BFC5916, Semester 2: Fintech Challenges in International Banking

This report examines the transformative impact of financial technology (fintech) on the international banking sector. It defines fintech as technology-driven innovation in financial services, highlighting its rapid growth and significance for both companies and consumers. The report explores various fintech applications, including retail banking, investment management, and the rise of cryptocurrencies, while also acknowledging regulatory challenges. It analyzes the challenges faced by traditional financial service providers and the evolution of their business models in response to fintech's emergence. The report details specific changes in financial services, such as integrated products, personalized recommendations, digital savings, and enhanced customer experiences through mobile and web platforms. The report references key academic sources to support its analysis and offers insights into the ongoing evolution of the banking industry in the face of technological advancements. The report is based on a group assignment for BFC5916 at Monash Business School.

Answer to Question 1
Fintech has been derived from the word financial technology. This technology innovation has
been designed to provide or support the financial services. This technology is showing a rapid
growth in the financial sector by innovating range of new business applications, processes and
models. Every financial service provider is dependent on technology but the fintech firms give a
huge importance to the technology friven innovations and consider it to be an integral part of the
business operations that are carried out. This technology helps in promoting automated use and
delivery of the financial services (Bruner, Eades and Schill, 2017). Fintech has not only helped
the companies but also the consumers and business owners to manage the business operations
more smoothly and efficiently by using algorithms along with certain specialised software. These
algorithms can be used with the help of computers as well as mobile phones.
Initially when fintech was introduced in 21st century, this term was used for the financial
institutions that utilised this technology at the back end systems. Presently, it has been observed
that there is a shift towards the consumers and it has obtained a definition that is oriented to the
consumers. There are various fields in which fintech have been adopted such as retail banking,
education, investment management and also fundraising. It has also encouraged the development
of crypto currencies like Bitcoin (Hassani, 2016). The fundings of fintech is at the rise but it is
facing certain problems because of the huge regulatory burden that it is facing.
Answer to point 5.
It has been observed that since the emergence of fintech the traditional financial service
providers are facing many challenges. They are also trying to transform the business models. It is
too early to determine the changes that would be seen because of the adoption of fintech. There
are many new fintech firms that are entering the market and are operating as start ups. There are
many traditional banks which have started making investments in financial innovation and have
also started setting up certain units in relation to fintech within the company. It is expected that
there will be a fall in revenue of banks by 10%-40% by the year 2025 and the main reason for it
will be fintech (Khan and Jain, 2014).
There are few changes in the services provided by the financial institutions. Some of the services
that are provided includes –

1. Provides integrated products and services- there are various financial tools that are used
by humans for managing their lives. Fintech helps in reducing such complexities of
obtaining different financial tools by providing all of them in one.
2. Personalised Recommendations- Fintech is a technology that has helped to give
recommendations on the basis of credit reports or credit users and other factors.
3. Saving digitally effortlessly- There are certain apps that are developed using the growing
technology which curates the consumers best offers on the basis of their spending
patterns.
4. Getting to know the credit card balance without logging in- The speed of service that is
provided by the financial institutions are very important for customers. Therefore, certain
banks have developed ways by which balance of credit card can be checked without
logging in into the account.
5. Touch Id fingerprint Sensor – It helps the users to get all the information about their
account faster and in a much simplified manner (Saunders and Cornett, 2017).
6. Settlements done instantly- In the traditional banking system, it took around 2-3 days for
reconciling the ledger with the payment but in growing blockchain technology it can be
done instantly. The available amount as well as the amount due can be reconciled
immediately.
7. Notifications received through text- In the preset scenario, the traditional financial
institution has started providing information like account balance, the amount that is
credited/ debited from account, maturing of term deposits etc. is provided to the
consumer through text messages.
8. Password entering and password retrieval- There are many times when consumers forget
their passwords. Earlier, the consumers had to go to the bank and follow a long procedure
for resetting it. Now, the method has become much simpler and digital (Reilly and
Brown, 2012).
9. Accessing statements natively – The financial institutions have started providing a very
smooth mobile as well as web experience to the customers. This also enables the
customers to extract account statement of the prior six month. Customers can know about
their expenses and to who have they transferred money. The process of maintaining
passbooks and providing PDF has totally disappeared.

REFERENCES
Bruner, R., Eades, K. and Schill, M. (2017). Case studies in finance. Dubuque, IA: McGraw-Hill
Education.
Hassani, B. (2016). Scenario analysis in risk management. Cham: Springer International
Publishing
Khan, M. and Jain, P. (2014). Financial management. New Delhi: McGraw Hill Education.
Reilly, F. and Brown, K. (2012). Investment analysis & portfolio management. Mason, OH:
South-Western Cengage Learning.
Saunders, A. and Cornett, M. (2017). Financial institutions management. New York: McGraw-
Hill Education.