Topic: Fin-Tech

Course Title: Financial Markets and Institutions

Course code: F-304

Submitted To:
Rashik Amin, Lecturer
Department of Finance
University of Dhaka

Submitted By:
Group Number 06
BBA 24th Batch, Section: A
Department of Finance
University of Dhaka

Date of Submission: 25th July, 2021

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 Group Number 06

Group Profile

Name Roll Remarks

Prabal Barua 24-004
Bushra Azad Kotha 24-088
MD Imamur Rahman 24-132
Sonchita Paul 24-153
Md Yeasin Ali 24-256

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 Acknowledgement

For the completion of the study, we don’t deserve all praise. A lot of people helped us by providing
information about the report. They also provided us with valuable advices and guidance.
First of all, we would like to express our gratitude from heart to the Beneficent, the Merciful, & Almighty
Allah for giving us the strength and patience to prepare this report within the scheduled time. We would
also like to acknowledge the contributions of the various Authors, whose textbooks have been instrumental
in preparing this report.
Finally, we would like to thank our F-304 Financial Markets and Institutions course introducer, Rashik
Amin, Sir, Lecturer, Department of Finance. His constant presence and words of encouragement inspired
us to do our very best. It would probably be impossible to complete this report without his guidance and
availability. The lessons that he taught us in our course has worked as a beacon while preparing this report.
This report is prepared for meeting our academic purpose, not for any other reason. It might not be used for
the benefit of any other purposes.

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 Letter of Transmittal

25th July, 2021

Rashik Amin, Lecturer
Department of Finance
University of Dhaka

Subject: Submission of group report on “Fin-Tech”.

Dear Sir,
Here is the report of the study on “Fin-Tech”.
We would like to say that this report was helpful for us to know about Fin-Tech. We are very thankful to
you for giving us such a wonderful opportunity of widening our knowledge from the pages of our book to
the field of practice.

We tried our best to deliver the best of our efforts and we hope that it lives up to your expectations.

Sincerely Yours,
On behalf of group no. 06
MD. Imamur Rahman
ID No: 24-132
BBA 24th Batch, Section: A
Department of Finance
University of Dhaka

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 Executive Summary
We have completed the report on “Fin-Tech”. As a student of Finance department, We must have the idea
about the Fin-Tech. For this reason, we have prepared the report on this topic. We have collected the
information about our report by the help of internet and many related journals. On the basis of these
information, we have mentioned some analysis, description, financial data and its role to financing.
Bangladesh is a densely populated country in the world. Moreover, Bangladesh faces many obstacles to its
development. Among them most sensitive problem for all is the severe proper mathematics teaching.
Solving problem by using financial terms is very essential at present in our country. In the report we see
the contribution of financing in providing high standard mathematics as well as making a lot of solving
way.

We have tried our best to provide all possible information about Fin-Tech. We believe practical experience
of working with a group will surely make us better understanding of our theoretical knowledge.

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 Table of Content

 Fintech in Investment Management

 Fintech-Global Perspective
 Fintech- Bangladesh Perspective

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 Fintech in Investment Management

Fintech
Fintech is the term used to refer to innovations in the financial and technology crossover space, and typically
refers to companies or services that use technology to provide financial services to businesses or consumers.

Fintech covers a broad range of services and applications. Areas of fintech development that are more
directly relevant to the investment industry include the following:
 Analysis of large datasets: It include traditional data and non traditional data.
 Analytical tools: Such as artificial intelligence, machine language, algorithms.
 Automated trading
 Automated advice. Robo-advisers or automated personal wealth management services provide
investment services to a larger number of retail investors at lower cost than traditional adviser
models can provide.
 Financial record keeping

Big Data

Big data is a term that describes the large volume of data – both structured and unstructured – that inundates
a business on a day-to-day basis. But it’s not the amount of data that’s important. It’s what organizations
do with the data that matters. Big data can be analyzed for insights that lead to better decisions and strategic
business moves.

