Fintech Study guides, Class notes & Summaries

Cryptography correct answers Transmitting messages and transactions securely against third party adversaires When we want to make a secure transactions, following has to occur(4) correct answers 1) message comes from right sender 2)1) message comes from right sender is not read by anyone else 3) Message is not altered 4) message is delivered to the right receiver Hashing correct answers -form of cryptography, used for checksum -transforms any text to an arbitrary length -use...

The Financial Stability Board defines fintech as "technology-enabled innovation in financial services that could result in new business models, applications, processes or products with an associated________ effect on the provision of financial services." correct answers Material What measures the fintech users as a percentage of the digitally active population? correct answers Fintech adoption rate Open Banking standards do all but which of the following? Make it possible to pass on i...

What advancement in banking has led to the percentage of people in Kenya with bank accounts to rise from 30% to nearly 100%? correct answers Mobile Money Accounts Which of the following are the two (2) major financial crises that resulted in an unusually high (for the U.S.) unemployment rate and caused the banking system to fail in the United States? correct answers The Great Recession of 2008 and the Great Depression. The banking system we have today is a direct descendent from which of t...

The FSI provides key services to the economic system (FSI = financial service industry) correct answers -Liquidity and transactions (trading systems for buying and selling) -Matching individuals who have excess funds with those with those who need the them (financial intermediation) -Risk sharing (diversification) Finanical services industry are different around the world -in the USA, UK & Asia -in EU correct answers Market based economy in USA, UK, ASIA More bank-based economy i...

What are some of the factors that allowed Ant Financial to become a dominant financial service provider in sucha short period of time? correct answers Large market Unmet demand for financial services to lower end of the retail costumers/ complement rather than compete with incumbentbanks Synergies from Alibaba -costumer focus, technologies, cross-selling, use of data Relationship with regulator Provide at least three drivers for the recent growth in FinTech. correct answers -Size, pr...

What is a challenger bank? Where are they mostly located? Two Examples. correct answers Tech-driven retail bank, created either as a start-up or a divestment from larger banks that use innovative systems and products to appeal to newer generations and directly compete with incumbents. Mostly in UK: Monzo & Revolut Capital One: Disruptive or sustaining? Why? Mix of organic and inorganic innovations? correct answers Sustaining- They entered retail banking in early 2000s, extending their pro...

Start-ups need to grow rapidly correct answers Network effects (conventional and data) and scale economies/first mover advantage Financing framework correct answers small businesses: low capital requirement, low novelty Capital intensive, proven-tech: high capital requirement, low novelty Capital intensive new tech: high capital, high novelty New technologies: low capital, high novelty Search frictions correct answers little public info available about start-up-- sourcing: where to find...

Real Time correct answers Payments can settle in real-time (around 5 minutes) instead of being netted and settled at the end of a period More costly and more risk because these are considered irreversible Gross Settlement correct answers Indicates that each individual transaction may be settled by itself Refers to the continuous process of settling payments on an individual basis without netting debits with credits Deferred Settlement correct answers Relies on netting transactions to red...

Supervised Learning correct answers Uses a precise rule to predict outcome Ex: Regression Random Forrest (Predict stock returns) Unsupervised Learning correct answers Uncovers relationships/commonalties/patterns between variables without a model/structure (What stocks are similar to each other) Deep Learning correct answers Mimicking how the brain works, uses multi-layered neural network (Detect investor sentiment using social media) Ex; time series (nerual nets) Fin-tech: correc...

Material correct answers The Financial Stability Board defines fintech as "technology-enabled innovation in financial services that could result in new business models, applications, processes or products with an associated __________ effect on the provision of financial services" Fintech Adoption Rate correct answers What measures the fintech users as a percentage of the digitally active population? b) eliminate all risk in the online banking system correct answers Open Banking standard...