypak/

 E7

P2M - RAAST
Service launched to facilitate
digital payment acceptance
https://arynews.tv/raast-p2m-service-launched-
to-facilitate-digital-payment-acceptance/
 E7

P2M - RAAST

Raast Person to Merchant (P2M) service was launched on March 1, 2023.

Now, with RAAST P2M, merchants are also able to receive digital payments from their
customers regardless of which banking app they use, by having them scan our provided QR
code.

Key Features:
• P2M Raast enables real-time digital payments from individuals to merchants, using various
methods like QR codes, Raast Aliases, IBANs, and Request to Pay features.
• It's a significant component of the broader Raast instant payment system, designed to
facilitate seamless digital transactions in Pakistan.
 E7

P2M - RAAST

Allows individuals to make payments to merchants using various payment methods, including:
• QR codes: Merchants can display a QR code that customers can scan to make a payment.
• Raast Alias: Customers can create a Raast Alias, which is a unique identifier that can be used to
make payments to merchants.
• IBAN: Customers can make payments to merchants using their International Bank Account
Number.
• Request to Pay: Merchants can initiate a payment request, which customers can then accept or
reject.
P2M Raast is available to customers of all banks and financial institutions that are members
of the Raast system.To use P2M Raast, customers must first register for a Raast account
with their bank. Once they have registered, they can make payments to merchants by
scanning a QR code, entering their Raast Alias, or using their IBAN.
 E7

P2M - RAAST

Benefits for Merchants:

• Increased Sales: Offer a convenient payment option and attract tech-savvy customers.
• Transaction history: Access a record of all past transactions for easy bookkeeping and
reconciliation.
• Interoperability: Works seamlessly across different banks & financial institutions within the
Raast network.
• Flexibility: Merchants can customize their payment acceptance methods based on their needs
and customer preferences.
• Improved Customer Satisfaction: Provide a fast, secure, and hassle-free payment
experience.
• Reduced Costs: Eliminate cash handling and potential for errors with cashless transactions.
• Real-time Settlement: Receive funds instantly, improving cash flow and business operations.
 E7

P2M - RAAST

Benefits for Customers:

• Convenience: Customers can make payments to merchants anytime, anywhere, using their
preferred payment method.
• Multiple Payment Methods: Choose from various options like QR code scan, Raast Alias
(unique identifier), IBAN, or Request to Pay feature.
• Real-time Transactions: Payments are settled instantly, removing delays and uncertainties.
• Accessibility: Available to customers of all banks and financial institutions participating in the
Raast system.
• Wide Merchant Network: Pay your bills and shop at various businesses accepting Raast P2M
payments.
• Security: Payments are made using secure encryption and authentication methods.
• Efficiency: Payments are settled in real time, eliminating the need to wait for funds to clear.
 E7

P2M - RAAST

Overall, Raast P2M aims to revolutionize digital payments in Pakistan by offering a convenient,
secure, and efficient way for individuals to pay merchants. Its diverse features benefit both
customers and businesses, paving the way for a more seamless and cashless economy.
 E7

P2M - RAAST

All regulated entities (REs), which include banks and financial institutions, must enable
P2M Raast capabilities within their delivery channels by March 1, 2024.
 E7
Dukan believes its digital commerce
Dukan.pk ecosystem has the potential to raise
Pakistan’s GDP by 10%.

Dukan has built the digital commerce technology stack to serve and interconnect all participants of
the MSME ecosystem. Dukan has successfully deployed seven key interoperable components across
thousands of manufacturers, distributors, wholesalers, retailers, and e-commerce businesses.
These components include
• Dukan Shops (customized online web stores),
• Dukan Payments (mobile wallet + payment gateway),
• Dukan Logistics (aggregation of third party delivery carriers),
• Dukan Credit (digital credit scored through Dukan ecosystem sales and purchases),
• Dukan Advertising (promotion and targeted ads through proprietary adtech engine),
• Dukan Marketplace (curated B2C and B2B wholesaler marketplace from within Dukan’s
ecosystem), and
• Dukan Distribution (supply chain vertical-agnostic digital distribution management system).
 E7

Dekan BOX

https://www.linkedin.com/posts/monis_easypaisakarobar-digitalpayments-raast-activity-714
2495152199163904-OnFn?utm_source=share&utm_medium=member_desktop

The Dukan Box notifies them of payments through a human voice in their their native
language, freeing up their hands to serve their customers
 E7

QR-based Request to Pay (RtP)

 E7

What is QR Code Payment?

Giving out mobile numbers or billers code may lead to fraud. Using QR codes eliminates this
possibility.
QR codes are easy to generate and customers don’t need any additional hardware to pay via
them. Just a smartphone with a camera is enough.
So, what exactly are these QR codes? What are its different types? How does it work? What are
its benefits?
 E7

What is QR Code Payment?

QR codes generally create a sort of pixel pattern with each part containing a piece of information.
In the case of digital payments, the information can be, merchants’ details, transaction details, etc.

Upon scanning, QR code patterns (horizontal and vertical black patterns on white background) get
decoded by the software and get converted into the character string.

The Qr codes (for payment acceptance) generally carry commands related to transactions.

Merchant can generate QR codes for his shop, or for any fixed or variable amount. According to
this command, the QR code is generated. It either opens a payment link, confirms payment, or does
any other operation as specified.

The customer just has to scan it and then transfer payment.

 E7

To scan QR codes, you will need,

• A barcode reader/ QR scanner.