Traditional data sources include corporate data in the form of annual reports, regulatory filings, sales and
earnings figures, and conference calls with analysts, the financial markets, including trade prices and
volumes. Non- traditional data sources, or alternative data sources—including social media (posts, tweets,
and blogs), email and text communications, web traffic, online news sites, and other electronic information
sources.

The term Big Data typically refers to datasets having the following characteristics:
 Volume: The amount of data collected in files, records, and tables is very large, representing many
millions, or even billions, of data points.
 Velocity: The speed with which the data are communicated is extremely great. Real-time or near-
real- time data have become the norm in many areas.
 Variety: The data are collected from many different sources and in a variety of formats,
including structured data (e.g., SQL tables or CSV files), semi- structured data (e.g., HTML
code), and unstructured data (e.g., video messages).

Source of big data

Big Data, therefore, encompasses data generated by

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  Financial markets (e.g., equity, fixed income, futures, options, and other derivatives),
 Businesses (e.g., corporate financials, commercial transactions, and credit card purchases),
 Governments (e.g., trade, economic, employment, and payroll data),
 Individuals (e.g., credit card purchases, product reviews, internet search logs, and social media
posts),
 Sensors (e.g., satellite imagery, shipping cargo information, and traffic patterns), and, in particular,
 The Internet of Things, or IoT (e.g., data generated by “smart” buildings, where the building is
providing a steady stream of information about climate control, energy consumption, security, and
other operational details).

Big Data poses several challenges when it is used in investment analysis. It includes, “Does the dataset
have selection bias, missing data, or data outliers? Is the volume of collected data sufficient? Is the dataset
well suited for the type of analysis?” The data must be sourced, cleansed, and organized before analysis
can occur.

Artificial Intelligence and Machine Language

The use of artificial intelligence (AI) and machine learning (ML) is evolving in the finance market, owing
to their exceptional benefits like more efficient processes, better financial analysis and customer
engagement.

According to the prediction of Autonomous Research, AI technologies will allow financial institutions to
reduce their operational costs by 22%, by 2030.

Impact of AI and ML in financial sector

 Automated customer support: Customer-facing systems such as AI interfaces and Chatbots can
offer useful advice while reducing the cost of staffing. Moreover, AI can automate the back office
process and make it seamless.
 Accurate Decision-making: Machine learning effectively analyzes the data and brings required
outcomes that help officials to cut costs. Also, it empowers organizations to solve specific problems
effectively.
 Fraud Prevention: AI and machine learning solutions are strong enough to react in real-time and
can analyze more data quickly. The organizations can efficiently find patterns and recognize
fraudulent process using different models of machine learning. The fintech software development
company can help build secured financial software and apps using these technologies.
 Better Trading and Wealth Management: Fintech firms are working with development and
technology leaders to bring new concepts that are effective and personalized. Artificial intelligence,
machine learning, and allied technologies are playing a vital role in financial organizations to
improve skills, customer satisfaction, and reduce costs.

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  Predictive Analytics: With machine learning algorithms, businesses can effectively gather and
analyze huge data sets to make faster and more accurate predictions of future trends in the financial
market. Accordingly, they can offer specific solutions for customers.

Data Science
Data science is an inter-disciplinary field that uses scientific methods, processes, algorithms and systems
to extract knowledge and insights from many structural and unstructured data.
A data processing system may involve some combination of:

 Conversion converting data to another form or Language.

 Validation – Ensuring that supplied data is "clean, correct and useful."
 Sorting – "arranging items in some sequence and/or in different sets."
 Summarization – reducing detail data to its main points.
 Aggregation – combining multiple pieces of data.
 Analysis – the "collection, organization, analysis, interpretation and presentation of data.".
 Reporting – list detail or summary data or computed information.

Data visualization is the graphical representation of information and data. By using visual elements like
charts, graphs, and maps, data visualization tools provide an accessible way to see and understand trends,
outliers, and patterns in data.

Data visualization tools provide data visualization designers with an easier way to create visual
representations of large data sets. When dealing with data sets that include hundreds of thousands or
millions of data points, automating the process of creating a visualization, at least in part, makes a designer’s
job significantly easier. Some data visualization tools are Tableau, Infogram, Tag cloud.

