digital finance

1. Md. Anhar Sharif Mollah
Assistant Professor of Finance
Daffodil International University.
Digital Finance and
Alternative Finance

2. • A Brief History of Financial Innovation
• Digitization of Financial Services FinTech & Funds
• Industry Showcase: How AI is Transforming the Future of FinTech
• Industry Showcase: Ensuring Compliance from the Start: Suitability and Funds
• Crowd funding - Regards, Charity and Equity
• P2P and Marketplace Lending
• The Rise of Chinese TechFins - New Models and New Products
• What is an ICO?
Topics to be covered

3. • What is Financial Innovation
Financial Innovation

4. • Digital finance is the term used to describe the impact of new
technologies on the financial services industry.
• It includes a variety of products, applications, processes and business
models that have transformed the traditional way of providing
banking and financial services. Ex: ERP software, Online banking
Digital Finance

5. Alternative Finance
Alternative Finance is an umbrella term that covers any
type of finance that does not come from a mainstream
provider. Ex: pawnshops, and payday lenders
Types of AF
• Crowd Funding
• P2P Lending
• Venture Capital
• Angel Investors
• Leasing
• Franchising

6. • Rewards-based crowd funding
• Donation-based crowd funding
• Equity crowd funding
• Profit-sharing / revenue-sharing
Crowd Funding

7. • Reach
• Presentation
• Validation of Concept
• Efficiency
Benefits of Crowd Funding

8. P2P Lending
• Peer-to-peer lending is a form of direct lending of money to
individuals or businesses without an official financial institution
participating as an intermediary in the deal. P2P lending is generally
done through online platforms that match lenders with the potential
borrowers.

9. How does peer-to-peer lending work?

10. How does peer-to-peer lending work?
• A potential borrower interested in obtaining a loan completes an online
application on the peer-to-peer lending platform.
• The platform assesses the application and determines the risk and credit
rating of the applicant. Then, the applicant is assigned with the appropriate
interest rate.
• When the application is approved, the applicant receives the available
options from the investors based on his credit rating and assigned interest
rates.
• The applicant can evaluate the suggested options and choose one of them.
• The applicant is responsible for paying periodic (usually monthly) interest
payments and repaying the principal amount at maturity.

11. Digital Financial Inclusion
• Digital financial inclusion is a broad-spectrum that
emphasizes digital access to traditional financial and banking
services by those under-served societies.
• The deployment of the cost-saving digital means to reach
currently financially excluded and underserved populations
with a range of formal financial services suited to their
needs.

12. Key Components of Digital Financial Inclusion
Digital Transactional Platform: Digital transactional platforms are those which
store and process the user data electronically with utmost privacy and security.
Devices: used by the customers can either be digital devices (mobile phones,
etc) that transmit information or instruments (payment cards, etc) that connect
to a digital device such as a point-of-sale (POS) terminal.
Retail Agent: Retail Agents are those that have access to resources for sending
and receiving the funds, which converts the electronic stored value of the fund
to hard cash.

13. FinTech
Fintech refers to the integration of technology into offerings by financial
services companies in order to improve their use and delivery to consumers.
Ex: Mobile Banking.
Fintech vs Digital Finance
Digital Finance encompasses a magnitude of new financial products, financial
businesses, finance-related software, and novel forms of customer
communication and interaction—delivered by FinTech companies and
innovative financial service providers

14. Tech Fin
TechFin, refers to tech-based firms that intend to extend their operations into
the financial sector. Apple Pay, We Chat Pay, Google Pay, and the yet to be
completed What Sapp Pay, are classic examples of TechFin establishments.
Techfin refers to a technology firm that wants to deliver financial products on
the basis of existing tech solutions.
Fintech vs Techfin
Fintech is a space where financial services are delivered through a better user
experience using cutting edge technology. TechFin on the other hand is where
a firm that has been delivering technology solutions, launches a new way to
deliver Financial services

15. Why Fintech?
• It’s Universal
• It’s Cheaper and reduces cost
• It’s More Secure and speedy
• It Creates Economic Growth
• It’s Empowering Businesses
• It Helps Companies Turn Big Data to Meaningful Data

16. Challenges of Fintech
• Data Security
• Compliance with Government Regulations
• Lack of Mobile and Tech Expertise
• User Retention and User Experience. ...
• Personalized Services.
• Quality of Software

17. Why Fintech?

18. Regtech
• Regtech is the management of regulatory processes within the
financial industry through technology. The main functions of regtech
include regulatory monitoring, reporting, and compliance.
• Regtech, or RegTech, consists of a group of companies that use cloud
computing technology through software-as-a-service (SaaS) to help
businesses comply with regulations efficiently and less expensively.
Regtech is also known as regulatory technology.

19. Benefits of Regtech
• Regtech is a community of tech companies that solve challenges arising
from a technology-driven economy through automation.
• Greater accuracy and comprehensiveness.
• Improved risk management.
• Efficiency gains

20. Block Chain
• Block chain is a specific type of database.
• It differs from a typical database in the way it stores
information; block chains store data in blocks that are then
chained together.
• As new data comes in it is entered into a fresh block. Once the
block is filled with data it is chained onto the previous block,
which makes the data chained together in chronological order.

21. • Real-Life Examples
Ecoinmerce is a Washington-based e-commerce platform that allows its
users to own digital assets like brands, stores, and crypto. These are
block chain tokens that they can then use for trading across the
marketplace.

22. Bit coin vs. Block chain
• The goal of block chain is to allow digital information to be recorded and
distributed, but not edited. Block chain technology was first outlined in
1991 by Stuart Haber and W. Scott Stornetta, two researchers who wanted
to implement a system where document timestamps could not be
tampered with.
• The Bitcoin protocol is built on a blockchain.

23. Advantages and Disadvantages of Block chain
Advantages
• Improved accuracy by removing human involvement in verification
• Cost reductions by eliminating third-party verification
• Decentralization makes it harder to tamper with
• Transactions are secure, private, and efficient
Disadvantages
• Significant technology cost associated with mining bitcoin
• Low transactions per second

24. ICO
An initial coin offering (ICO) is the crypto currency industry’s equivalent to
an initial public offering (IPO). A company looking to raise money to create
a new coin, app, or service launches an ICO as a way to raise funds.

25. 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).

26. 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

27. Artificial Intelligence in Finance
• It refers to the application of computational tools to complete tasks
that normally required human intuition and judgment.
• Artificial intelligence in finance is transforming the way we interact
with money. AI is helping the financial industry to streamline and
optimize processes ranging from credit decisions to quantitative
trading and financial risk management.

28. What does AI mean for the financial industry?
• Virtual assistants and chat bots
• Improved investment insights
• Smarter search results
• Personalized financial advice
• Fraud prevention and anti-money laundering
• "Reading" contracts and legal documents

29. Applications of AI in Financial Services
AI in Personal Finance
AI in Consumer Finance
AI in Corporate Finance

30. HOW AI HAS TRANSFORMED THE FINANCE INDUSTRY
1. Risk Assessment
2. Fraud Detection And Management:
3. Financial Advisory Services:
4. Trading
5. Managing Finance