• A smartphone with an inbuilt camera.
(Nowadays, there are many apps with which, QR codes can be scanned with utmost ease)
 E7

Advantages of QR code

Although similar to the linear barcodes we see on products in shops, the QR

code has four important advantages:
• It stores a large volume of data.
• It can be scanned from a screen or from a paper.
• It can be read even if part of the code is damaged.
• It’s safer because information can be encrypted.
 E7

Characteristics of QR codes

• The main characteristic of the QR code is a set of three squares placed in three corners.

• The overall size of the matrix can vary. Smaller the matrix less the information and larger the
size more the information.

• As the QR code is two dimensional, it contains more data than a one-dimensional bar code.

• QR code can store up to 4,296 alphanumeric characters and unlike a barcode, it is two
dimensional, meaning it can be scanned in any direction and thus can contain more
information than barcode.

• Since QR codes contain more data, they allow for encryption that is useful for payment
processing.
 E7

Types of QR Code

There are two types of categories for QR codes:

1) Static QR code:
• contains the Payment URL directly placed inside. As these QR codes are static, the content
of the codes can not be altered and these codes also can not be tracked.
• They are used for quick and simple online payment acceptance.
• Customers just have to
• Scan the QR code,
• Enter the purchase amount,
• The merchant will verify the details and then the customer can initiate the online payment.
• We can used such codes at small shops, at restaurants, hardware stores, medicals, in-store
retails, etc.
 E7

Types of QR Code

2) Dynamic QR code:

• Dynamic QR code offers a better payment experience for both customers and merchants.
It is editable and comes with extra features like password protection, scan analysis, etc.
• A merchant can find out various details like how many people scanned the code or what
type of devices were used for scanning, etc.
- Dynamic QR code conveys the purchase amount and merchant information.
• In this case, the customer just has to accept the transaction through the QR code
application.
 E7

QR Code full-form: Quick Response Code.

It consists of a pattern of black barcodes or squares arranged in a square grid

on a white background.

These codes can be read through the QR code scanner. Nowadays many mobile
cameras come with inbuilt scanners.

They are similar to barcodes, the difference is, QR codes can store a large
amount of data compared to barcodes.
 E7

How QR-based Request to Pay (RtP) works

1. Merchant Initiates Request:

• The merchant creates a payment request using their payment app or point-of-sale (POS)
system.
• They encode the payment details, including the amount, due date, and payment reference,
into a QR code.
• This QR code is then displayed to the customer, either physically (printed on a receipt or
displayed on a screen) or digitally (sent via email or text message).
 E7

How QR-based Request to Pay (RtP) works

2. Customer Scans the QR Code:

• The customer uses their mobile banking app or a dedicated QR code scanner to scan
the QR code.
• Their app automatically captures the payment details from the code.
• The customer is presented with a summary of the payment request, including the
amount, merchant information, and any additional details.
 E7

How QR-based Request to Pay (RtP) works

3. Customer Authorizes Payment:

• The customer reviews the payment details and verifies that they are correct.
• They then authorize the payment using their preferred authentication method, such as
PIN, fingerprint, or facial recognition.
• This authorization triggers the payment process within their bank's system.
 E7

How QR-based Request to Pay (RtP) works

4. Payment is Processed:
• The payment is securely processed through the relevant payment networks (e.g., Raast in
Pakistan or other interoperable systems).
• The funds are transferred from the customer's account to the merchant's account in
real-time.
• The customer receives a confirmation message or receipt indicating successful payment.
 E7

How QR-based Request to Pay (RtP) works

5. Merchant Receives Notification:

• The merchant gets a notification that the payment has been successfully received.
• They can access the funds immediately, improving cash flow and reducing the risk of fraud
 E7

Key Advantages of QR-Based RtP:

• Convenience: Simple and intuitive for both customers and merchants.

• Security: Reduces manual errors and potential for fraud.
• Speed: Real-time payments for faster settlement and access to funds.
• Flexibility: Can be used for various payment scenarios, both in-person and online.
• Cost-effective: Eliminates the need for expensive payment terminals.
• Interoperability: Works across different banks and payment systems.
 E7

QR-Based RtP: Additional Insights:

• QR-based RtP is gaining popularity globally as a convenient and secure payment

method.
• It's expected to play a significant role in the digitization of payments and the growth
of cashless economies.
• It's often integrated with mobile wallets and payment apps for a seamless user
experience.
• It can also be used for recurring payments or bill payments.
 E8

E8. Consortium Blockchains

- HYPERLEDGER
- CORDA
 E8

Consortium Blockchains:

• A hybrid of public and private blockchains.

• Governed by a consortium of pre-approved organizations.
• Offers more flexibility and control than public blockchains, while still providing some of the
benefits of transparency and trust.
• Examples: R3 Corda, Hyperledger Fabric

Choosing the right type of blockchain for your needs depends on a number of factors, such as
the level of security and privacy required, the number of users, and the desired level of
scalability.
 E8

Hyperledger
 E8

Hyperledger

is an umbrella project under the Linux Foundation that aims to advance cross-industry blockchain
technologies. It brings together various blockchain-related frameworks, tools, and libraries that can be
used for the development of enterprise-grade blockchain solutions.

The key goals of Hyperledger include promoting collaboration, providing a neutral space for development,
and fostering open-source innovation in the blockchain space.

