INTRODUCTION TO

FINTECH
Objective of the Course:
To impart knowledge on the basics of
fintech
To obtain basic knowledge on payment, crypto currencies
and blockchain To gain understanding about digital
finance and alternative finance.
To learn about fintech regulation and regtech
To impart knowledge on data and tech fin
 Unit- I Basics of Fintech -Concept -Fintech
Transformation -Evolution of Fintech - Fintech
typology- Emerging Economics: Opportunities
and Challenges- Introduction to Regulation.
Unit- II: Payment, Cryptocurrencies and Blockchain
Introduction- Individual Payments- RTGS Systems -E-
Wallet and payments-The ABCDs of Alternative Finance
Cryptocurrencies .Introduction to Digital Asset Market- Legal
and Regulatory Implications of Cryptocurrencies- Blockchain
- cybersecurity.
 Unit- III:Digital Finance and Alternative Finance

Introduction- A Brief History of Financial Innovation-

Digitization of Financial Services- Fintech & Funds -
Crowdfunding - Regards, Charity and Equity- P2P and
Marketplace Lending.
UNIT- IV: FinTech Regulation and RegTech
Fintech Regulations- Evolution of RegTech- RegTech Ecosystem:
Financial Institutions- RegTech Ecosystem: Startups- RegTech Startups:
Challenges- RegTech Ecosystem: Regulators- Regulatory Sandboxes-
Smart Regulation.
 UNIT- V : Data and TechFin
History of Data Regulation- Data in Financial Services- Digital Identity-
Al and Governance- New Challenges of AI and Machine Learning-

Data, Metadata and Differential Privacy- The Future of Data Driven Finance.
UNIT -1
The word ‘FinTech’ is simply a combination of the words
‘financial’ and ‘technology’.
Fintech is just technology that is used to improve the delivery of
financial services.

It describes the use of technology to deliver financial services and

products to consumers. The areas of banking, insurance, investing –
anything that relates to finance. Increasingly, FinTech is coming to
represent technologies that are disrupting traditional financial services,
including mobile payments, money transfers, loans, fundraising and asset
[Link] is giving rise to new business models, applications,
processes and products.
$137.5 billion invested in fintech businesses in 2019.
History : Fintech 1.0 (1886 – 1967)
This stage involves building the infrastructure that will support globalized financial
services. The first transatlantic cable (1866) and Fedwire (1918) in the USA enabled the
first electronic fund transfer system using technologies such as telegraph and Morse code.
It was basic by today’s standards, but at a time of developing infrastructure and
transportation, the ability to make financial transactions over a more considerable
distance was revolutionary.

Fintech 2.0 (1967 – 2008)

phase is marked by the installation of the first ATM by Barclays in [Link] 1970s saw
the establishment of NASDAQ, the world’s first digital stock exchange and SWIFT (Society
For Worldwide Interbank Financial Telecommunications), a communication protocol
between financial institutions facilitating the large volume of cross-border [Link]
era continued through the 1980s with the rise of bank mainframe computers (and a
“Gordon Gecko” sense of Wall Street style…) and the growth of online banking through the
1980s saw the way people do business change, with the online revolution leading to a
shift in how people perceived financial institutions.
 the growth of online banking through the 1980s saw the way people do business change, with the online
revolution leading to a shift in how people perceived financial institutions.

PayPal was launched in 1998, the first movements towards digital banking, with connected customers
starting to manage their money in different ways.

Fintech 3.0 (2008-Current)

Post-financial crisis, lack of trust in banks aligned with regulatory change opens up the market to new
providers. Bitcoin is born in 2009 followed by other cryptocurrencies using blockchain technology.

Smartphone adoption means that mobile devices become the primary means by which people access the
web and other financial services.

Fintech 3.5
Back in the Fintech 1.0 era in 1886, someone threw a cable under the Atlantic and this kick-started the
way that banks do business for the next century. The previous fintech eras haven’t moved much further
geographically than that wire under the ocean, with the vast majority of development taking place across
the developed world – mainly Europe and the USA

Fintech 3.5 has been defined to account for the changes in consumer behaviour and how they access the
internet in the developing world. The two countries with the highest fintech usage are China and India.
The Future - Machine Learning is set to evolve the way we interact with banks and
insurance companies, designed to strengthen the customer relationship by developing a
“segment of one” By doing this, financial institutions can target individuals with bespoke
offers and support that match their behaviour and will create a more relevant experience for
them.

fintech is set to change how money is collected and managed through a wave of integrated
payment providers.
 Basics of FinTech
Fintech or financial technology means offering financial services over the internet.
Everything right from mobile banking apps to mobile payments apps, blockchain and
cryptocurrency, stock trading, etc can be included in this fintech innovation.

In simple words, every business can use fintech for their services and enhance or
automate their work and procedures.

Examples of FinTech:Online and Mobile Payment Systems - Google pay or Whatsapp payment or anything
else.
Examples - FinTech Investors
45%
Paytm - 5 place
Investors : Alibaba Group, Ant
Financials , Berkshire Hathaway,
Softbank ,SAIF Partners

OLA Money - 8 place

Investors :SoftBank ,Tencent ,
Hyundai Motors, KIA Motors,
Sailing Capital
Importance of Fintech

● Rise of new age FinTech start-ups rolling out innovative solutions

using low-cost technology

● Strategic partnerships between incumbents (Industry )and FinTechs

● Launch of new digital products or digital-only banks by incumbents

● Government intervention through creation and operationalisation of

FinTech policies, launch of initiatives such as smart cities, portals for

quick approval of loans for small and medium scale enterprises

(SMEs), etc.
Fintech Transformation
top three challenges companies face with their fintech transformation

Challenge 1: data security and privacy concerns

An increasingly digital environment in the financial sector, including mobile banking and
payment apps, is one of the cybercriminals’ top targets.

Cybersecurity can impact customers’ money as well as personal data. So that even large
reputable companies have to take care of the valuable information and make sure their
virtual security is on point.

Challenge 2: compliance with regulations

innovative technologies are increasingly integrated into financial operations and

services, regulatory obligations for such processes also arise. Different legislative
guidelines are set out to protect financial institutions from frauds and malicious
actors, safeguard customers’ investments and sensitive information
Challenge 3: lack of tech expertise

Building a top-notch financial solution is not easy; it requires hands-on

experience. Many companies fail to form strong in-house teams; moreover,
the hiring process may be pretty time-consuming.

reliable technology partner to outsource the fintech development process.

FinTech - Typology
Fintech covers a wide range of use cases across business-to-business (B2B),
business-to-consumer (B2C), and peer-to-peer (P2P) - markets.
1. Blockchain and Cryptocurrency-

Blockchain technology was first outlined in 1991 by Stuart Haber and W.

