CHAPTER 1 INTRODUCTION TO FINTECH

INTRODUCTION TO FINANCIAL DR. NIK HADIYAN NIK AZMAN
AND

DIGITAL TECHNOLOGIES
(FINTECH)

CONTENT FINTECH
PHENOMENA IN

MALAYSIA

FINTECH

01 EVOLUTION

02 LENDING IN
03 FINTECH

04 GENERATION
05 COMMERCE

06 CROWDFUNDING
AND

CROWDINVESTING

Q&A SESSION

In one word, what would you like to take away from this class?

ⓘ Start presenting to display the poll results on this slide.

How energized do you feel today?

ⓘ Start presenting to display the poll results on this slide.

Do you know what is fintech?

ⓘ Start presenting to display the poll results on this slide.

Do you think fintech has relationship to you?

ⓘ Start presenting to display the poll results on this slide.

REAL FINTECH
PHENOMENA IN MALAYSIA

Fintech in Malaysia

Others Payment
14% 20%

• Developments in Malaysian fintech are altering Wallet Crowdfunding
the country’s financial sector landscape 20% 6%

• High mobile phone penetration rates, and strong Insurtech Remittances
government support for the digital economy, 9% 7%
Malaysia is well situated to take advantage of
fintech innovation. Lending Blockchain
8% 8%
• Mobile wallets and electronic payments
EMBRACE the technology strongly Wealthtech
8%
• Mobile banking is also booming, supported by
near-universal 4G network coverage, affordable Note: Others include AI/big Data/marketplace/proptech and Islamic Fintech
data, and 5G is in the works.





WHAT IS THE FINTECH
INDUSTRY?

FINTECH EVOLUTION

1 INNOVATION GIG
EDUCATO
2 MODERN R IN 21ST
TECHNOLOGY CENTURT

3 MANAGEABLE Y – DR
EMA

FINTECH
EVOLUTION

4 TOOLS

Blockchain

• Decentralize system and there are many
interdependence computers involves a database
that goes against censorship (Public ledger)

• Another one is private ledger
• Networks of computers maintain collective

bookkeeping on the cloud
• One of the application of blockchain is

cryptocurrencies
• First is bitcoin in 2009, then namecoin
• As 2016 about 700 cryptocurrencies available for

online transactions

ETH (2015) ETC (2015)

by Vitalik Buterin – by Vitalik Buterin –
smart contract smart contract

BITCOIN (2009) RIPPLE (2012)

by Satoshi Real time gross
Nakamoto – online settlement
system
profile -coin
LITCOIN (2011)
STELLAR (2018)
Charles Lee
Jeb McCaleb (Google

employees)

A Full
digital
access

Perform B
automated
portfolio
rebalancing

Personalise to D C Adopt indexation
customers’ goals or passive
management
and behavior
Is ROBO ADVISOR
technology truly
DISTRUPTIVE?

YES!!! Why?

Internet of things (IoT)

• It is a suite of technologies and applications allowing devices with
embedded sensors to be connected to the internet and exchange data
using the same Internet Protocol (IP)

• Seeking to improve quality of life as well as making industries more
productive

KEY DRIVERS? 1 23 4 5

04

URBANIZATION SMART PHONE RISING DEMAND INCREASING CLOUD
PENETRATION FOR CONNECTED NEED FOR BASED
INVENTORY PLATFORM
DEVICES MANAGEMENT

Internet of things (IoT) 3

2

BENEFIT WHOM? 1 CUSTOMER TINYPPT designed template for GOVERNMENT
BUSINESS presentation in PowerPoint
Improve Reduce
- Lower their their quality Spending
operating
of life

cost

- Improve their

productivity O2O and IoT? What is that?

China used to shift customers from online to

offline….

on demand services, daily deal sites, click and

collect services)

IoT successful companies

• Ingenico group – global leader in
seamless payments

• Mastercard – enables consumers
do their grocery shopping (ex:
Samsung Family hub refrigerator-
wifi enable touch screen)

• VISA – records credit card
transactions and compares them
with the real location of the card
holder.

Artificial Intelligence Use of computer

ML-MI-MC 1 science to create

intelligence machine

5 AI 2

Deep learning Use of AI in
which uses of financial
big amount of services

data

43

Expected to
replace bank

staffs

Big Data

• Big data 3v refers to large datasets that
cannot be stored and analyse by regular
database software

• In a simple way, just imagine big data as
an aeroplane, the information as a fuel,
system will feed the platform to make it
functional.

• Inside this big engine, data is captured
and manage, converting it into
meaningful insights that management
can use.