• Open Source Collaboration: Hyperledger is a collaborative effort with contributions from various
organizations and individuals. It encourages open-source development and collaboration to build a
robust ecosystem of blockchain technologies.
• Permissioned Blockchains: Many Hyperledger projects focus on developing permissioned
blockchains. These are blockchains where participants are known and have explicit permission to join
the network. This contrasts with public blockchains where participation is open to anyone.
 E8
https://blog.web3labs.com/a-comparison-of-hyperledger-distributed-ledger-technologies
Hyperledger #:~:text=Hyperledger%20Fabric%20excels%20in%20its,designed%20for%20decentrali
sed%20identity%20management.

• Diverse Projects: Hyperledger hosts a variety of projects, each addressing specific needs in
the enterprise blockchain space. These projects includes:
• Hyperledger Fabric: A permissioned blockchain platform with a modular architecture, suitable for
a range of enterprise use cases.
• Hyperledger Sawtooth: A modular and flexible blockchain platform designed for versatility and
scalability.
• Hyperledger Besu: An Ethereum-compatible client suitable for enterprise blockchain solutions.
• Hyperledger Indy: Focused on decentralized identity, particularly self-sovereign identity.
• Enterprise Use Cases: Hyperledger projects are designed to address the specific needs
and challenges of enterprises. Use cases include supply chain management, financial services,
healthcare, identity management, and more.
 E8

Hyperledger

• Neutral Governance: Hyperledger operates under neutral governance provided by the Linux
Foundation. This ensures that the development of blockchain technologies remains vendor-neutral and
transparent.
• Interoperability: Some Hyperledger projects, like Hyperledger Quilt, aim to address interoperability
between different blockchain networks, allowing for smoother communication and collaboration.

It's important to note that Hyperledger is not a single blockchain but rather a collection of projects offering
different tools and platforms tailored for various enterprise scenarios. Organizations can choose the
Hyperledger project that best fits their specific use case requirements.
 E8

Companies using Hyperledger Fabric:

• Walmart: Uses Hyperledger Fabric for food traceability and supply chain management.
• Hitachi: Uses for identity management and data sharing.
• IBM: Use if for a variety of purpose, including trade finance & supply chain management.
• Visa: Use it for cross-border payments and identity management.
• JPMorgan Chase: Use it for trade finance and payments.
• HSBC: Use it for trade finance and supply chain management.
• Intel: Use it for supply chain management and identity management.
• Seagate: Use it for secure data storage and supply chain management.
 E8

Companies using Hyperledger Fabric:

• Change Healthcare: Use it for healthcare data sharing and patient identity management.
• Vocational Training Council (China): for issuing educational certificates & verifying student identities.
• OptimHire: Uses it for background checks and employment verification.
• Fintract Global: Use it for trade finance and supply chain management.
• Citi: Use it for cross-border payments and trade finance.
• NIRA Inc.: Use it for supply chain management and inventory tracking.
• Australian Securities Exchange (ASX): Use it for post-trade settlement of securities.
• We.trade: A consortium of European banks using Hyperledger Fabric for trade finance.
• Everledger: Use it to track the provenance of diamonds and other valuables.

This is not an exhaustive list, and there are many other companies using Hyperledger Fabric.
 E8

Companies using Hyperledger Sawtooth:

• State Bank of India (SBI): Uses Sawtooth Lake for their consortium platform BankChain, a
blockchain-based banking network for real-time payments, KYC, and other services. Over 27 members,
including banks and financial institutions from India and the Middle East.
• PokitDok: Healthcare transaction platform DokChain built on Sawtooth Lake for secure and efficient
healthcare data management. Utilizes Sawtooth's features for developing smart healthcare contracts.
• ScanTrust: Provides secure QR codes for traceability solutions. Built their blockchain-enabled
traceability system using Hyperledger Sawtooth.
• T-Mobile: Exploring Sawtooth for managing network roaming agreements and identity verification.
• Intel: Major contributor to Sawtooth's development and actively involved in its use cases.
• IBM:Offers Sawtooth as part of its blockchain-as-a-service (BaaS) platform on IBM Cloud.
 E8

Companies using Hyperledger Sawtooth:

• Everledger: Tracks the provenance of diamonds and other high-value assets using Sawtooth.
• Sawtooth Supply Chain: Collaborative project by Intel and Sawtooth developers to create a
supply chain solution for tracking goods and materials.
• Healthcare Data Gateway (HDG): Built on Sawtooth to enable secure sharing of healthcare
data among providers and patients.
• Verizon: Exploring Sawtooth for various use cases, including supply chain management and
identity verification.
• SAP: Integrating Sawtooth with its enterprise software for blockchain-based applications.
• Ant Financial: Using Sawtooth for its blockchain-based financial services platform.
• Huawei: Exploring Sawtooth for its blockchain initiatives.
 E8

R3 Corda

• R3 Corda is a blockchain platform designed for financial services.

• It is a permissioned blockchain, which means that only authorized participants can access
and view transaction data.
•
•
This ensures the privacy and security of sensitive financial information.
• Corda is designed to be scalable and efficient, making it suitable for real-world applications
in the banking sector.
• It is also designed to be interoperable with existing financial systems and infrastructure,
making it easier for banks to adopt blockchain technology.
• Corda is being used by a growing number of banks and financial institutions around the
world.
• It is being used for a variety of applications, including trade finance, cross-border
payments, regulatory reporting, identity verification, and supply chain finance.
 E8

R3 Corda

Here are some of the key features of R3 Corda:

• Permissioned blockchain: Only authorized participants can access and view transaction
data.

• Scalable and efficient: Designed to handle high volumes of transactions.

• Interoperable: Can be integrated with existing financial systems and infrastructure.

