The Future of Finance: The Impact of Fintech, Ai, and Crypto on Financial Services

ISBN-13: 9783030145323 / Angielski / Twarda / 2019 / 312 str.

Henri Arslanian; Fabrice Fischer; R. Jesse McWaters

Spis treści

 

Chapter 1 - The Digital Triumvirate of Computation, Data, and Connectivity  13

1.1 Increasing computational power 13

1.2 Increasing data collection and availability  16

1.3 Increasing digital connectivity  18

1.4 Bringing computation, connectivity and data together in the cloud  20

Chapter 2 - New Interfaces for the Digital World  22

​2.1 The evolution of visual displays  23

2.2 Voice as a user interface  24

2.3 Wearables and the body as an interface  25

The Fundamentals of Fintech  27

Chapter 3 - The Rise of Fintech  28

3.1 Drivers of the fintech revolution  29

3.1.1 A changing economic/regulatory landscape  29

3.1.2 A rapidly evolving technology environment 29

3.1.3 Shifting customer expectations  30

​3.2​ Types of fintechs  31

3.2.1 Fintech and payments  31

3.2.2 Fintech and lending  36

3.2.3 Fintech and wealth management 38

3.2.4 Fintech and insurance  41

3.2.5​ Fintech and digital banking  43

3.2.6​ Regtech: A different sort of fintech innovation  45

3.3​ Challenges faced by fintechs  49

3.3.1 Access to talent 49

3.3.2 Regulatory compliance  51

3.3.3 Customer trust 53

3.3.4 Scaling the customer base  53

3.3.5 Raising capital 55

Chapter 4 - Incumbent Financial Institutions and their Response to Fintechs  55

4.1 Impediments to incumbent innovation  56

4.2 Incumbents building/replicating fintech offerings  58

4.3 Incumbents investing in fintechs  61

4.4 Incumbents partnering with fintechs  62

Chapter 5 -​ The Emergence of Techfin  64

5.1 The case for tech to techfin  64

5.2 China as a template for the growth of techfin  65

5.2.1 Alibaba and Tencent’s transformation of payments in China  65

5.2.2 Alibaba and Tencent’s expansion beyond payments  66

5.2.3 Alibaba and Tencent’s international expansion  67

5.3 Early techfin developments outside of China  68

Chapter 6 - The Changing Structure of the Financial Ecosystem   70

6.1 Incumbent collaboration with techfins  70

6.2 Fintech collaboration with techfins  71

Chapter 7 - Financial Innovation and Inclusion  72

7.1 Fintech as a driver of financial inclusion  72

7.2 Government as an enabler of inclusive fintech solutions  75

The Fundamentals of Crypto-assets  76

Chapter 8 - The Basics of Cryptography and Encryption  77

8.1 Early encryption  77

8.2​ Asymmetric or public key cryptography  78

8.3 Early experiments with cryptocurrencies  79

Chapter 9 - The Rise of Bitcoin  80

​9.1​ The Bitcoin white paper 81

9.2 The technical foundations of Bitcoin  84

​9.2.1​ The role of cryptography in Bitcoin  84

9.2.2​ The role of decentralization in Bitcoin  86

9.2.3​ The role of immutability in Bitcoin  87

​9.2.4​ The role of proof-of-work in Bitcoin  87

9.3​ The growth of Bitcoin  89

9.4​ Challenges facing Bitcoin  93

​Chapter 10 - Blockchain as an Enabling Technology  95

​10.1​ Defining the characteristics of a blockchain  96

10.2 Challenges  99

10.3 Use cases of blockchains  100

Chapter 11 - The Proliferation of Crypto-assets  103

11.1 The emergence of new crypto-assets  103

11.2 Mechanisms for distributing new crypto-assets  105

11.2.1 The creation of new tokens via mining  106

11.2.2 The creation of new tokens via a hard fork  106

11.2.3 The distribution of new tokens via sale  108

11.3 A closer look at ICOs  108

11.3.1 Technical structure of an ICO   109

11.3.2 The regulatory treatment of ICOs  112

11.3.3 Advantages and challenges of ICOs  115

Chapter 12 - A High-Level Taxonomy of Crypto-assets  117

12.1 Establishing a taxonomy of crypto-assets  117

12.2 Payment tokens  119

12.2.1 Characteristics of a payment token  119

12.2.2 Challenges facing payment tokens  120

12.2.3 Regulation of payment tokens  121

12.3.4 Stable coins  122

12.3​ Utility tokens  124

12.4 Investment tokens  126

12.4.1 Tokenization of new investment instruments  126

12.4.2 Tokenization of pre-existing investment instruments  127

​12.5 Non-fungible tradable tokens  130

12.6 Non-fungible non-tradable digital assets  131

Chapter 13 - The Crypto-asset Ecosystem   132

13.1 Crypto-asset exchanges  133

13.1.1 Centralized crypto-asset exchanges  133

13.1.2 Decentralized crypto-asset exchanges  136

13.2 Crypto-asset custodians and wallets  136

13.2.1 Crypto-asset custodians  137

13.2.2 Crypto-asset wallets  138

13.3 Advisory and consumer services for the crypto-asset ecosystem   139

The Fundamentals of Artificial Intelligence  139

Chapter 14 - Understanding Artificial Intelligence and its Capabilities  140

14.1 The surprisingly tricky problem of defining AI  140

14.2 Why artificial intelligence matters  142

14.3 Selected AI techniques  143

14.3.1 Machine learning  143

14.3.2 Neural networks and deep learning  144

14.3.3 Genetic and evolutionary algorithms  145

14.3.4 Limitations of these techniques  145

14.4 Selected capabilities of AI  145

14.4.1 Machine vision  146

14.4.2 Natural language processing  146

14.5 High-level implications of AI for business  147

Chapter 15 - Applications of Artificial Intelligence in Financial Services  148

15.1 Key artificial intelligence opportunities for financial institutions  148

15.1.1 AI-enabled automation  149

15.1.2 AI-enabled improved decision-making  150

15.1.3 AI-enabled customization  150

15.1.4 AI-enabled new value propositions  150

15.2 Specific applications of AI in sub-sectors of financial services  151