Scott Stornetta, two researchers who wanted to implement a system
where document timestamps could not be tampered with. But it wasn’t
until almost two decades later, with the launch of Bitcoin in January
2009, that blockchain had its first real-world application
A blockchain is a distributed database or ledger that is shared among
the nodes of a computer network. As a database, a blockchain stores
information electronically in digital format
With the availability of smart contracts, Proof-of-Work, Peer-to-Peer
transactions, blockchain-powered trading platforms, decentralized
ledgers, and immutable records.
Transaction Process - block chain
A cryptocurrency/ bitcoin - is a digital currency, which
is an alternative form of payment created using
encryption algorithms. The use of encryption
technologies means that cryptocurrencies function both
as a currency and as a virtual accounting system.
To use cryptocurrencies, need a cryptocurrency
wallet. These wallets can be software that is a
cloud-based service or is stored on a computer or on
your mobile device. The wallets are the tool through
which you store your encryption keys that confirm the
identity and link to the cryptocurrency.
Cryptocurrencies are still relatively new, and the market
for these digital currencies is very volatile. Since
cryptocurrencies don't need banks or any other third party
to regulate them; they tend to be uninsured and are hard
to convert into a form of tangible currency (such as US
dollars or euros.)
In addition, since cryptocurrencies are technology-based
intangible assets, they can be hacked like any other
intangible technology asset. Finally, since you store your
cryptocurrencies in a digital wallet, if you lose your wallet
(or access to it or to wallet backups), you have lost your
entire cryptocurrency investment.
Ethereum is an open-source blockchain framework for
decentralized applications, founded by Vitalik Buterin in 2015.
Ethereum eliminates the requirement for a third-party
institution such as a bank to transmit and receive payments.
Ethereum was the first blockchain system to include smart
contracts, which are self-executing contracts in which the
conditions of a contract between a buyer and a seller are
expressed in computer code. Ethereum’s native currency is
called Ether. Because the Ethereum blockchain is
programmable, it may be used by developers to create new
types of apps.
 [Link] (InsurTech)
With the development of digital financial ecosystems, insurance solutions of
high value are developed in the insurance business to improve the client
experience.

Insurers are integrating smartphone applications, drones, the Internet of

Things (IoT), artificial intelligence (AI), machine learning, and other techniques
to give greater effect through their services to customers and other entities
that use them.

InsurTech is steadily transforming the way clients see insurance products, with
several perks such as online markets, more easy and tailored ways,
customized profiting, and many more.

Rapid expansion and progress in the insurance sector have been enabled by
the use of technology in areas .
3. Regulatory (RegTech)

The Financial Conduct Authority defined RegTech in 2015 as “a

subset of FinTech that focuses on technology that may support the
delivery of regulatory obligations more efficiently and effectively
than existing capabilities.” RegTech refers to the use of
cutting-edge technology to improve compliance and the
implementation of simple, secure, and cost-effective regulations.
In a world where finance is being taken over by different
technological applications, new regulatory frameworks are
required to keep up with the innovations. RegTech is primarily
employed to standardize and promote transparent regulatory
processes that automate the whole compliance system.

RegTech is being utilized to deliver regulatory solutions in a

variety of ways, including regulatory reporting, risk
management, transaction monitoring, and compliance.
Regis-TR, Provenir, Continuity, and IdentityMind are several
RegTech platforms that provide such solutions.
4. Lending (LendTech)

This industry employs technology to provide customers with financing

options through more accurate and quicker procedures. To provide
error-free outcomes, smart systems employing Artificial Intelligence and
Machine Learning algorithms are employed to process and validate identify
credentials.

The use of technology in loan procedures makes it easier to forecast

income expectations, evaluate the borrower’s track record, appraise
collateral value, and foresee changes.
5. Payments (PayTech)

With the development and integration of digital processing applications and

different processing networks, FinTech is transforming the payments sector.
Wearable technology and smart gadgets are being created for customers to
improve digital connectivity and secure consumer identity.

Payment Technology secures and simplifies asset management and the

processing of various payment transactions (PayTech). PayPal and GPay are
among the payment platforms that use PayTech.
6. Mobile Payments

Mobile wallets and other integrated payment solutions are frequently

employed by business models and individuals to facilitate and carry out
payment operations via technology. This is a significant topic of FinTech
since every transaction done by any customer includes the payment
process.

Most transactions would appear difficult to make and finish if mobile

payment systems were not available to overcome the constraints created
by traditional methods. Consumers all across the world are using digital
wallets such as Apple Pay, and Google Wallet. These platforms are simple
to use, safe and enhance the entire customer experience.
7. Trading (TradeTech)
TradeTech is essentially the use of information technology to
lower the information costs of international commerce,
streamline trade finance, and promote transparency in
trading processes for both business models and consumers.
International cooperation is critical for realizing its full
potential and advantages. TradeTech uses IT systems in
supply chain financing and asset distribution platforms to
simplify and support cross-border commerce.
8. Robo-Advising and Stock-Trading Apps

Apps for Robo-Advising and Stock Trading Diversified investment portfolios

may be developed and made available to customers using technology,
eliminating the need for an investment professional or adviser. Robo
Advisors is a system designed for novice investors to assist with risk
management as well as professional investment management.

Rather than using traditional methods, stock-trading applications make

buying and selling stock investments easier and more efficient. These
stock-trading applications are used by any online broker with resources to
trade assets and investments. Finch Money is an example of an
investment and stock trading app in the US.
9. Personal Finance (WealthTech)

This branch of FinTech focuses on improving wealth management and

retail investment services by leveraging technology to augment and
provide operations in a more efficient and automated manner. These
digital solutions are utilized to improve existing solutions and develop
new ones to make them available to new groups of investors. Monie is
an example of a personal finance app for Egypt.

WealthTech facilitates the streamlining of the investing process,

allowing investors to manage their investment portfolios more easily.
WealthTech is being incorporated into the finance sector through the
use of Micro-Investment, Robo-retirement, Portfolio management
10. International Money Transfers -Through the integration of technology into payment
channels that may be utilized to enable international money transfers, barriers have
been removed. Traditional methods of payment are less efficient and effective in this
field of FinTech, since newer and more effective methods of payment exist now, making
the entire process more streamlined, secure, quicker, and simpler for customers and
business models.

11. Equity Financing

This is a means of raising cash or capital by selling shares of a firm to the general
public, financial institutions, or investors. The funds raised are then utilized to fund
new business ventures or to develop existing firms.

Crowdfunding may reach a larger population of investors by utilizing technology.

Kickstarter, Pebble, and numerous other crowdfunding sites provide prizes to their
participants.
12. Accounting

Machine Learning, Artificial Intelligence, Cloud Computing, Digitized Tax Platforms,

and other technological breakthroughs are being utilized to improve accounting
automation and transparency. Through the use of software and tools, the use of
technology in this field of finance has improved data access and analysis.

The introduction of financial technology and software has lowered the number of time
accountants need to execute tasks such as invoice management, cash flow
forecasting, and other accounting services.