• Built with regulatory compliance in mind: Supports KYC/AML and other

regulations.
 E8

R3 Corda - Use Cases in Banking Sector

Trade finance: can be used to streamline the trade finance process, reduce costs & improve transparency.

Cross-Border Payments: can be used to enable faster and cheaper cross-border payments.

Regulatory Reporting: can be used to automate & streamline the process of regulatory reporting.

Identity Verification: can be used to improve the efficiency & security of identity verification processes.

Supply Chain Finance: can be used to improve the efficiency & transparency of supply chain finance.
 E8

Corda vs. R3 Corda

Corda is an open-source platform that is maintained by the Corda Foundation. It is a

general-purpose platform that can be used for a variety of applications, including supply
chain management, trade finance, and identity management.

R3 Corda is a commercial version of Corda that is developed and maintained by R3, a

consortium of over 300 financial institutions. R3 Corda includes a number of features and
capabilities that are designed specifically for the financial services industry, such as support
for privacy-preserving transactions and integration with existing financial systems.
 E8

Companies using R3 Corda

Financial Services industry:

• JPMorgan Chase: Developing blockchain-based trade finance solutions.

• UBS: Exploring it for cross-border payments and trade finance.
• Barclays: Utilizing it for trade finance and identity management.
• Credit Suisse: Exploring it for trade finance and regulatory compliance.
• BNP Paribas Securities Services: Offering custody & settlement services for digital assets
• State Street Corporation: Exploring it for asset servicing and regulatory compliance.
• SIX Swiss Exchange: Implementing it for post-trade settlement of securities.
• Australian Securities Exchange (ASX): Utilizing it for post-trade settlement of securities.
 E8

Companies using R3 Corda

Other Industries:

• Shell: Exploring it for energy trading and supply chain management.

• Trafigura: Utilizing it for commodity trading and finance.
• Maersk: Building a blockchain-based platform for supply chain management.
• IBM Food Trust: Utilizing it for food traceability and supply chain management.
• De Beers Group: Exploring it for diamond provenance tracking and authentication.
• Everledger: Utilizing it for tracking the provenance of luxury goods.
• We.trade: A consortium of European banks using it for trade finance.
• Marco Polo: A trade finance platform built on it by major banks.
 E9

PYTHON - Revision of Important Concepts

ESSENTIAL SYNTAX / CHEAT SHEET

Basic Input/Output:
o User input: name = input("Enter your name: ")

o Printing: print("Hello, world!")

o Comments: # This is a comment

 E9

PYTHON - Revision of Important Concepts

Data Types & Initialization:

o Numbers: int, float num = 1 num=0.1
o Strings: ('str') or ("str") Name = “abc”
o Booleans: True, False Status = True
o Lists: [], mutable, my_list = [1, "hello",True]
o Tuples: (), immutable, my_tuple = (1, 2, 3)
o Sets: {}, unique elements, my_set = {1, "a",True}
o Dictionaries: {}, key-value pairs, my_dict = {"name": "Bob", "age": 30}
 E9

PYTHON - Revision of Important Concepts

Variables & Operators:

o Variable assignment: name = "Alice"

o Arithmetic: +, -, *, /, // (integer division), % (modulo)
o Comparison: ==, !=, <, >, <=, >=
o Logical: and, or, not
o Membership: in, not in
 E9

PYTHON - Revision of Important Concepts

Lists Functions:
o Access elements: list[index]
o Add elements: list.append(element)
o Maximum & Minimum: max(list), min(list)
o Remove specific elements is search & removed : list.remove(element)
o Combine lists: list1 + list2, list.extend(list2)
o Sort lists: list.sort() # doesn’t change the list.
sorted(list) # change the original list,
o Reverse lists: list[::-1]
 E9

PYTHON - Revision of Important Concepts

Dictionaries:
o Create dictionaries: dict()
o Access values: dict[key]
o Add key-value pairs: dict[new_key] = new_value
o Check (Find) for keys: key in dict # returns True or False
o Get all keys: dict.keys()
o Get all values: dict.values()
 E9

PYTHON - Revision of Important Concepts

Strings Functions:
o Access characters: string[index]

o Slice substrings: string[start:end]

o Reverse strings: string[::-1]

o Check (find) for substrings: substring in string

o Split strings: string.split()

o Strip whitespace: string.strip(), string.lstrip(), string.rstrip()

o Replace characters: string.replace(old, new)

 E9

PYTHON - Revision of Important Concepts

- Functions:

“Functions are reusable blocks of code that perform specific tasks. They help organize code,
make it more readable, and reduce redundancy”

A function is a block of code which only runs when it is called.

You can pass data, known as parameters, into a function.

A function can return data as a result.

 E9

PYTHON - Revision of Important Concepts

Functions:

o Defining: def my_function(arg1, arg2): ...

o Calling: result = my_function(value1, value2)
o Returning a value: return result
 E9

PYTHON - Revision of Important Concepts

- String format() or f-strings

format() method formats the specified value(s) & insert them inside string's placeholder.

placeholder is defined using curly brackets: {}.

format() method returns the formatted string

txt1 = "My name is {}, I'm {}".format("John",36)

txt2 = "My name is {fname}, I'm {age}".format(fname = "John", age = 36)
txt3 = "My name is {0}, I'm {1}".format("John",36)
 E9

PYTHON - Revision of Important Concepts

- String format()

# Use "%" to convert the number into a percentage format:

txt = "You scored {:%}"
print(txt.format(0.25))
# Or, without any decimals:
txt = "You scored {:.0%}"
print(txt.format(0.25))
 E9

PYTHON - Revision of Important Concepts

- String format()