15.2.1 Key applications of artificial intelligence in lending  151

15.2.2 Key applications of artificial intelligence in wealth and asset management 153

15.2.3 Key applications of artificial intelligence in insurance  155

15.2.4 Key applications of artificial intelligence in payments  157

15.3 Key challenges to the deployment of artificial intelligence in financial institutions  159

15.3.1 Data challenges to deploying of AI in financial institutions  159

15.3.2 Technology challenges to deploying of AI in financial institutions  160

15.3.3 Talent challenges to deploying of AI in financial institutions  160

15.3.4 Regulatory challenges to deploying of AI in financial institutions  162

Future Trends in Fintech, Crypto, and AI  163

Chapter 16 - Fintech and the Future of the Financial Ecosystem   164

16.1 The changing shape of the financial ecosystem   165

16.1.1 The shift from in-person to digital channels  165

16.1.2 Larger shifts in the financial ecosystem on the horizon  167

16.2 A new approach to customer experience  168

16.2.1 Open banking and the ‘platformization’ of the customer experience  168

16.2.2 Who will own the financial platform of the future?  170

16.2.3 Broader challenges of a platform model of customer experience  171

16.3 New market dynamics for competing financial products  172

16.4 Renovating the back office and shared financial infrastructure  174

16.4.1 Outsourcing the back office  174

16.4.2 The much needed modernization of financial infrastructure  175

Chapter 17 - The Continuing Evolution of Crypto-assets  176

17.1 Regulators provide improved clarity on crypto-assets  177

17.1.1 A positive disposition to crypto-assets  177

17.1.2 A neutral approach to crypto-assets  178

17.1.3 A negative approach to crypto-assets  179

17.1.4 The future of crypto-asset regulation  180

17.2 Financial incumbents as facilitators of crypto investments  181

17.2.1 Institutional investors and crypto-assets  181

17.2.2 Incumbent financial institutions as crypto-asset service providers  182

17.3 ​Large tech firms’ forays into crypto  183

17.4 Central bank-backed digital currencies  185

Chapter 18 – Future Trends in Artificial Intelligence  189

18.1 The perils of predicting AI developments  189

18.2 The democratization of artificial intelligence  191

18.3 AI trends in financial services  193

18.3.1 Alternative data and ‘quantamental’ asset management 194

18.3.2 AI-as-a-service by and for financial institutions  196

18.3.3 AI enabled ‘self-driving finance  198

18.4 Responsible regulation of AI in financial services  201

Artificial Intelligence Meets Cryptoassets  202

Chapter 19: Selected Scenarios for a Crypto-AI World  203

19.1 Real-time auditing  203

19.2 Artificially intelligent distributed autonomous corporations  206

19.3 Blockchain based identity powered by AI data managers  208

19.4 Data marketplaces and the democratization of AI  210

19.5 AI catalyzing the adoption of cryptoassets  213

19.6 The machine-to-machine payment economy  214

A Financial Future Full of Possibilities  217

O autorze

Henri Arslanian is the PwC FinTech & Crypto Leader for Asia, the Chairman of the FinTech Association of Hong Kong and an Adjunct Associate Professor at the University of Hong Kong where he teaches the first FinTech university course in Asia. A lawyer and banker by background, Henri is a TEDx speaker and a published author, and has delivered keynotes at some of the most prestigious conferences globally. Henri has been awarded many industry and academic awards over the years from being regularly named one of the Most Influential Individuals in FinTech in Asia to being awarded the Governor General of Canada Gold Medal for Academic Excellence.Henri was also recognized as one of the global LinkedIn Top Voices in Economy & Finance and is regularly featured in global media including Bloomberg, CNBC, CNN, The Wall Street Journal and the Financial Times.

Fabrice Fischer is the Founder and CEO of blu, an Artificial Intelligence advisory firm specializing in disruptive innovation within the Financial Services industry. He is also a co-founder of the Insead Angels Asia and a Director of the Asia Transformation & Turnaround Association. Fabrice has spent over 20 years in Financial Services and IT in Asia, Europe and North America. Over the past six years as CFO of Sentient Technologies, he oversaw a period rapid growth, which has led to the company being one of the world’s best funded AI outfits. He was also instrumental in the launch of Sentient Investment Management, Sentient’s hedge fund, anchored on artificial intelligence to continually evolve and optimize its investment strategies.

                    

         

      

     

       

    

Blurb

This book, written jointly by an engineer and artificial intelligence expert along with a lawyer and banker, is a glimpse on what the future of the financial services will look like and the impact it will have on society.

The first half of the book provides a detailed yet easy to understand educational and technical overview of FinTech, artificial intelligence and cryptocurrencies including the existing industry pain points and the new technological enablers.

The second half provides a practical, concise and engaging overview of their latest trends and their impact on the future of the financial services industry including numerous use cases and practical examples.

The book is a must read for any professional currently working in finance, any student studying the topic or anyone curious on how the future of finance will look like.