13. Consumer Banking (BankTech) - Many financial institutions are using digital
technology to deliver services in a more streamlined and efficient manner. BankTech
is the use of digitized platforms to provide banking solutions and products to
consumers. BankTech has several advantages over traditional banking methods,
including improved user experience, lower costs, and less operational friction.
Emerging Technologies in FinTech

The Internet of Things, Artificial Intelligence, Machine Learning, Robotics, Cloud

Computing, and Automated Assistants are just a few of the developing technologies being
utilized to improve financial sector solutions and products. FinTech has revolutionized and
will continue to influence the business models offered to consumers. Every sector of the
economy is increasingly incorporating and integrating FinTech into its infrastructure.

FinTech applications are numerous and expanding, with developments in fields such as
Blockchain, lending platforms, insurance technology, digital banks, and others. The
FinTech sector is rapidly expanding, with several business models and customers driving
increased demand for financial and technical solutions.

Financial goods are now available to consumers in more efficient and useful ways because
of advances in technology.
1 Digital Payment Services
One of the common revolutions that have taken place in every sector including
finance is digitalization. Massive technological and fundamental
transformations are happening right now

,open an account or transfer money at any time and from any location with
digital-only banks. This is the benefit of digitalization. A rapid overview of
account balance, account transaction history, bill payments, and real-time
analytics are just a few of the fantastic benefits of digital-only banks.

1.2 Big Data and Analytics

In the financial business, digitization has invaded and revolutionized many financial
institutions that compete in the market. big data and analytics are being employed
extensively. Companies use data and analytics to be competitive because they help
them to improve operations, maximize income, foresee client wants and provide
customized product offers, and forecast demand.
1.3 Blockchain Technology
Blockchain is becoming a fundamental aspect of financial institutions’ operational
infrastructure, including digital payments, stock trading, smart contracts, and
identity management, due to its rapid expansion and acceptance. Blockchain’s
global reach, speed, and security are encouraging financial institutions to use it
more quickly.

1.4 Personalization
Banking and personalization are two sides of a coin. Personalization in banking
always works in favor of businesses. In the financial services business,
personalization refers to providing a valuable service or product to a consumer
based on personal experiences and past data. The epidemic has forced financial
institutions to focus on the essentials rather than the nice-to-haves
1.5 Robotic Process Automation
RPA doesn’t really mean that the process must be automatic, it can also mean
[Link]’s rise can undoubtedly be linked to the fact that they provide a
high-quality user experience and cognitive wealth-management advice at
reasonable costs.

The need for Robo-advisors is increasing. People want to take advantage of the
current situation and are eagerly anticipating sophisticated investment options
and in-depth market analysis. To take advantage of this unusual opportunity, the
businesses must prepare themselves to provide new features with Robo advisory
services. In the banking sector, they provide services such as account opening
methods, customer support services, or any other financial-related operations.
2. Challenges Faced By Fintech Companies

2.1 Data Privacy and Application Security Challenges

fintech firms store enormous amounts of very sensitive

user data, such as credit card numbers, income and
investment information, social security numbers, and so
on. Because of the increased use of phone and online
banking services, this information is always at risk of
transit. As a result, this information is extremely sensitive.
Thus, there is always this question of risk in tandem with
fintechs’ application security and data privacy. Information
protection is becoming increasingly crucial.
2.2 Regulatory and Compliance Laws
It is not easy to start a fintech organization. Due to fraud alerts and
data thefts it has become a lot difficult to get approval for commencing
a fintech enterprise. These restrictions are not only tough to comply
with, but they also make it difficult for Fintech companies to join the
Indian market. To avoid fraud, make compliance regulations act as a
stringent regulatory framework. They, too, serve as significant
roadblocks for new Fintech startups. Fintech start-ups must complete a
long number of requirements before they may begin operations.
2.3 Focusing on the Customer Experience
Finance has a reputation for being difficult. Although
the procedures involved in fintech organizations
have swiftly changed. There is still a lot of ground to
be covered in terms of creating a superb user
experience that goes beyond a simple UI(computer
mouse, atm’s etc). Conversational UI is an
innovation of business that focuses on the special
user interface that simulates speaking with a real
person. Bots may offer information to the user in the
format they require.
2.4 Changing Revenue and Business Models
Fintechs should reconsider their income and expense strategies, as well as adapt

or extend their resources. To cope with the economic downturn, many

businesses are using cost-cutting tactics such as employee reductions and wage

cutbacks. If the business takes up, there are so many necessary changes that

need to be applied within businesses. This includes changes in revenue streams

and other business dependencies. This will also alter the business models. To

cope with the higher transaction volumes, contactless payment fintech are

repurposing their resources.

2.5 Personalized Services
As we know, it is difficult for businesses to cope and offer personalized services.

Though it has been the key and fundamental aspect of banking, businesses find it

challenging to offer. Personalization, in today’s context, implies communicating with a

user in real-time, on their chosen channel. You must provide a tailored solution to their

specific demands is what customers mean by personalized services. They are not

ready to settle on any other grounds.

Customers are also willing to embrace Fintech as a financial wellness consultant. Some

users are overwhelmed by a vast range of options. But good customization ensures

that they only see the options that are relevant to them.
Introduction to Regulation :
Regulate to control something by rules ,regulation and
official rule made by government or other authorities or
controlling something by rules.
FinTech-related policy measures can be usefully divided into three groups:

● Direct organizers of FinTech activities: It concerns regulating activities such as

digital banking, Robo-advice, and payment services.
● Those who focus on using new technologies in the delivery of financial
services: regulations involving new rules or guidelines for market participants
to use technologies such as biometrics or artificial intelligence.
● Those who specifically promote digital financial services: Arrangements that
enable policy initiatives such as digital identities, data sharing, and innovation
centers.
Fintech has been applied to many areas of finance. Here are just a few examples.

● Roboadvisors are apps or online platforms that optimally invest your money automatically, often
for little cost, and are accessible to ordinary individuals.
● Investment apps like Robinhood make it easy to buy and sell stocks, ETFs, and crypto from your
mobile device, often with little or no commission.
● Payments apps like Paypal, Venmo, Block (Square), Zelle, and Cash App make it easy to pay
individuals or businesses online and in an instant.
● Personal finance apps such as Mint, YNAB, and Quicken SimpliFi let you see all of your finances
in one place, set budgets, pay bills, and so on.
● P2P lending platforms like Prosper, Lending Club, and Upstart allow individuals and small business
owners to receive loans from an array of individuals who contribute micro loans directly to them.
● Crypto apps, including wallets, exchanges, and payments applications allow you to hold and
transact in cryptocurrencies and digital tokens like Bitcoin and NTFs.
● InsurTech is the application of technology specifically to the insurance space. One example would
be the use of devices that monitor your driving in order to adjust auto insurance rates.
1. Data Privacy
Data privacy is one of the most important legal issues in the fintech
industry. Fintech companies collect and use large amounts of
customer data. This raises concerns about how this data will be
used and protected.
One of the most critical issues in developing financial technology is
risk assessment and data breach(law ) prevention. When regulatory
bodies uncover a data leak, they may be able to identify the
perpetrator due to noncompliance with anti-data-leak regulations.
In countries that are members of the European Union,
noncompliance (failure to act) with anti-data-leak financial
technology regulations may result in hefty fines.
2. Money Laundering
Money laundering is a process whereby the proceeds of criminal
activity are transformed into legitimate funds.
This legal issue is particularly relevant for the regulation of the
fintech industry because of the way fintech companies facilitate
payments and transfers. Fintech companies are required to comply
with anti-money laundering (AML) regulations. These require
financial institutions to take measures to prevent and detect money
laundering.
AML laws and programs for fintech regulation should include
customer identification and screening, transaction monitoring and
reporting of suspicious activity.
3. Cyberattacks

Financial institutions are a common target for cyberattacks.