#Use "," to add a coma or any character as a thousand separator:

txt = "The universe is {:,} years old."
print(txt.format(13800000000))

txt = "The universe is {:_} years old."

print(txt.format(13800000000))
 E9

PYTHON - Revision of Important Concepts

- String format()

# Add a placeholder where you want to display the price:

price = 49
txt = "The price is {} dollars"
print(txt.format(price))

# Format the price to be displayed as a number with two decimals:

txt = "The price is {:.2f} dollars"
 E9

PYTHON - Revision of Important Concepts

- String format()
Multiple Values (Method # 1)

# If you want to use more values, just add more values to the format() method:

count = 3
itemno = 567
price = 49
myorder = "I want {} pieces of item number {} for {:.2f} dollars."
print(myorder.format(quantity, itemno, price))
 E9

PYTHON - Revision of Important Concepts

- String format()
Index Numbers (Method # 2)
# You can use index numbers (a number inside the curly brackets {0}) to be sure the values are placed
in the correct placeholders:
quantity = 3 itemno = 567 price = 49
myorder = "I want {0} pieces of item number {1} for {2:.2f} dollars."
print(myorder.format(quantity, itemno, price))
# Also, if you want to refer to the same value more than once, use the index number:
age = 36 name = "John"
txt = "His name is {1}. {1} is {0} years old."
print(txt.format(age, name))
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PYTHON - Revision of Important Concepts

- String format()
Named Indexes (Method # 3)
# You can also use named indexes by entering a name inside the curly brackets {carname}, but then you
must use names when you pass the parameter values txt.format(carname = "Ford"):

myorder = "I have a {carname}, it is a {model}."

print(myorder.format(carname = "Ford", model = "Mustang"))
 E9

PYTHON - Revision of Important Concepts

Control Flow:
o if, elif, else statements (conditional execution)
o for loops (iterate over sequences): for i in range(5): print(i)
The for loop is used when we know the number of iterations, that is, how many times a statement
must be executed. That is why, when we initialize the for loop, we must define the ending point.
o while loops (repeat code until a condition is met)
While loop is used to execute a block of statements repeatedly until a given condition is satisfied.
o break Immediately terminates the loop, regardless of any remaining iterations.
o continue Skips the remaining code in the current iteration and jumps to the beginning of
the next iteration.
 E9

PYTHON - Revision of Important Concepts

Comments:

# This is a single-line comment

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PYTHON - Revision of Important Concepts

Python Libraries:

O NumPy: Efficient numerical computations with arrays

O Pandas: Data analysis and manipulation with DataFrames
O Matplotlib: Creating visualisations (plots, charts, graphs)
 E9

PYTHON - Revision of Important Concepts

- Pandas Library
1. Import pandas: import pandas as pd
2. Import data from a CSV file: df = pd.read_csv("data.csv") # Assuming CSV file named "data.csv" exists
3. Select a column: names = df["Name"] # Select the "Name" column print(names)
4. Select a single element by row & column index: df.iloc[2, 1]
# Select the value at row 3 (index 2) and column 2 (index 1)

Additional examples of data selection:

• Select multiple columns: df[["Name", "Age", "City"]]
• Select rows by condition: df[df["Age"] > 30]
• Select a range of rows and columns: df.iloc[1:2, 2:4]
# Select rows 1 to 2 (inclusive) and columns 2 to 3 (exclusive)
 E9

CSV file text

- You can paste the following text in a notepad file & save as csv format to practice)
- Ensure the file is saved in the same directory as your Python script.

Name,Age,City,Occupation
ice,25,New York,Software Engineer
Bob,32,London,Data Scientist
Charlie,41,Paris,Teacher
David,28,Berlin,Marketing Manager
Emily,35,Tokyo,Doctor
 E9

PYTHON - Revision of Important Concepts

- Pandas Library

1. Filtering:
# Select people from New York new_yorkers = df[df["City"] == "New York"]
# Select people younger than 30 younger_than_30 = df[df["Age"] < 30]

2. Sorting:
# Sort by age in ascending order df_sorted_by_age = df.sort_values(by="Age")
# Sort by city and then age (both in descending order)
df_sorted_by_city_age = df.sort_values(by=["City", "Age"], ascending=False)
 E9

PYTHON - Revision of Important Concepts

- Pandas Library
3. Grouping:
# Group by city and calculate the mean age for each city
df.groupby("City")["Age"].mean()
# Group by occupation and count the number of people in each occupation
df.groupby("Occupation").size()
4. Aggregating:
# Calculate the total, minimum, and maximum age df["Age"].sum() df["Age"].min() df["Age"].max()
# Calculate the average age for each occupation df.groupby("Occupation")["Age"].mean()
 E9

PYTHON - Revision of Important Concepts

- File operations in Python:
1. Check file existence: import os
filename = "my_file.txt"
if os.path.exists(filename):
print("The file exists!")
else:
print("The file does not exist.")
2. Open files:
# Open a file for reading (default mode) file = open("my_file.txt")
# Open a file for writing (overwrites existing content) file = open("new_file.txt", "w")
# Open a file for appending (adds content to the end) file = open("existing_file.txt", "a")
 E9

PYTHON - Revision of Important Concepts

- File operations in Python:

3. Read file contents: contents = file.read() # Read the entire file as a string
print(contents)

4. Write to files: text = "This is some text to write to the file."

file.write(text)

5. Close files: file.close() # Releases resources associated with the file

 E9

Python - Exception Handling

Common Python exceptions and how to handle them:

1. ZeroDivisionError:
try:
result = 10 / 0 # Attempting to divide by zero
except ZeroDivisionError:
print("Cannot divide by zero!")