Application for Investment Management

Text Analytics
Text analytics is the automated process of translating large volumes of unstructured text into quantitative
data to uncover insights, trends, and patterns. Combined with data visualization tools, this technique enables
companies to understand the story behind the numbers and make better decisions.

Natural Language Processing (NLP)

Natural language processing (NLP) is a subfield of linguistics, computer science, and artificial intelligence
concerned with the interactions between computers and human language, in particular how to program
computers to process and analyze large amounts of natural language data.

Importance of NLP

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  Large volumes of textual data: Natural language processing helps computers communicate with
humans in their own language and scales other language-related tasks. For example, NLP makes it
possible for computers to read text, hear speech, interpret it, measure sentiment and determine
which parts are important.

 Structuring a highly unstructured data source: Human language is astoundingly complex and
diverse. We express ourselves in infinite ways, both verbally and in writing. Not only are there
hundreds of languages and dialects, but within each language is a unique set of grammar and syntax
rules, terms and slang. When we write, we often misspell or abbreviate words, or omit punctuation.
When we speak, we have regional accents, and we mumble, stutter and borrow terms from other
languages.

Process of NLP

 Content categorization: A linguistic-based document summary, including search and indexing,

content alerts and duplication detection.

 Topic discovery and modeling: Accurately capture the meaning and themes in text collections, and
apply advanced analytics to text, like optimization and forecasting.

 Contextual extraction: Automatically pull structured information from text-based sources.

 Sentiment analysis: Identifying the mood or subjective opinions within large amounts of text,
including average sentiment and opinion mining.

 Speech-to-text and text-to-speech conversion: Transforming voice commands into written text, and
vice versa.

 Document summarization: Automatically generating synopses of large bodies of text.

 Machine translation: Automatic translation of text or speech from one language to another.

Robo-advisory Service
Robo-advisors (also spelled robo-adviser or roboadvisor) are digital platforms that provide automated,
algorithm-driven financial planning services with little to no human supervision.

A typical robo-advisor collects information from clients about their financial situation and future goals
through an online survey and then uses the data to offer advice and automatically invest client assets. The
best robo-advisors offer easy account setup, robust goal planning, account services, portfolio management,
and security features, attentive customer service, comprehensive education, and low fees.

Two types of wealth management services dominate the robo-advice sec tor: fully automated digital wealth
managers and adviser-assisted dig ital wealth managers.

 Fully Automated Digital Wealth Managers: The fully automated model does not rely on
assistance from a human financial adviser. These services seek to offer a low-cost solution to in
vesting and recommend an investment portfolio, which is often composed of ETFs. The service
package may include direct deposits, periodic rebalancing, and dividend reinvestment options.

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  Adviser- Assisted Digital Wealth Managers: Adviser-assisted digital wealth managers provide
automated investment services along with a virtual financial adviser, who is available to offer basic
financial planning advice and periodic reviews by phone. Adviser-assisted dig ital wealth
managers are capable of providing additional services that may involve a more holistic analysis of
a client’s assets and liabilities.

Risk Analysis
Risk analysis is the process of identifying and analyzing potential issues that could negatively impact key
business initiatives or projects. This process is done in order to help organizations avoid or mitigate those
risks.

Big Data and ML techniques may provide insights into real- time and changing market circumstances to
help identify weakening or adverse trends in advance, allowing for improved risk management and
investment decision making.

ML techniques may be used to help assess data quality. To help ensure accurate and reliable data that may
originate from numerous alternative data sources, ML techniques can help validate data quality by
identifying questionable data, potential errors, and data outliers before integration with traditional data for
use in risk models and in risk management applications.

Algorithmic trading
Algorithmic trading is a process for executing orders utilizing automated and pre-programmed trading
instructions to account for variables such as price, timing and volume.