Fintech companies hold large amounts of data. This makes them

attractive targets for cybercriminals. Also, fintech firms may be less
prepared to defend against cyberattacks than traditional financial
firms.

All financial firms need to have robust cybersecurity programs in

place to ensure proper protection. These programs should include
data encryption, firewalls and intrusion detection systems.
Unit- II

Payments -Businesses can accept payments in different ways,

which include cash, card, and cheque payments. Moreover,
advanced methods like digital fund transfers, mobile payments,
and other online payments are becoming popular by the day.

Today, customers expect speed, wider choice, higher security,

and ease of use while making payments
1. NEFT (National Electronic Fund Transfer)
The National Electronic Fund Transfer or NEFT is the simplest and most liked
form of money transfer from one bank to bank.
To make any NEFT transaction, you just need two important pieces of
information -- firstly, account number and secondly, the IFSC Code of the
destination account.
In NEFT, there is no cap on the amount of money (no limit) that can be
transferred. However, individual banks may set a limit.
Step 1: Go to Fund Transfer tab, and select 'Transfer to other bank' (NEFT)

Step 2: Select the recipient account and enter the relevant details

Step 3: Accept the (Terms and Conditions)

Step 4: Recheck the details, if all are correct and complete the process
2. RTGS (Real Time Gross Settlement

A Real Time Gross Settlement or RTGS is almost similar to NEFT but the minimum
payment and how it credits to the destination account differs.
If you want to transfer more than 2 then you can use this. There is no upper cap on
the amount.
An RTGS money transfer happens on a real-time basis. The bank of the person to
whom the money is transferred gets 30 minutes to credit it to his/her account.
Steps to make RTGS funds transfer:
Step 1: Go to Fund Transfer tab, and select 'Transfer to other bank' (RTGS)
Step 2: Select the recipient account and enter the relevant details
Step 3: Accept the (Terms and Conditions)
Step 4: Recheck the details, if all are correct, then confirm and complete the process
● Real-time gross settlement is the continuous process of
settling interbank payments on an individual order basis
across the books of a central bank.
● This system's process is opposed to netting debits with
credits at the end of the day.
● Real-time gross settlement is generally employed for
large-value interbank funds transfers.
● RTGS systems are increasingly used by central banks
worldwide and can help minimize the risks related to
high-value payment settlements among financial
institutions.
3. IMPS (Immediate Payment Service)
Immediate Payment Service or IMPs an instant fund transfer service and it can be used
anytime. IMPS can be simply defined as NEFT+[Link] order to avoid fraud complaints, the
cap on transaction limit is set very low. For IMPS transfer, you just need to know the
destination account holder's IMPS id (MMID) and his/her mobile number.
Steps to make IMPS money transfer:
Step 1:Using your Customer ID and Password into Net Banking/Mobile Banking
Step 2: Go to Funds Transfer tab (Other Bank Account)
Step 3: Select Debit / Credit Account, mode of transfer as IMPS and beneficiary account
Step 4: Enter the amount to be transferred and click on Submit
Step 5: Click on the confirm button
Step 6: Recheck all the information and approve the transaction using OTP (one time
password) received on your registered mobile number
Step 7: And at last, confirm by clicking on the submit button.
Other than NEFT, RTGS and IMPS, you can also transfer your money through UPI and
cheque.
1. UPI (Unified Payments Interface):
A Unified Payments Interface is a real-time payment system that allows transactions to be
done through any smartphone using VPA (Virtual Payment Address).
No bank account detail is needed for the money transfer through UPI. Only mobile number
or name is sufficient and the transactions can be done 24/7. UPI-enabled apps allow the
transfers up to Rs 1 lakh.
2. Cheque:
You can transfer money from your one account to another account by cheque. You have to
simply draw a stating payee as your name along with the account number wherein you
want to transfer the amount along with your signature.
It's done immediately at a branch if the transfer is within your bank.
There is no limit if you want to transfer money from your a/c to another bank a/c, but if
you want to withdraw a certain amount, there are restrictions.
E-wallet
A mobile wallet is a way to carry cash in digital format. You can
link your credit card or debit card information in mobile device to
mobile wallet application or you can transfer money online to mobile
wallet. Instead of using your physical plastic card to make
purchases, you can pay with your smartphone, tablet, or smart
watch. An individual's account is required to be linked to the digital
wallet to load money in it. Most banks have their e-wallets and
some private companies. e.g. Paytm, Freecharge, Mobikwik,
Oxigen, m Ruppee, Airtel Money, Jio Money, SBI Buddy, itz
Cash, Citrus Pay, Vodafone M-Pesa, Axis Bank Lime, ICICI
Pockets, SpeedPay etc.
ABCD’s of Alternative Finance
Alternative finance refers to financial channels, processes, and instruments that
are outside of the traditional finance system such as banks and capital markets.
For several years, Alternative Finance is slowly altering financial services and the
providers of such services in two main ways –

● New business models

● New technologies.

A - Artificial Intelligence, or AI,

B - Blockchain,
C - Cloud computing, and
D - Data
Four key inter related technologies have caused Alternative finance to flourish – namely the
ABCDs of Fintech.

A – Artificial Intelligence (AI)

B – Blockchain technology (DLT)

C – Cloud Computing

D – Data
A – AI A for Automation/ Autonomous (& APIs, Algorithms):

The term artificial intelligence was coined at the Dartmouth summer research workshop in
1955. 1. Weak AI—also called Narrow AI or Artificial Narrow Intelligence (ANI)—is AI
trained and focused to perform specific tasks. Weak AI drives most of the AI that
surrounds us today. ‘Narrow’ might be a more accurate descriptor for this type of AI as
it is anything but weak; it enables some very robust applications, such as Apple's Siri,
Amazon's Alexa, IBM Watson, and autonomous vehicles

Strong AI is made up of Artificial General Intelligence (AGI) and Artificial Super Intelligence
(ASI). Artificial general intelligence (AGI), or general AI, is a theoretical form of AI where a
machine would have an intelligence equaled to humans; it would have a self-aware
consciousness that has the ability to solve problems, learn, and plan for the future.