2.TypeError:
try:
name = "Alice" + 10 # Trying to add a string and an integer
except TypeError:
print("Cannot add a string and an integer!")
 E9

Python - Exception Handling

Common Python exceptions and how to handle them:

3.ValueError:
try:
age = int("hello") # Trying to convert a non-numeric string to an integer
except ValueError:
print("Invalid input for age!")
4. IndexError:
numbers = [1, 2, 3]
try:
print(numbers[5]) # Accessing an index that's out of range
except IndexError:
print("Index out of range!")
 E9

Python - Exception Handling

Common Python exceptions and how to handle them:

5. KeyError:
person = {"name": "Bob", "age": 30}
try:
print(person["city"]) # Trying to access a non-existent key
except KeyError:
print("Key not found in the dictionary!")
 E9

Python - Exception Handling

Common Python exceptions and how to handle them:

General exception handling:

try: # Code that might raise exceptions
except: # Catch any type of exception

Key points:
try block: # Encloses the code that might raise exceptions.
except blocks: # Handle specific exception types.
finally block (optional): #Executes code regardless of whether an exception occurs, often
used for cleanup tasks.
 E10

E10. Central Bank Digital Currency (CBDC)

https://www.youtube.com/watch?v=58_lJ-9oblc
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The Emergence and Implications of Central Bank Digital

Currencies (CBDCs)
The emergence of CBDCs is a significant development in the financial landscape. As digital technologies
continue to reshape economies and societies, central banks are exploring the potential of issuing their own
digital currencies to complement or even replace traditional cash and payment systems.
Several factors are driving the emergence of CBDCs:
• Technological advancements: Blockchain technology offers a secure and efficient platform for issuing
and managing digital currencies.
• Rise of digital payments: The increasing popularity of digital payments is outpacing the capabilities of
traditional cash and payment systems.
• Private digital currencies: The emergence of private digital currencies, such as Bitcoin, has sparked
interest in central bank alternatives.
• Financial inclusion: CBDCs have the potential to improve financial inclusion by providing access to
financial services for the unbanked and underbanked.
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The Emergence and Implications of Central Bank Digital

Currencies (CBDCs)

Current stage: While still in its early stages, CBDC development is gaining momentum. Several
central banks are conducting research, pilots, and proofs-of-concept.

Examples:
• China's e-CNY,
• the Bahamas' Sand Dollar, and
• the Eastern Caribbean Central Bank's DCash.
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The Emergence and Implications of CBDCs

CBDCs has the potential to have profound implications for various stakeholders:

For individuals:
Faster and cheaper payments: CBDCs can offer faster and cheaper cross-border payments compared to
traditional methods.
Increased financial inclusion: CBDCs can provide access to financial services for those excluded from
traditional banking systems.
Greater privacy: CBDCs can offer greater privacy than private digital currencies.
 E8
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The Emergence and Implications of CBDCs

For businesses:
More efficient trade finance: CBDCs can facilitate faster and more secure trade finance transactions.
Reduced operational costs: CBDCs can help businesses reduce transaction costs and improve operational
efficiency.
New business opportunities: CBDCs can create opportunities for new business models and services.
For central banks:
Enhanced monetary policy control: CBDCs can give central banks greater control over the money supply and
monetary policy.
Financial stability: CBDCs can help mitigate financial stability risks associated with private digital currencies.
Innovation: CBDCs can promote innovation in the financial services sector.
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Challenges and uncertainties:

Despite the potential benefits, there are also challenges and uncertainties associated with CBDCs:

Technology: The technology underlying CBDCs is still evolving and requires further development.
Regulation: The legal and regulatory framework for CBDCs is still unclear in many jurisdictions.
Privacy concerns: Balancing the benefits of privacy with the need for regulatory oversight and
financial stability is crucial.
Interoperability: Ensuring interoperability between different CBDCs is necessary for global
adoption.

Overall, the emergence of CBDCs represents a significant opportunity to modernize and improve the
financial system. However, careful consideration of the potential risks and challenges is essential to
ensure a successful and sustainable implementation.
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BIS - CBDC: Foundational Principles and Core Features 2018

Published by: Committee on Payments and Market Infrastructures and the Markets Committee

This report provides a high-level overview of the key considerations for central banks when issuing a
CBDC. It covers topics such as:

Definition and characteristics of CBDCs:

• A CBDC is a digital form of central bank money that is a legal tender and a direct liability of the
central bank. It can be used for payments, investments, and other purposes.
• CBDCs can be either retail or wholesale.
• Retail CBDCs are designed for use by the general public, while
• Wholesale CBDCs are designed for use by financial institutions.
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BIS - CBDC: Foundational Principles and Core Features 2018

Published by: Committee on Payments and Market Infrastructures and the Markets Committee

Motivations for issuing a CBDC:

Central banks may issue a CBDC for a variety of reasons, such as:
• To improve the efficiency and security of the payments system.
• To promote financial inclusion.
• To provide a safe and convenient alternative to private digital currencies.
• To maintain control over the monetary system.
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BIS - CBDC: Foundational Principles and Core Features 2018

Published by: Committee on Payments and Market Infrastructures and the Markets Committee

Design choices for CBDCs:

Central banks need to make a number of design choices when issuing a CBDC, such as:
• Whether to issue a retail or wholesale CBDC.
• Whether to allow for offline transactions.
• Whether to provide privacy features.
• The technology platform to use.
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BIS - CBDC: Foundational Principles and Core Features 2018