CAMERA ACTION! – DR EMA

1 CLOUDERA 5 QUALTRICS

KEY PLAYERS? 3 AVANT 7 ALTERYX
CREDIT

4 WELAB 8 GOOD DATA

2 DATABRICKS 6 IBM WATSON

INNOVATION OF
LENDING IN FINTECH

Innovation of Lending in Fintech

• Moneylenders used to sit on benches, known as
“banca”, which give rise to the word “bank”.

• When the lender stopped lending money and
smashed his “banca”, this known as “banca
rupta” which led to the term bankrupt

• in 18th century people are looking for fund. In
1950, McNamara invented credit card and used
it to pay bills.

• The first online lending specialist grew up
between 1980 and 2000. Quicken loans, a
Detroit-based mortgage lender, launched its
online application and review process in 1985.

• The first internet bank started online banking in

P2P Lending

• Its started with the launch of Zopa in the
UK and Prosper in the US (match
borrowers and lenders in the central
marketplace)

• If approve, they get a risk classification,
which determines how much they will
need to pay in interest.

• Of course, they will get better interest
rate than the banks offer.

• P2P lending is believe to be much more
profitable than keeping money in the
saving accounts.

PUBLISH@YOUTUBE – DR EMA

1 HOW ABOUT
BANK?

P2P UNPAID LOAN? 2
LENDING?
3 WHO ARE THE
KEY PLAYERS?

SUBDOMAIN 4
OF P2P?

Digital Consumer Lending POST-PRODUCTION! – DR NIK

PERSONALIZATION QUICK Credit card always
offer 0% interest,
CONVENIENCE WHY? UTILIZE FLEXIBILTY but if customer fail
DIGITAL to pay for its credit
It is riskier for LENDING card balance at
lender, the lender particular time, high
charges highest interest rate will
interest rate to charge on that.
offset the risk.
SIMPLICITY TRANSPARENT

Digital Lending to students

• Many students need loans to fund
their university studies.

• Taking into advantage, P2P
introduces two types loan to
students.

• Each loan is linked to a particular
degree, program and school. Why?

• From where investors earn
money?

• Key players: SoFi (social finance),
CommonBond, earnest, loanhero,
LendEDU

• Since 2008, banks have been awarding fewer loans
Digital Lending to Small medium enterprises
• Digital lending take this chance to fill in the gap.
for SMEs • There are 2 business models are innovative in

providing loans.

Short-term Working Capital

• Require a certain number of
months of credit history, a
certain amount of credit
turnover

• No paperwork, and everything
is done online.

• Example of the players are
Paypal (easy), Kabbage (easy)
and OnDeck (hardest)

Peer-to-Business Loans

• Businesses get funds quickly and at a lower
interest rate, while lenders receive a higher
profit from their investments.

• In P2B business model, borrower can initiate a
loan by specifying the amount and the date of
repayment desired.

• Then lenders will try to outbid each other and
offering an interest rate

• The borrower can decide whether to accept or
reject the loan.

GENERATION
COMMERCE

Generation Commerce

DEVICES

What does it
mean?

STEP STEP STEP STEP

01 02 03 04

Point of Tablets- Online Mobile
Sale Based Acquiring Payment
(POS) Cash
Registers
Evolution

POINT OF SALE (POS) MPOS
EVOLUTION TODAY

MPOS

BARCODE
READER

COMPUTERIZATION

MANUALLY INITIAL
P OPERATE CASH

REGISTER

Tablets-Based Cash Registers

• Its portability, user friendly and
cheap

• The apps sends sales information
to a back office so that managers
can monitor sales, manage
inventory and run reports in real
time .

• Key players are toast, shopify,
point, presto and Revel.

Online Acquiring

• A customer typically enters the
required details on the seller’s
website, which instructing their
bank/financial services providers to
pay the seller for a purchase.

• They use authentication protocols and
data protection methods to encrypt
customer data on the seller’s website.

Mobile Payment- is this
available in Malaysia?

• This is popular among the countries
who are having highest numbers of
unbankable.

• This mobile phone payment system
does not require you to have smart
phone or even internet connection.

• It allow people to deposit money to an
account stored in their phones, receive
balances using SMS, make payments
and redeem balances using a network of
agents

4

CROWDFUNDING

BUSINESS STAGES

EARLY STAGE GROWTH BRIDGE

SEED EXPANSION IPO

In your own words, do you think Fintech is important?

ⓘ Start presenting to display the poll results on this slide.

Why is Fintech important?

Example:
• Allow people to transact without having bank
account
• Help develop better technologies for risk
assessment
• OnDeck and Kabbage use the information
to assess the performance of small
businesses using more than 1500 data
points
• Avant underwrites consumers using
Machine Learning (ML)
• Kickstarter tap into people’s wisdom to
fund start-ups by allowing crowds to their
preferred ideas