Artificial Super Intelligence (ASI)—also known as superintelligence—would surpass

the intelligence and ability of the human brain. While strong AI is still entirely
theoretical with no practical examples in use today, that doesn't mean AI
researchers aren't also exploring its development.
some of the most common examples:

● Speech recognition: It is also known as automatic speech recognition (ASR), computer speech
recognition, or speech-to-text, and it is a capability which uses natural language processing (NLP)
to process human speech into a written format. Many mobile devices incorporate speech
recognition into their systems to conduct voice search—e.g. Siri—or provide more accessibility
around texting.
● Customer service: Online virtual agents are replacing human agents along the customer journey.
They answer frequently asked questions (FAQs) around topics, like shipping, or provide
personalized advice, cross-selling products or suggesting sizes for users, changing the way we
think about customer engagement across websites and social media platforms. Examples include
messaging bots on e-commerce sites with virtual agents, messaging apps, such as Slack and
Facebook Messenger, and tasks usually done by virtual assistants and voice assistants.
● Computer vision: This AI technology enables computers and systems to derive meaningful
information from digital images, videos and other visual inputs, and based on those inputs, it can
take action. This ability to provide recommendations distinguishes it from image recognition
tasks. Powered by convolutional neural networks, computer vision has applications within photo
tagging in social media, radiology imaging in healthcare, and self-driving cars within the
automotive industry.
● Recommendation engines: Using past consumption behavior data, AI algorithms can help to
discover data trends that can be used to develop more effective cross-selling strategies. This is
used to make relevant add-on recommendations to customers during the checkout process for
online retailers.
● Automated stock trading: Designed to optimize stock portfolios, AI-driven high-frequency trading
platforms make thousands or even millions of trades per day without human intervention.
Data storage cost continues to fall while data are being gathered at
remarkable rates through online activities and connected devices, hence
in view of more structured & unstructured data to be gathered, stored,
and used to train the machines.
Major cloud companies, such as Amazon's AWS, Google Cloud,
Microsoft's Azure, IBM Cloud and Alibaba's Aliyun incorporate AI into
their services, which include machine learning frameworks on
open-source basis to allow their clients to experiment and incorporate
into their operations.
key examples of banking APIs include analytics, account authentication,
account information, payment processing, and even loyalty programs.
Banks are using APIs for one or more of the following four main reasons
— reach, speed, domains, or the Internet of Things (IoT). In turn,
operations become more efficient, and all parties mutually benefit.
B - Blockchain
Blockchain is a shared, immutable ledger that facilitates the process of recording
transactions and tracking assets in a business network. An asset can be tangible (a
house, car, cash, land) or intangible (intellectual property, patents, copyrights,
branding). Virtually anything of value can be tracked and traded on a blockchain
network, reducing risk and cutting costs for all involved.

Blockchain is important: Business runs on information. The faster it’s received and the
more accurate it is, the better. Blockchain is ideal for delivering that information because
it provides immediate, shared and completely transparent information stored on an
immutable ledger that can be accessed only by permissioned network members. A
blockchain network can track orders, payments, accounts, production and much more.
And because members share a single view of the truth, you can see all details of a
transaction end to end, giving you greater confidence, as well as new efficiencies and
opportunities.
Benefits of blockchain:
Greater trust
With blockchain, as a member of a members-only network, you can rest assured that you
are receiving accurate and timely data, and that your confidential blockchain records will be
shared only with network members to whom you have specifically granted access.

Greater security
Consensus on data accuracy is required from all network members, and all validated
transactions are immutable because they are recorded permanently. No one, not even a
system administrator, can delete a transaction.

More efficiencies
With a distributed ledger that is shared among members of a network, time-wasting record
reconciliations are eliminated. And to speed transactions, a set of rules — called a smart
contract — can be stored on the blockchain and executed automatically.
C - Cloud computing

The term ‘cloud computing’ also refers to the technology that makes cloud work.
cloud computing is the delivery of computing services—including servers, storage, databases, networking, software,
analytics, and intelligence—over the Internet (“the cloud”) to offer faster innovation, flexible resources, and
economies of [Link] servers are usually located in data centres or server farms, and there is a huge
network of data centres around the world, all connected by the internet. Big name cloud providers such as
Google, Microsoft and AWS have their own networks of data centres which form their own cloud platforms

Cloud computing works by enabling client devices to access data and cloud applications over the internet
from remote physical servers, databases and computers

An internet network connection links the front end, which includes the accessing client device, browser,
network and cloud software applications, with the back end, which consists of databases, servers and
computers. The back end functions as a repository, storing data that is accessed by the front end.

Communications between the front and back ends are managed by a central server. The central server relies
on protocols to facilitate the exchange of data. The central server uses both software and middleware to
manage connectivity between different client devices and cloud servers. Typically, there is a dedicated server
for each individual application or workload.
cloud computing benefits helps do the following:

● Lower IT costs: Cloud lets you offload some or most of the costs and effort of
purchasing, installing, configuring, and managing your own on-premises
infrastructure.

● Improve agility and time-to-value: With cloud, your organization can start using
enterprise applications in minutes, instead of waiting weeks or months for IT to
respond to a request, purchase and configure supporting hardware, and install
software. Cloud also lets you empower certain users—specifically developers and
data scientists—to help themselves to software and support infrastructure.

● Scale more easily and cost-effectively: Cloud provides elasticity—instead of

purchasing excess capacity that sits unused during slow periods, you can scale
capacity up and down in response to spikes and dips in traffic. You can also take
advantage of your cloud provider’s global network to spread your applications
closer to users around the world.
D - Data
Data have been called the new oil that is being bought and sold by gatherers and
users and increasingly fueling the AI engine. A lot of information in the financial
system is still being collected through paper forms filled by customers & bank staffs
and not easily searchable or manipulated for analysis. The digitization of
information from paper into data, from physical pulp to digital ones and "0"s means
that such information can more easily be stored, transmitted, searched, processed,
analyzed and displayed.

This digitization allows for online capital marketplaces to be more easily created
and operated where gatherers can process and analyze the data for those who need
the capital and then display the relevant information on the new platforms for the
potential providers of capital to make their own investment decisions. At the same
time, digital form filling and tracking of the online customer activity allows both
these online platforms as well as, virtual banks and e-brokerages to scale more
quickly with less manual labor and space resources.
Introduction to digital asset :
Digital assets have become more popular and valuable as
technological advances become integrated into our personal
and professional lives. Data, images, video, written content,
and more have long been considered digital assets with
ownership rights.
Digital assets are built atop blockchain technology, which integrates
a system of account with the unit of account. This is to say that the
cryptocurrency unit contains an immutable ledger that is distributed
across many different servers. These digital assets can behave as
currencies or as stores of value, or have other computational
functions.
A Digital Asset Management platform can manage a large quantity of digital assets and
formats :
● Images (product or corporate photos, infographics, illustrations, etc.)
● Videos (advertising clips, promotional videos, filmed interviews, webinars, event
footage, etc.)
● Audio files (sounds, music, podcasts, audio interviews, sound signatures, radio ads, etc.)
● Textual content (articles, white papers, case studies, press kits and releases, in-house
magazines, slide shows, PDF documents, etc.)
● Brand identity content (logos, graphic charters, signatures, document templates, etc.)
● Strengthening collaborative work
The use of a digital asset management solution has the advantage of strengthening
collaborative work within an organisation by providing more flexibility and agility.
The processes of creating and exploiting digital assets usually involve many participants from
different backgrounds : writers, graphic designers, designers, documentalists, marketers, etc.
They need to work together on a common project. They have to work together on a common
project or at least ensure that their actions do not overlap with those of others. In addition,
the level of digital literacy within the same team tends to vary greatly between individuals,
which can be a major barrier to efficient collaboration.
A Digital Asset Management platform provides solutions to these problems: the centralisation
of assets, the pooling of data, and the intuitiveness of the user interface are all assets that
encourage collaborative work.
Types of Digital Assets
There are many different types of digital assets. Here is a list of many of the familiar ones:

● Photos
● Documents
● Videos
● Books
● Audio/Music
● Animations
● Illustrations
● Manuscripts
● Emails and email accounts
● Logos
● Metadata
● Content
● Social media accounts
● Gaming accounts
Newer digital assets are based on blockchain or similar technologies:

Non fungible tokens- only - online assets Some examples are in-game avatars, digital/
non-digital collectibles, tickets, domain names,

Cryptocurrency - buying and selling through exchange

● Tokens-which can also be referred to as crypto tokens — are units of value that
blockchain-based organizations or projects develop on top of existing blockchain
networks.
● Crypto Assets -Crypto assets are purely digital assets that use public ledgers over
the internet to prove ownership. They use cryptography, peer-to-peer networks and a
distributed ledger technology (DLT) – such as blockchain – to create, verify and secure
transactions. Bitcoin, ethereum
● Tokenized Assets- the tokenization of assets refers to the process of issuing a
blockchain token (specifically, a security token) that digitally represents a real
tradable asset
● Security Tokens -security tokens are financial instruments that represent ownership
interest in an asset– only they've been created digitally (tokenized) to unlock the power
of the [Link] - Overall Best Crypto STO Available Right Now.
● Meta Music Token - Earn a Share of Music Royalties.
● Aquarius Fund - High-Yield Investment Opportunities for Professional Investors.
● Blockstream Mining - Gain Exposure to the Bitcoin Mining Industry Passively
● Central Bank Digital Currencies- Central Bank Digital Currency (CBDC) is a new form of
money that exists only in digital form. Instead of printing money, the central bank
issues widely accessible digital coins so that digital transactions and transfers become
simple.
Importance of Digital Assets
When you look at a list of the digital items that can be considered assets, it becomes
clear that our lives are more digitally-based than ever. For example, when we want to
learn about something, we turn to digitally hosted information because it is quicker
and easier than driving to a library, hoping they have the resources you need.

By streamlining the steps involved in managing digital assets, a Digital Asset Management
platform also helps to optimise business costs on several levels:

● Saving time in searching for assets

● Reuse of created or purchased media (for better profitability)
● Optimisation of asset storage (no duplication, no obsolete versions, etc.)
● Optimal use and exploitation (benefits) of resources
● Use of a single solution that centralises all assets (rather than a set of tools)
● These reduced costs, in turn, improve the return on investment.
When you handle a large amount of digital assets, a digital asset management platform is
all you need. It brings together all the features and uses you need to make your content a
true vehicle for your brand identity.
Introduction to Cryptocurrencies, Non-Fungible Tokens:
Both cryptocurrencies and NFTs are based on blockchain or other distributed ledger
technologies. Oversimplified, blockchain is a manner of storage of data in a decentralised
manner such that no one person (or group) can exercise absolute control over the data.
The term ‘blockchain' refers to the manner in which new packets of data (called blocks)
when added are linked to the last added block of data, thus forming a chain of data
blocks linked chronologically.

A key feature of blockchain technology is the manner in which data blocks are verified
and added. This occurs through a network of computers working in parallel, without any
one computer regulating the blockchain or exercising superior control over the
management or storage of the data or the verification processes. Data once added to a
blockchain cannot be deleted, modified or tampered with, thus a blockchain forms an
accurate and reliable chronologically arranged record of all data that has been added to
the blockchain. As a result, even if there is any human error in the data being added, the
added data cannot be edited to rectify the mistake; only a new block may be added to
acknowledge and address the error.
One application of the blockchain technology is cryptocurrencies where a finite set of
‘currency' units, referred to as coins, are used as an electronic cash system. This may be
linked to an underlying asset or have some inherent value. Bitcoin is one of the most
popular cryptocurrencies, being the first cryptocurrency introduced in January 2009 by its
pseudonymous creator Satoshi Nakamoto. As on date, there are over 10,000
cryptocurrencies that have been launched, hoping to mimic the popularity and value
appreciation of Bitcoin.

NFTs are another application of blockchain where tokens, which are similar to coins, can be
bought and sold in a digital form. Unlike cryptocurrencies where the coins are homogenous,
NFTs are non-fungible, i.e., non-interchangeable by nature such that each token is unique
and has a value that is distinct from other tokens. NFTs are linked to one or more
underlying assets such as artwork or real estate, which gives it its value.
Virtual Digital Assets:
While cryptocurrencies continue to not be recognised as legal tender, the Finance Bill
proposes that ‘virtual digital assets' be recognised as a separate class of capital
assets under the Income Tax Act, 1961, distinct from other identified classes of
capital assets, or as a generic capital asset. Irrespective of the legality of the
transaction, such classification would permit the taxation of the gains arising from the
sale or other transfer of virtual digital assets.
Hence, from April 1, 2023, any income arising from the transfer of virtual digital
assets will attract tax on the capital gains at the rate of 30%. Additionally, a
withholding tax at the rate of 1% will be applicable on the payment of sale
consideration for virtual digital assets, should such consideration cumulatively
exceeds INR 10,000 (approx. USD 130) in any financial year.
As per the Finance Bill, the term ‘virtual digital assets' includes both cryptocurrencies
and NFTs. The criteria for identification of cryptocurrencies or similar applications as
virtual digital assets has been intentionally kept wide in scope. Besides the
differences in their attributes cryptocurrencies ultimately act as payment systems,
where units are transferable and represent some value.
 Block Chain
Blockchain is a shared, immutable ledger that facilitates the process of recording
transactions and tracking assets in a business network. An asset can be tangible (a
house, car, cash, land) or intangible (intellectual property, patents, copyrights,
branding). Virtually anything of value can be tracked and traded on a blockchain
network, reducing risk and cutting costs for all involved.

