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Blockchain, Cryptocurrency, and The Future of FinTech

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(Toronto, Canada - Wei-Jiun Su)


Embracing Disruption



- The FinTech Revolution

Fintech is a broad term for the intersection of financial services and technology. Fintech is rapidly changing the way we think about money: who has access to it, who controls it, and how to protect it. 

The global fintech market is expected to reach $190 billion by 2026, growing at a CAGR of 13.9%. Fintech is reshaping financial services and industries, along with major banks, global markets and the government regulations that govern them. Categories include peer-to-peer lending, digital wealth management, insurance, consumer finance, real estate, blockchain, automation, and more.

The rise of cryptocurrencies is rewriting long-held ideas about how money should work. In order not to be left behind, central banks around the world are starting to develop their own digital currencies. Experts say these new forms of cash could boost financial inclusion, cut payment fees and make money smarter, but they also come with significant risks. 

In most advanced economies, the production and distribution of money has been the sole responsibility of central banks for at least a century. This changed in 2009 with the launch of Bitcoin, which uses blockchain technology to delegate the minting and governance of digital currencies to a decentralized network of volunteers. 

Since then, many new cryptocurrencies have emerged that promise a fast, cheap and secure way to transfer money directly between users without relying on banks or payment providers. Second-generation cryptocurrencies like ethereum also introduced the concept of programmable money, making it possible to create smart contracts that automatically enforce financial agreements.


- The Future of Financial Services

Financial services must harness the power of technology to transform and grow at scale and speed, while meeting the growing expectations of future customers. Financial technology, or Fintech for short, is one of the most exciting and fastest-growing areas of global business today. 

While the definition may be simple, the products and companies that adopt newly developed digital and online technologies in the banking and financial services industry, how they are used, and their impact on consumers are far more complex. In fact, in a relatively short period of time, the emergence of a new generation of fintech has greatly influenced how we do business, how we transact as clients, and how we think about the future of finance. Among other things, it significantly blurs the lines between business services, allowing bankers, advisors and technology providers to offer nearly identical services. 

Fintech refers to technological innovation in the design and delivery of financial services and products. Financial technology continues to evolve; advancements include the use of big data, artificial intelligence (AI) and machine learning to evaluate investment opportunities, optimize portfolios and reduce risk. Fintechs are increasingly focused on client outcomes, with the desired outcome being the ability to provide investors with tailored, actionable advice in a more accessible and less expensive manner.


- The Future of FinTech Industry

FinTech is an economic industry composed of companies that use technology to improve the efficiency of financial services. It is usually applied in technology startup scenarios to disrupt industries such as retail banking, lending and financing, payment and transfer, wealth and asset management, market Trading with exchanges, insurance, blockchain, etc. It refers to a new application, process, product or business model in the financial services industry. 

However, the term fintech has begun to be used for a wider range of technological applications in the space –- front-end consumer products, new entrants competing with existing players, and even new paradigms such as Bitcoin. The financial services industry is one of the last areas that new technologies have yet to fully conquer. Fintech companies are trying to disintermediate the existing financial system and challenge traditional companies that are less reliant on software.

As a practice, fintech innovation relies on a dual foundation of data science disciplines and financial expertise, such as the fundamentals of investment analysis. While the industry relies on highly specialized roles such as machine learning and data engineers, expertise in finance – complemented by fintech knowledge – can help practitioners better compete in an evolving industry.


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[Yosemite National Park, California]

- Emerging Technology in Financial Services

From customer service chatbots to software robotic bankers, disruptive digital technologies such as artificial intelligence (AI), robotics and blockchain are transforming the financial services industry. Financial services firms are using AI in a wide range of settings. In addition to the customer service chatbots mentioned above, they have also deployed artificial intelligence to automate loan and insurance underwriting. 

Robotics encompasses a wide range of technologies, and according to the survey, it is making deep inroads into the financial services industry. Robots come in many forms, from physical devices like customer service robots in retail environments to software robots that control business applications. Software robots are part of the growing field of robotic process automation. 

Blockchain is at the forefront of emerging technologies that financial institutions believe can profoundly impact the way they do business. Many financial institutions are using blockchain to build various platforms -- such as payments and trade finance -- and are starting to use full-fledged cryptocurrencies.