It has grown significantly in popularity since the early 1980s and is used by institutional investors and large
trading firms for a variety of purposes. While it provides advantages, such as faster execution time and
reduced costs, algorithmic trading can also exacerbate the market's negative tendencies by causing flash
crashes and immediate loss of liquidity.

Algorithmic trading allows for faster and easier execution of orders, making it attractive for exchanges. In
turn, this means that traders and investors can quickly book profits off small changes in price. The scalping
trading strategy commonly employs algorithms because it involves rapid buying and selling of securities at
small price increments.

Distributed Ledger Technology

A distributed ledger (also called a shared ledger or distributed ledger technology or DLT) is a consensus of
replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, or
institutions. Unlike with a distributed database, there is no central administrator

The distributed ledger database is spread across several nodes (devices) on a peer-to-peer network, where
each replicates and saves an identical copy of the ledger and updates itself independently. The primary
advantage is the lack of central authority. When a ledger update happens, each node constructs the new

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transaction, and then the nodes vote by consensus algorithm on which copy is correct. Once a consensus
has been determined, all the other nodes update themselves with the new, correct copy of the ledger.
Security is accomplished through cryptographic keys and signatures.

Distributed ledgers may be permissioned or permission less. This determines if anyone or only approved
people can run a node to validate transactions. They also vary between the consensus algorithm – proof of
work, proof of stake, or voting systems. They may be mineable (one can claim ownership of new coins
contributing with a node) or not (the creator of the crypto currency owns all at the beginning).

Blockchain and distributed ledger technology (DLT) may offer a new way to store, record, and track
financial assets on a secure, distributed basis. Applications include cryptocurrencies and tokenization.
Additionally, DLT may bring efficiencies to post- trade and compliance processes through automation,
smart contracts, and identity verification.

All blockchain is considered to be a form of DLT. There are also non-blockchain distributed ledger
tables.Non-blockchain DLTs can be in the form of a distributed cryptocurrency or they may be the
architecture on which private or public data is stored or shared. The main difference is that while blockchain
requires global consensus across all nodes a DLT can achieve consensus without having to validate across
the entire blockchain.

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 Global Perspective

Ans to the question no 1:

Chris Skinner says,” Ignoring technological change in a financial system based upon technology is
like a mouse starving to death because someone moved their cheese.’’ Fintech is highly beneficial for
any business providing financial services because-

 Cut costs and improve quality of financial services

 Offer better deals to borrowers and lenders
 Better analytics on investments and investment assessment
 Machine learning on consumer credit scores
 Using crowds to finance startups
 The creation of a more stable credit landscape
 Improved matching of borrowers and savers
 Improve automation of financial institutions and create more seamless service (more reliance on
digital banking, less on brick and mortar)

Collaboration with fintech is crucial & will be the only for the traditional firms to deliver technologies
solutions at the speed expected by the market. Fintech is changing the present investment management
universe in the developed world by many ways. Such as:

i)Focusing on data analytics & automation: while skeptical asset & wealth managers are investing in new
technologies by focused on data analytics.

ii)Automation of asset allocation “robo – advisors”: New accelerated online platform & application improve
the retail customer experience by providing bespoke but affordable services to help investors set their
investment goals, choose the right product or service & manage investment portfolios.

iii)Digital experience with human support: The innovation under “robo advisors'' are becoming more
sophisticated & many stat ups are pivoting enable a digital experience. Those who are ready to embrace the
fintech disruption could go a step further & become first movers incorporating broader & multi source data
sets & forming a more holistic view of customers.

iv)Blockchain, a disruptive potential in investment management: When viewed as distributed ledger

technology (DLT), The blockchain could have a profound effect on post trade settlement through
streamlining & cutting costs of the process. By using DLT the need for reconciliation of proprietary
database is eliminated. Also embedding business logic in the code of a smart contract could impact in
investment management value chain in terms of augmenting, streamlining or possibly completely
reinventing current process.

v)Too lax about the fintech disruption: Even though many believe that investment managers will be
disrupted by fintech industry players hold the belief that they are immune to the disturbance potential of

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new entrant. Banking & payments industries offer changing the financial sectors by offering nee solution
that are visible nee solution that are visible disturbing traditional players such as palpable.