Business runs on information. The faster it’s received and the more accurate it is,
the better. Blockchain is ideal for delivering that information because it provides
immediate, shared and completely transparent information stored on an immutable
ledger that can be accessed only by permissioned network members. A blockchain
network can track orders, payments, accounts, production and much more. And
because members share a single view of the truth, you can see all details of a
transaction end to end, giving you greater confidence, as well as new efficiencies
and opportunities.
Key elements of a blockchain

Distributed ledger technology

All network participants have access to the distributed ledger and its immutable record
of transactions. With this shared ledger, transactions are recorded only once,
eliminating the duplication of effort that’s typical of traditional business networks.
Immutable records
No participant can change or tamper with a transaction after it’s been recorded to the
shared ledger. If a transaction record includes an error, a new transaction must be
added to reverse the error, and both transactions are then visible.
Smart contracts
To speed transactions, a set of rules — called a smart contract — is stored on the
blockchain and executed automatically. A smart contract can define conditions for
corporate bond transfers, include terms for travel insurance to be paid and much
more.
Cyber security - is the practice of defending computers, servers, mobile devices, electronic systems, networks, and data from
malicious attacks. It's also known as information technology security or electronic information security. The term applies in a variety
of contexts, from business to mobile computing, and can be divided into a few common categories.

· Network security Network security is a set of technologies that protects the usability and integrity of a
company's infrastructure by preventing the entry or proliferation within a network of a wide variety of potential
[Link] is the practice of securing a computer network from intruders, whether targeted attackers or
opportunistic malware.
· Application security focuses on keeping software and devices free of threats. A compromised application could provide access
to the data its designed to protect. Successful security begins in the design stage, well before a program or device is deployed. Eg
Firewall,antivirus

· Information security protects the integrity and privacy of data, both in storage and in transit.

· Operational security includes the processes and decisions for handling and protecting data assets. The permissions users have
when accessing a network and the procedures that determine how and where data may be stored or shared all fall under this
umbrella.

· Disaster recovery and business continuity define how an organization responds to a cyber-security incident or any other
event that causes the loss of operations or data. Disaster recovery policies dictate how the organization restores its operations and
information to return to the same operating capacity as before the event. Business continuity is the plan the organization falls back on
while trying to operate without certain resources.

· End-user education addresses the most unpredictable cyber-security factor: people. Anyone can accidentally introduce a virus
to an otherwise secure system by failing to follow good security practices. Teaching users to delete suspicious email attachments, not
plug in unidentified USB drives, and various other important lessons is vital for the security of any organization.
Types of cyber threats
The threats countered by cyber-security are three-fold:

1. Cybercrime includes single actors or groups targeting systems for financial gain or
to cause disruption.

2. Cyber-attack often involves politically motivated information gathering.

3. Cyberterrorism is intended to undermine electronic systems to cause panic or

fear.
Unit - 3
Financial innovation is the creation of new financial instruments, products,
services, institutions, or markets. The innovations and use of digital technologies
improve economic opportunity and promote financial inclusion.

Financial innovation - is the process of creating new financial products, services, or

processes. Financial innovation has come via advances in financial instruments,
technology, and payment systems. Digital technology has helped to transform the
financial services industry, changing how we save, borrow, invest, and pay for
goods.
Causes
There are various causes of financial innovations, such as:

● Technological advancements and payment system innovations.

● Competition
● Financial globalization
● Market failures, financial insecurity, domino effects, potentially high systemic
risks, etc., trigger the need for innovation initiatives.
Concept
● Financial innovation is the development of new financial products, processes, services,
institutions, or markets. Acceptance and integration of new technologies make the scope for
the changes in the financial sector vast.
● Examples include cardless ATM services, weather derivatives, central bank digital currency,
QR code payment, hedge funds, and exchange-traded funds.
● There are different types of financial innovations: product, process, and institutional.
● Digital innovation helps improve financial inclusion and increase financial literacy not only
among the banked population but also among the unbanked population.
There are different types of financial innovations discussed below:

● Process Innovations: Innovative financial business processes give clients better services and
boost the effectiveness of business operations. These innovations include new company
procedures that boost productivity and open up new markets, among others. The simplest
example is the online banking facility.
● Financial Institutional Innovations: The advancement of the financial system, which is a
prerequisite for economic growth, depends on innovation. Examples include the
establishment of a new organization providing innovative practices or services. However,
creating a regulatory framework that promotes innovation, globalization, and the growth of
the financial sector while maintaining a fair balance between private and social incentives is
challenging.
● Product Innovations: It introduces financial innovation products or instruments such as
weather derivatives and family wealth accounts. Product innovations are released to better
adapt to the changing consumer demand or to increase efficiency.
FinTech Innovations
[Link] and web-based payment applications

[Link] Currency - Digital currency is a form of currency that is available only in digital or electronic form, and not in physical form. It is also called
Digital Money or Electronic Money

3. A cryptocurrency is another form of digital currency which uses cryptography to secure and verify transactions and to manage and control the
creation of new currency units

[Link] Ledger A distributed ledger can be described as a ledger of any transaction or contract maintained in decentralized from across different
locations and people. Unlike traditional databases, distributed ledgers have no central data store or administrative functionality.

5. Blockchain A blockchain is a type of database. A database is a collection of information that is stored electronically on a computer system.
Information or data, in databases is typically structured in table format to allow for easier searching and filtering of specific information. • A blockchain
collects information together in groups, also known as blocks, that hold sets of information. • Blocks have certain storage capacities, and when filled,
are chained onto the previously filled block, forming a chain of data known as the “Blockchain” • All new information that follows will be freshly added
in any block which is also added to the chain once filled. It is the record-keeping technology behind the Bitcoin network. In Bitcoin’s case, blockchain i
used in a decentralized way that no single person or group has control – rather, all users collectively retain control.

[Link] Funding Crowd funding is a way of raising debt or equity from multiple investors via an internet-based platform. It refers to the solicitation of
funds (small amount) from multiple investors through a web-based platform or social networking site for a specific project, busines venture or social
issue.

[Link] to Peer Leding Peer-to Peer lenders connect lenders and borrowers using advanced technologies to speed up loan acceptance. These
technologies are designed to increase the efficiency and reduce the time involved in accessing the credit. P2P platforms are different from banks
because they do not take position in loans. These platforms more directly match the risk appetite of lenders with the profile of borrowers

[Link] Contracts Smart contracts are computer protocols that can self-execute, selfenforce, self-verify and self-constrain the performance of a
contract. Development of smart contracts in relation to financial services could have a large impact on the structure of trade finance or derivatives
trading and could also be integrated into robo-advice wealth management service.
9.E-Aggregators E-Aggregators provide internet-based venues for retail customers to compare the prices
and features of a range of financial and nonfinancial products such as standardized insurance, mortgages,
and deposit account products. E-Aggregators also provide an easy way to switch between providers and
may become a major distributor for a variety of financial products.

[Link] computing Cloud computing is the delivery of different services through the internet. These
resources include tools and applications like data storage, savers, databases, networking, and software.

[Link] Advice Robo-advisors are digital platform 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.

12.E-Trading E-trading refers to a method of trading securities, financial derivatives or foreign exchange
electronically. Both buyers and sellers use the internet to connect to a trading platform such as an
exchange-based system or e-communication network.