Published by: Committee on Payments and Market Infrastructures and the Markets Committee

Potential benefits of CBDCs:

CBDCs have the potential to offer significant benefits, such as:
• Increased efficiency: CBDCs can be used to make faster and cheaper payments than traditional
methods.
• Enhanced security: CBDCs are more secure than traditional payment methods, such as cash and credit
cards.
• Improved financial inclusion: CBDCs can provide access to financial services for people who do not
have access to traditional banking services.
• Greater monetary policy control: Central banks can have more control over the money supply with
CBDCs.
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BIS - CBDC: Foundational Principles and Core Features 2018

Published by: Committee on Payments and Market Infrastructures and the Markets Committee

Potential risks associated with CBDCs, such as:

• Financial instability: CBDCs could lead to financial instability if they are not properly designed and
implemented.
• Cybersecurity threats: CBDCs are vulnerable to cyberattacks.
• Privacy concerns: CBDCs could raise privacy concerns if they are not designed to protect user privacy.
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BIS - CBDC: Foundational Principles and Core Features 2018

Published by: Committee on Payments and Market Infrastructures and the Markets Committee

Key findings:

• CBDCs have the potential to offer significant benefits for central banks and the financial system.
• However, there are also potential risks associated with CBDCs that need to be carefully considered.
• Central banks need to carefully design and implement CBDCs in order to mitigate the risks and
maximize the benefits.
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Connecting Economies Through CBDC (2022)

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BIS mBridge:

Project mBridge is a collaborative effort between the BIS Innovation Hub Hong Kong
Centre, the Hong Kong Monetary Authority, the Bank of Thailand, the Digital Currency
Institute of the People's Bank of China, and the Central Bank of the United Arab Emirates.
It aims to develop a multi-CBDC platform for cross-border payments that can be used by
central banks and commercial banks around the world.
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BIS mBridge: Connecting Economies Through CBDC (2022)

This platform aims to address the inefficiencies and challenges of existing cross-border payment
systems, such as:

Slow speed: Transactions can take several days to settle.

High cost: Fees can be significant, especially for smaller transactions.
Lack of transparency: The process can be complex and opaque, making it difficult to track the
status of payments.
Limited accessibility: Many individuals and businesses lack access to efficient cross-border
payment services.
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BIS mBridge: Connecting Economies Through CBDC (2022)

mBridge proposes a solution by offering a platform with the following key features:

Multi-CBDC design: Allows direct exchange between different CBDCs, eliminating the need for
intermediaries and foreign exchange conversions.
Custom-built blockchain: Provides a secure and efficient infrastructure for settlement and
recordkeeping.
Comprehensive legal framework: Ensures compliance with relevant regulations and protects
user privacy.
Collaborative governance: Promotes joint ownership and decision-making among participating
central banks.
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BIS mBridge: Connecting Economies Through CBDC (2022)

In 2022, mBridge achieved significant milestones:

Successful pilot test: Completed between Hong Kong, Thailand, and China, demonstrating the
platform's functionality and potential.
Expansion of participants: New central banks joined the project, increasing its global reach and
impact.
Ongoing development: Enhancements and improvements continue to be made to the platform's
technology and features.
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BIS mBridge: Connecting Economies Through CBDC (2022)

The potential benefits of mBridge are substantial:

Reduced transaction costs: Lower fees and faster settlement can significantly benefit businesses
and individuals.
Increased efficiency: Streamlined processes and automated workflows can improve operational
efficiency for financial institutions.
Enhanced transparency: All transactions are recorded on a public ledger, ensuring transparency
and traceability.
Improved financial inclusion: Greater access to cross-border payments can promote financial
inclusion for underserved communities.
Boosted global trade: Easier and cheaper cross-border transactions can facilitate international
trade and economic growth.
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BIS mBridge: Connecting Economies Through CBDC (2022)

However, challenges remain:

Regulatory uncertainty: The legal and regulatory landscape surrounding CBDCs is still evolving.
Technological integration: Existing financial infrastructure needs to be adapted and integrated with
the mBridge platform.
Interoperability: Ensuring compatibility with other CBDC systems and payment networks is crucial
for wider adoption.
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BIS mBridge: Connecting Economies Through CBDC (2022)

Despite these challenges, Project mBridge represents a significant advancement in the field of
cross-border payments.
By leveraging the potential of CBDC technology and fostering international collaboration, mBridge
offers a promising solution for overcoming current challenges and creating a more efficient, inclusive,
and transparent global financial system.
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BIS mBridge: Connecting Economies Through CBDC (2022)

Additional resources:

Project mBridge website: https://www.bis.org/publ/othp59.htm

BIS Innovation Hub website: https://www.bis.org/topic/fintech/hub.htm

Article: Project mBridge: Connecting Economies Through CBDCs:

https://www.bis.org/publ/othp38.htm
 E8
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BIS CBDC - Information Security and Operational Risks to

Central Banks
Central banks are investigating the potential for issuing CBDCs, but their introduction also presents new information
security and operational risks.
This document by BIS provides an integrated risk-management framework that can be applied throughout the entire
CBDC lifecycle, from research and design to implementation and operation.
Key findings and recommendations from the report include:
• CBDCs will have far-reaching implications for the way central banks currently operate.
• Cybersecurity is a key risk for CBDCs, as they would be open to many participants and points of attack.
• The potential effect of fraud could be more significant due to the ease of transferring large amounts
electronically.
• Central banks need to develop robust mitigation methods for cyber-risks before issuing CBDCs.
• The appropriate degree of privacy for CBDCs needs to be carefully considered, as it involves difficult public policy
design choices.
• Existing laws may need to be updated to address the unique challenges of CBDCs.
• Central banks should collaborate with other stakeholders, such as commercial banks and technology providers, to
develop and implement CBDCs in a safe and efficient manner.
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BIS CBDC - Information Security and Operational Risks to

Central Banks
The document also discusses the implications of many of the design choices that a central bank needs
to take when considering a CBDC, such as:

• The technology platform that will be used.