Ans to the question no :2

Fintech is an integral part of the digital revolution. Due to introduction of fintech, investment
management has also felt the touches of change.

i)Fintech is develop a customer centric approach that leverages automation, digital experience & human
support to streamline customer analysis strategies. This goes a long way in building customer
relationships & providing advice to clients with fewer total assets.

ii)The impact of robo-advisors enabling higher technology turnover & reducing friction in transaction.

iii)Automation of investment procedures make it easier to monitor portfolios.

iv)Alternative business models such as crowdsourcing have helped customers revisit the way investments
are made.

v)The key benefit from community building services that engage customers in an attempt to maximize
investment facilitation.

The avenues of fintech which are created to be explored.

1)Online banking: Banking is a rapidly changing industry & the biggest paradigm shift that has occurred is
the move to online bank. These banks hold key advantages over traditional institutions such as freedom
from historical tech restrictions & the fees associated with brick & mortar branches.

2)Mobile banking: The payment segment is much more mature than other fintech areas & a small handful
of companies now dominate the business B2C. Mobile banking provides quick access to funds. With mobile
application, the user can perform several banking functions such as bill pays, check deposit, account
balance.

3)P2P lending: Peer to peer lending or p2p is not common in the western world, but in Korea & India it is
big. This is lending money to individuals or business through a platform service that matches lenders with
borrowers. It lending generally operate online & having lower overhead costs. As a result, lenders earn
higher return while borrowers can borrow money at a lower interest rate.

4)Enterprise financial enterprise: This is IT solutions made for the financial sector which includes tools for
handling accounts, invoices, tax, shareholder management.
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5)Payments: Payments is about payment services including payment back – end infrastructure, card issuing,
merchant acquiring, seamless solution & point of sales solution.

Future avenues of fintech:

1)Unbundling will continue: Banking will be more fragmented with incumbents losing more & more pieces
as consumer build their own suite of products from a multitude of providers.

2)The blockchain will reign: Digital systems like Blockchain, Ripple will be common place. Outside of

US will see the biggest moves as mobile banking, blockchain tech will move faster.

3)Increased Competition: The competition will come from non-traditional competitors in big tech. Many
starts from scratch truly ‘digital' bank will curve out a niche for themselves. Some of the big traditional
banks that don't embrace partnership with fintech or generate their own innovations will fail.

4)More flexibility, more context awareness: Using more sophisticated analytics banks will deliver
customized experience to each person. We should see greater adoption of API models & some interesting
new ways to leverage them to improve science & stickiness.

5)Networking: In any business, instant access to information, product integration & geography are the
mandatory requirements. Financial industries should have to take cost effective initiative.

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 Bangladesh Perspective
Part-A
Fintech in different economic and financial activities in Bangladesh
Taking a look at Bangladesh, in or der to boost financial inclusion, Bangladesh Bank issued
a draft guideline (2011) and granted per mission to 28 banks to provide mobile finance under
a bank-led structur e. As of June 2017, 18 banks had already launched such ser vices. In a
country such as Bangladesh, implementation of a DFS is set to offer several important benefits. It would
ease up the access to formal financial services by signup through eKYC. It is likely to generate an easier
loan facility with credit rating after using any app or machine-based solutions. Customers/ SME's efficiency
and capacity would further increase and produce finest products. The market, both local and global should
become more accessible with transactions being made easy through market place.

Some relevant examples of Fintech are: bKash, NAGAD, Rocket, Pathao, Ajkerdeal, Uber, Daraz etc.

bKash: bKash provides six types of services. They are:

 Cash- In
 Cash-Out
 Send Money
 Payment
 Cash- In:

This is a process of deposit money to bKash account. This service is providing in the agent point. The total
process is given bellow:

1. Go to any bKash Agent

2. Let the agent know the amount want to Cash In
3. Write down the bKash Account Number and the Cash In amount in the Agent Register
4. Pay the amount of money want to Cash in
5. In exchange, the agent will send balance to bKash Account.

