ABHIGNA M.

P
2021MMBA07ASB079
FINTECH FUNDAMENTALS
1. Which type of financial participants are providing the biggest challenge of regulators with
respect of Fintech regulation?

The integration of traditional finance and fintech gives rise to significant regulatory challenges.

The effective regulation of fintech requires the reaching of consensus of our future goals,
financial stability should be the aim, finance should serve the real economy and bring benefits to
society, finance should strike a balance between innovation, stability and development and
consumer rights should be protected.

Fintech is vulnerable to challenges passed by a new breed of competitors in the form of

technology-driven non-bank companies that have grown rapidly as regulators in the US and
around the world begin to deliberate between revolutionary and evolutionary approaches to
fintech regulation.

Fintech companies pass a strategic threat by potentionally disrupting the financial sectors and
services, particularly in the areas such as lending payments, wealth management and property
and casualty products.

2. Comparing the emerging of derivatives innovations decade years ago and fintech, are there
any similarities, dissimilarities? Do you think Fintech will replace derivatives role or it will
complete derivatives role?

Fintech has become the all-encompassing catch world for innovative and disruptive
developments in the financial services industry. In the derivatives world, sell and buy-side firms
are being encouraged to embrace the full range of new technologies, whether it be in collateral
management, utility, cloud-based solutions, data management/ blockchain. The challenge is not
only keeping pace but also deciphering the hype from the reality.

A financial market without a derivative is one that is lacking. However, derivatives have their
own problems.

Derivatives is an international game with many players and rules. Much like derivatives, fintech
is also unregulated and has risks. But together they could become better.

Fintech will not replace but will complete it by plugging up its issue and making it whole.

3. How does Bitcoin network work?

 Users transact in bitcoin either buying, sending or exchanging bitcoins. The transactions
are broadcast to many computers that compete to validate blocks of transaction.
 The validation process, known as mining is completed by cryptocurrency miners who
own vast computing resources. Miners earn bitcoin for every block that they validate.
 Miners add blocks to the bitcoin blockchain. Every transaction is triple-verified by the
sender, the receiver, and the rest of the bitcoin network.
 Every new block and the transaction information is contained is instantly copied
worldwide to bitcoin miner’s local version of Bitcoin blockchain, which consensus
regarding the current state of bitcoin blockchain.
4. When an extreme event happens, such as Covid-19, how Fintech will help?
 Financial inclusion in developing markets has become even more important during the
pandemic.
 Mobile solutions are proving to be lifeline in emerging economies.
 Fintech firms can use this opportunity to build their reputation and emerge stronger as
the crisis has passed.

As the reality around us is changing, fintech has actually managed to make this transaction a
lot easier.

Relocating the digital world : Fintech is used to make the transactions more convenient by
taking out the third party from the equations.

Fintech is making self-isolation more likely : Fintechs have made self-isolation much easier
task and in mind made the possibility of flattening the curve of this outbreak much bigger.
Online services that we can pay for through fintech are now practically covering every
industry imaginable. There services have become such an essential part of our lives.

5. EU vs UK vs USA : What are 4 key differences?

When we think about fintech there is a big difference in what everyone might envision and
this may rely for a big part. Before2017, the US was leading the way and they were making
large investments in the development of new technologies related to online banking ,
mobile apps.
Fintech firms in Europe have long been undervalued by the market while offering substantial
added value and more interesting growth perspective than their American counterparts.
The use of consumer fintech in US seems to be well behind that in most of Europe, where
regulation that looks ahead has sparked a surge of innovation in digital banking services
along with the backend infrastructure onto which products are built and operated.
A common request from the US fintech industry has been to implement legislation that
support start-ups and is tailor made for specific industry. The feeling is that will create a
favourable environment for growth and give the industry to catchup with European
counterpart.