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FINTECH
KUBS, University of Karachi
BA(BBA)-351: Computer Application to business
Submitted by Alisha Jawaid
Submitted to Sir Fawad Alam
Assignment deadline: 4th of April, 2022
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FINTECH
FinTech, short for Financial Technology, is the use of technology to
provide financial services. Fintech refers to a multi-billion dollar industry.
FinTechs have been experiencing remarkable growth over the past few years
globally. According to the report, FinTechs are categorized as Traditional
Fintechs and Emergent Fintechs. The term fintech includes a huge range of
products, technologies, and business models that are changing the financial
services industry. For instance, if we have ever paid for something, transferred
money using an app or checked our bank statement online, then we are already
part of a multi billion dollar industry. It’s called fintech and it’s changing
economies around the world.
It refers to everything from cashless payments, to crowd funding platforms, to
robo-advisors, to virtual currencies. Donating to someone’s kickstarter
campaign or transferring money to someone using venmo or any other app,
that’s also fintech.
SCOPE OF FINTECH
There are more than 40 notable fintechs operating in the country, of which,
most are operating in payments space. In Pakistan, Fintech companies are
providing services such as digital banking, payment gateways, e-wallets or
digital wallets, digital lending etc.
TRADITIONAL AND EMERGENT FINTECHS
Traditional fintechs in Pakistan includes “Monet, Innovb, TPS, Autosoft,
and Abacus.” Whereas, Emergent fintechs are “Oneload, Red Buffer, Batwa,
Payload, and Finja.”
Those who haved studied finance, economics, management, engineering or
commerce can easily start their career in this field. Even graphic designers
can also start young to curate a profitable career in this industry.
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TECHNOLOGIES THAT CONTRIBUTE TO FINTECH
Many technologies that contribute to Fintech are:
Artificial intelligence(AI) and machine learning(ML) include credit
scoring, fraud detection, regulatory compliance, and wealth management.
Similarly, big data and data analytics is also included, through large
datasets, consumer preferences, spending habits, and investment behavior
can be extracted and used to develop predictive analytics. Robotic process
automation(RPA) is the process of assigning manual, repetitive tasks to
robotics instead of humans in order to streamline workflows in financial
institutions. Lastly, block chain Industry is being adopted at a large scale in
financial industry due to its ability to securely store transaction records and
other sensitive data. Each data is encrypted and chances of cyber attacks are
low. Block chain is alao the back bone of many crypto currencies.
FUTURE OF FINTECH
Businesses across the world are turning rapidly towards fint for managing
their finances and to deliver their products and services. Digital payment
facilities have become essen as they can better cater to consumer behaviour
in the digital era. Due to restrictions imposed on traditional economic
activities by covid-19 importance of financial services has been widely
realised as it not only help businesses to adjust its operations but its also
contributing to relief activities. The use of technology has allowed for
greater flexibility for the consumer. Transactions are faster and the ude of
high level security ensures their safety.
ROSHAN DIGITAL ACCOUNT
The State Bank of Pakistan(SBP) is on the mission to revamp and
revolutionise the financial ecosystem of Pakistan. For this purpose, the SBP
has taken significant steps in the recent past. For the first time in its banking
history, Non-Resident Pakistanis(NRPs) can now remotely open a bank
tthrough entirely digital and online processors. And, this is possible due to
Roshan Digital Account(RDA). Crucially, this initiative supports investment
into Pakistan's Stock market and property market, which will serve as an
important driving force to augment the development of Pakistan's economy.
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These steps by regulator have proven fruitful, as funds received via RDA
have grown exponentially from 7 million USD to 2 plus USD in a span of 10
months.
RAAST
The State Bank of Pakistan has launched a micro payment gateway called
RAAST. This is a key step towards financial inclusion and will bring about
tectonic changes to Pakistan's economy. RAAST will provide financial
inclusion for underrepresented and unbanked communities, a secure platform
for digital payment. These initiatives are forerunner to a great future. So far,
its just a great start. As Pakistan is gearing towards one of the biggest
changes in its history of banking.
ECOMMERCE MARKET
Pakistan has recently embarked on the journey towards digitalization.
Revenue in the ecommerce market is projected to reach US$3,900m in 2020.
Revenue is expected to growth rate (CAGR 2020-2024) of 16.3%, resulting
in a projected market volume of US$7,133m by 2024 (statista). During the
last five years, significant progress has been recorded in the usage of internet
banking and mobile banking channels with an annual transactions growth of
31% and 88% respectively.
CHALLENGES OF FINTECH
Many prominent Fintech companies face various issues like long fund
raising cycles, missed out targets, and increasing losses. These are very
common issues, which take place due to mismanagement of the leading
lifecycle.
DATA SECURITY
As we know, traditional banking system are confidential with security
guards, CCTVs, vaults, and heavy bullet proof doors to keep data safe and
secure. But when we talk about virtual security, things are not easy as we
think. Vulnerabilities are much more discreet and have potentially more
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impact on users, as not only their money is at stake but their personal data
too.
LACK OF MOBILE AND TECH EXPERTISE
In the fintech industry, some of the finance companies or banks don’t have
proper or convenient mobile banking services. However, some banks try to
replicate websites, but in this digital world, nobody would prefer a mobile
application. Every user wants a seamless and convenient option to use.
Therefore, a lack of expertise in Fintech mobile apps development services
result in non friendly applications that don’t use mobile devices to their
fullest potential.
BIG DATA AND AI INTEGRATION
According to Accenture, 82% of US bankers and 79% of bankers globally
believe that Artificial intelligence(AI) will revolutionise the way banks fetch
data and interact with customers. As we know, big data and AI have made
their impact in every organisation. Using big data, organisations can collect
personal information about users, social status to financial behaviour, habits,
and in app activity. This data is very important to banks, specially when it
comes to credit ratings and offering other high risk banking services. With
the help of big data, AI automates the whole process to detect fraud perform
a risk analysis and manage transactions effectively. However, Fintech
organisation face various challenges to implement these technologies. They
require expertise and constant maintenance.
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