 Cash-Out:

If bkash users have sufficient balance in their bKash Account, users can withdraw cash anytime. There is
two way of withdraw money from bkash account, one option is from agents and another is from BRAC
Bank ATM Booth.

 Send Money:

Send Money allows you to transfer money from one bKash Account to another bKash Account. To send
money the process is given bellow:

 Go to any bKash Mobile Menu by dialing *247#

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  Choose “Send Money”
 Enter the bKash Account Number who want to send money to
 Enter the amount who wants to send
 Enter a reference about the transaction.
 Now enter the bKash Mobile Menu PIN to confirm the transaction

 Payment Process:

Anyone can make payments from bKash Account to any “Merchant” who accepts “bKash Payment”. For
example, if anyone want to pay after shopping the process will be:

 Go to your bKash Mobile Menu by dialing *247#

 Choose “Payment”
 Enter the Merchant bKash Account Number for pay
 Enter the amount want to pay
 Enter the Counter Number* (the salesperson at the counter will tell you the number
 Now enter bKash Mobile Menu PIN to confirm (bKash, 2013)

Why the process of bKash is superior than any other alternative process?

Among the contestants, bKash has evidently been the leader. From all the different services it provides, a
prime slice of the scenario includes 'send money', 'cash in' and 'cash out'. bKash became the world's largest
mobile financial service provider in terms of the number of subscribers, agents and transactions within 5
years since launch. This may be due to its out-of-the-box business model, vigorous distribution network
with innovative and efficient structure, effective cash management and the truculent customer acquisition
drive. And for this reason, the process of bKash is superior than any other alternative process.

(Part -B)

The future opportunities that are available for Fintech in Bangladesh:

In the near future we may see a larger variety of financial services and that can be the opportunities for
Fintech in Bangladesh. This includes but is not limited to:

 Fintech can be used to automate the traditional banking system to provide improved customer service.

 SureCash is one of the new entrants in the mobile finance sector.

 investing services and insurance.

So it is clearly stated that some future opportunities for Fintech are available in Bangladesh.
The introduction of Fintech can improve the economic and financial market conditions in
Bangladesh in many ways:

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A. We can attract more foreign investment in our country.
B. More private Equity firm and Venture Capital firms are now interested to invest in the emerging
economy in South Asia
C. SME sector can be benefited tremendously by FinTech.
D. Through Fintech more small and medium entrepreneurs can get easy access to finance.
E. Tax collection can be done by easily through automation which will improve the Govt. revenues.

How the other developed countries introduced Fintech in their economic and financial environment:
1. As one category of fintech, “techfin” or “big tech” players are increasingly important as payments
providers in some countries, but not in others. For instance, big tech mobile payments made up
16% of GDP in China according to the most recent data, but less than 1% in the United States,
India and Brazil.
2. Especially in EMDEs, mobile payments are benefiting from the high share of consumers with
mobile phones, which often exceeds those with bank accounts or credit cards.
3. In many African countries, but also in Chile, Bangladesh and Iran, over 20% of the population had
a mobile money account in the latest World Bank survey.
4. Meanwhile, peer-to-peer (P2P) lending, marketplace lending, and other fintech credit platforms are
now economically sizeable in some segments. For instance, fintech lenders made up 8% of new
mortgage lending in the US in 2016, and 38% of unsecured personal lending in 2018. These
platforms are economically relevant in the financing of small and medium enterprises (SMEs) in
China, the US and UK. In the US and UK, such platforms extended 15.1% and 6.3% of equivalent
bank credit to SMEs, respectively.6 Within the UK, CCAF (2017) finds that most credit is provided
in and from London and the Southeast, but that other regions (e.g. the North East) received more
in funding than they provided. Fintech credit, including credit extended by big tech platforms, has
also achieved scale in Korea and Kenya.
5. Yet such credit is quite small in much of Continental Europe, the Middle East and Latin America
– generally far less than 1% of the stock of outstanding credit by banks and other lenders.

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Thank You

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