• The level of anonymity that will be provided to users.
• The distribution model that will be used.
• The regulatory framework that will be applied.
By carefully considering these risks and taking proactive measures, central banks can mitigate the
potential risks associated with CBDCs and ensure that they are issued in a safe and secure manner.
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Project mBridge Update: Connecting Economies Through CBDCs

(October 2023)
• Commercial banks often lack direct relationships with offshore counterparties and must rely on a
global network of correspondent banks to make cross-border payments.
• A typical cross-border payment would involve not only the payer’s and payee’s local banks, but also
their correspondent banks (which may or may not be in a third jurisdiction).
• While critical to the functioning of the international payments system, cross-border payments
made in this manner tend to exhibit high costs, settlement risks, low speed and operational
complexities due to duplicated processes and steps in the payment chain.
• There is also evidence to suggest that correspondent banks are cutting back their services
worldwide, leaving many without sufficient or affordable access to the global payments network.
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Project mBridge Update: Connecting Economies Through CBDCs

(October 2023)
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Project mBridge Update: Connecting Economies Through CBDCs

(October 2023)
With mBridge, the number of steps can be significantly reduced by allowing direct, bilateral connectivity between
the payee’s and payer’s local banks supported by interoperability with participants’ domestic payment systems.

As such, cross-border payments on the platform developed for Project mBridge can be:

• Faster: instant settlement within seconds.

• Safer: settled in the safest settlement asset – central bank money.
• More accessible: with direct, bilateral connectivity between any two banks on the platform.
• Cheaper: less settlement risk and fewer duplicated processes can lead to a reduction in overall costs.
• Compliant: with banks ensuring compliance with each jurisdiction’s KYC/AML/CFT regulations off-bridge.
• Settled with finality: based on legal and/or contractual arrangements and protections.
 E8
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Project mBridge Update: Connecting Economies Through CBDCs

(October 2023)
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Project mBridge Update: Connecting Economies Through CBDCs

(October 2023)
Project mBridge’s platform is underpinned by custom-built distributed ledger technology (DLT), a set of
comprehensive legal rulebook documents and a fit-for-purpose governance structure.

The project is a collaborative effort of the BIS Innovation Hub, four founding central banks and over 25
observing members:

Founding central banks: Hong Kong Monetary Authority, Central Bank of the United Arab Emirates, Digital
Currency Institute of the People’s Bank of China and Bank of Thailand.

Observing members: Bangko Sentral ng Pilipinas; Bank Indonesia; Bank of France ; Bank of Israel; Bank of
Italy; Bank of Korea; Bank of Namibia; Central Bank of Bahrain; Central Bank of Chile; Central Bank of Egypt;
Central Bank of Jordan; Central Bank of Malaysia; Central Bank of Nepal; Central Bank of Norway; Central
Bank of the Republic of Türkiye; European Central Bank; International Monetary Fund; Magyar Nemzeti Bank;
National Bank of Georgia; National Bank of Kazakhstan; New York Innovation Centre, Federal Reserve Bank of
New York; Reserve Bank of Australia; Saudi Central Bank; South African Reserve Bank; The World Bank.
 E8
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Project mBridge Update: Connecting Economies Through CBDCs

(October 2023)
Multi-CBDC arrangements that directly connect the CBDCs of different jurisdictions in a single common
technical infrastructure offer significant potential to improve the current system and allow cross-border
payments to be immediate, cheap and universally accessible with final settlement.

For Project mBridge, a platform based on a new blockchain – the mBridge Ledger – was built by central
banks to support real-time, peer-to-peer, cross-border payments and foreign exchange transactions using
CBDCs, focusing on the use case of international trade. It also ensures compliance with jurisdiction-specific
policy and legal requirements, regulations and governance needs. In 2022, a pilot involving real corporate
transactions was conducted on the platform among participating central banks, selected commercial banks and
their corporate customers in four jurisdictions.

A next envisaged stage in this project is to see if the platform tested can evolve to become a minimum
viable product, which entails continued work on the technology and legal and governance frameworks; acting
as a testbed and evaluating potential synergies with other BIS Innovation Hub projects and innovative private
sector solutions; and welcoming new participants and use cases.
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Project mBridge Update: Connecting Economies Through CBDCs

(October 2023) - Key Updates - Summary
● Successful pilot test: Completed between Hong Kong, Thailand, and China in 2022, demonstrating
the platform's functionality and potential.
● Expansion of participants: New central banks joined the project in 2023, including the Central
Bank of the United Arab Emirates and the Digital Currency Institute of the People's Bank of China,
increasing its global reach and impact.
● Technology advancements: The platform has undergone significant technological advancements,
including the introduction of the Dashing consensus algorithm, which improves transaction speed
and efficiency.
● Regulatory progress: The project has made progress in addressing regulatory concerns
surrounding CBDCs, establishing a comprehensive legal framework and governance structure.
● Focus on specific use cases: The project has begun exploring specific use cases for the platform,
such as trade finance and international remittances.
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