- The Future of Financial Technologies

Fintech is technology and innovation designed to compete with traditional financial methods in providing financial services. It is an emerging industry that uses technology to improve financial activities. The use of smartphones for mobile banking, investing, lending services and cryptocurrencies are examples of technologies designed to make financial services more accessible to the public. Fintech companies include start-ups and established financial institutions and technology companies that seek to replace or enhance the use of financial services provided by existing financial companies. 

Internet-based technologies have made it cheap to gather information and network. This empowers the sharing economy, allowing fintech companies to snatch intermediary business from banks. But both fintech and “sharing economy” businesses manage information centrally—they act as middlemen -- just like traditional financial institutions. The FinTech revolution is forcing the financial services industry and everything involved to evolve rapidly.  

According to McKinsey’s analysis, seven key technologies will drive fintech and shape the financial competitive landscape over the next decade:

  • AI will drive tremendous value creation.
  • Blockchain will disrupt established financial agreements.
  • Cloud computing will liberate financial service providers.
  • IoT will drive a new era of financial trust.
  • Open source, SaaS and serverless will lower barriers to entry.
  • No-code and low-code will redefine app development.
  • Hyperautomation will replace human labor Hyperautomation refers to the introduction of artificial intelligence, deep learning, event-driven software, robotics.


- Blockchain: Disrupting the FinTech

While fintech has disrupted banking, blockchain has disrupted fintech. Blockchain is a very powerful technology capable of performing complex operations. The distributed ledger technology that underpins blockchain systems is designed for near real-time data transfer. It can provide instant solutions for customers' transactions and interactions with banks. Blockchain technology allows the entire financial services industry to significantly optimize business processes by sharing data in an efficient, secure and transparent manner. 

Blockchain plays a key role in reducing fraud. The technology facilitates the use of smart contracts to support the storage of any type of digital information. Furthermore, the implementation of blockchain in digital payments could be highly transformative in the payments sector.


- The Future of the Blockchain and Digital Assets Industry

Cryptocurrencies are the most talked about of all blockchain technologies, especially given the recent market volatility. These technologies have been the foundation for many other use cases for over a decade. Some opportunities in cryptocurrencies and other areas are now maturing. However, given the volatility and opacity of many blockchain initiatives and regulatory uncertainty, many leaders of traditional financial services firms are generally hesitant to seize the opportunity. 

Interviews with industry experts and seasoned executives of traditional financial institutions and blockchain-specialized firms in the second quarter of 2022, including during periods of heightened volatility, allow us to understand what opportunities may arise and when and how often certain Disruptors can present a formidable challenge. The sharp fall in cryptocurrency prices and the increase in market risk factors will cause some leaders to reconsider their commitment to investing in the future. Instead, we see this as a pivotal moment for leaders to develop a strategy that empowers them with choice and ensures readiness for a future that continues to transition to a digital asset economy. 


- The Competitive Fintech Influencers

The following ten fintech influencers are:  

  • FinTech will drive the new business model. 
  • The sharing economy will be embedded in every part of the financial system. 
  • Blockchain will shake things up. 
  • Digital becomes mainstream. 
  • “Customer intelligence” will be the most important predictor of revenue growth and profitability. 
  • Advances in robotics and AI will start a wave of ‘re-shoring’ and localisation.  
  • The public cloud will become the dominant infrastructure model.  
  • Cyber-security will be one of the top risks facing financial institutions. 
  • Asia will emerge as a key center of technology-driven innovation.  
  • Regulators will turn to technology, too.  


 - Increasing Ransomware Attacks

Monetization is another key factor contributing to the increase in cyberattacks. In the past, it was difficult for cybercriminals to profit from attacks, but things have changed since then. Now, cybercriminals are increasingly turning to ransomware attacks, or attackers who can access and encrypt victims' data and demand a ransom. 

The advent of cryptocurrencies and ransomware has made it easier for people to commit crimes and get away with it because they can get paid in untraceable ways. There's also [anonymous communication software] Tor, which makes it easier to anonymize threats. This trend motivates attackers to commit cybercrimes for monetary gain, while making it harder to track and identify these criminals. As a result, there is an increasing demand for skilled cybersecurity professionals who can implement policies to prevent these attacks.



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