[Link] Data Big data refers to the large, diverse sets of information that grow at ever increasing rates. As
more business activity is digitized, new sources of information are becoming available, By combining these
data sources with the availability of increased computing power is delivering faster, cheaper, and more
comprehensive analysis for better informed decision-making 9
Digital Financial Services
Digital Financial Services (DFS) include a broad range of financial services accessed
and delivered through digital channels, including payments, credit, savings,
remittances and insurance. Digital financial services, powered by fintech, have the
potential to lower costs by maximizing economies of scale, to increase the speed,
security and transparency of transactions and to allow for more tailored financial
services that serve the poor. Digital channels refers to the internet, mobile phones,
ATMs, POS terminals etc. – DFS concept includes mobile financial services (MFS).
■ MFS is the use of a mobile phone to access financial services and execute financial
transactions. – Includes both transactional services and non-transactional services –
MFS include M-Banking, M-payments, M-money.
■ M-Money is a mobile based service facilitating electronic transfers and other
transactional and non transactional services using mobile networks
■ M-Banking is the use of a mobile phone to access banking services and execute
financial transactions. – Often used to refer only to customers with bank accounts
DFS -
Reach larger audience of customers untapped by the existing banking
infrastructure

■ Increases financial inclusion

■ Increase efficiency of delivery

■ Improve quality of service

■ Revenue growth – Reaching new market segments – Offering new products and
services enabled by technology

■ Cost reduction to companies and customers – Operational cost by reducing

branch costs – Reducing transactional costs
 Fintech and funds
The Fund will focus on companies that generate revenues from the application of
technology in the financial services industry sector and/or which aim to compete with
traditional methods in the operation and distribution of financial products and services.

advantages of implementing FinTech solutions for a financial institution:

1. Zero barrier applications and faster approvals - Remember the time

when it took a week or even longer to open a personal bank account. Well, it is
now long gone. With FinTech solutions, users can easily submit their
applications to open an [Link] results in more and more users opting for
institutions that have FinTech implemented for their financial operations.
2. Higher efficiency -Throughout any industry, technology is a de-facto
catalyst agent for increasing efficiency in operations. FinTech is no
[Link] institutions gain efficiency in the processes through
automation and customised implementation of FinTech as per the demand and
nature of the business operations.
3. Automated customer service -The convergence of Artificial Intelligence
with FinTech is opening doorways to a plethora of automated customer
service options. Smart chatbots, Virtual assistants and advisors,
Personalised UI are a few of hundreds of ways for automated customer
[Link] kinds of automation reduce costs for financial institutions.
It also delivers a far better customer service experience to users resulting
in higher retention rates.
4. Highly regulated and risk
-averse- Although FinTech is relatively new, it is highly regulated to ensure
robust governance and proper risk management. This is also something to
take care of while choosing a FinTech software solutions partner for your
financial [Link] sure you choose a partner who has the required
certifications and merits to develop a robust FinTech solution for your
financial institution.
5. No compromise on security -Security is unarguably the most important
factor for any financial institution. The most common reason for not
adapting FinTech for financial institutions is the hesitation about security.
Crowdfunding
Crowdfunding is a mechanism through which funds are raised
in order to finance projects, ventures, expenses, products.
The funds are raised from a large number of individual investors
and donators.
Crowdfunding has created the opportunity for entrepreneurs to
raise hundreds of thousands or millions of dollars from anyone
with money to invest. Crowdfunding provides a forum to anyone
with an idea to pitch it in front of waiting investors.
Crowdfunding is similar to P2P lending, although it typically matches individual investors
with early-stage business ideas that need a capital injection. Unlike P2P lending – which
offers investors interest in return – crowdfunding is typically either reward-based (the
investor might receive a discounted product or other merchandise) or equity-based (the
business gives up equity stakes in exchange for the investment).
There are different crowdfunding options to choose from. Each type has different
benefits for businesses and investors. You will need to consider which one is right
for your business, project or venture.

Reward crowdfunding
Reward crowdfunding allows investors to contribute to your venture in return for
non-financial [Link] type of funding is commonly used for creative projects.
It usually operates as a tired system - the more an investor donates to your fund,
the greater the reward they will receive (eg credits on a record cover, tickets to an
event, free gifts etc). A benefit to the business is that the reward doesn't usually
cost much to deliver.

Debt crowdfunding
Debt crowdfunding provides investors with the chance to fund your project in
exchange for financial interest on their investment.
This finance option may provide you with borrowing at a lower cost than that
offered by applying for a loan through a bank. The advantage of this model is that
it may be easier to win support for a campaign, as the backers are attracted to
getting a return. This type of crowdfunding may work best for businesses with a
track-record of revenues.
Equity crowdfunding
An equity crowdfunder will invest money in return for shares, or a small
stake in your business, project or venture. This type of crowdfunding could
work best for growth-focused companies in areas where there is potential for
return.

Donation crowdfunding
This type of crowdfunding is designed for charities, or those who raise
money for social or charitable projects, to gather a community online and to
enable them to donate to a project.
While most established charities coordinate this through their own website,
crowdfunding platforms can be useful for smaller organisations and people
raising money for personal or specific charitable causes.
P2P - Peer to Peer
P2P lending transactions involve borrowers and lenders both essentially acting as customers with an
intermediary known as a P2P lending "platform" that facilitates loans to borrowing customers and investments
from lending customers.

Peer-to-peer (P2P) lending enables individuals to obtain loans directly from other individuals, cutting out the
financial institution as the middleman.
Peer-to-peer platforms and crowdfunding Peer-to-peer (P2P) fintech platforms help individuals
connect with one another to achieve mutually beneficial financial goals. In many ways, they might
be considered the fintech equivalent of social networks or even dating apps. P2P lending has
generally received the most attention in this space in recent years, but P2P insurance and
savings are also areas of growth:

• P2P lending platforms act as intermediaries that connect potential borrowers with investors
without the need for a traditional bank or loan company in the middle. The platform matches
individuals based on their risk profile or appetite and chases the borrower for payments, where
necessary. In theory, because of the reduced intermediary costs, the borrower benefits from
lower interest rates, while the investor achieves higher returns on their investment.

• P2P insurance pools group similar individuals (such as friends, family members or those with a
collective interest) who collectively insure each other’s losses. Each pays in money that is only
used if someone makes a claim; otherwise, any remaining money is returned to the individuals at
the end of the coverage period or may sometimes be donated to a charitable cause instead. This
means that there is no insurance company keeping
P2P savings platforms tend to modernise ROSCA schemes (Rotating Savings and
Credit Associations 22), which is a form of saving that allows a group of individuals
to reach their savings goals more quickly than they would have been able to on
their own. Each member of the ROSCA pays in a given amount of money – for
example, ten people pay £10 per week – into a central fund. At the end of each
week, this entire central pot of money – £100 in this example – is given (randomly
or based on need) to one individual (who then continues to pay into the pot but
can no longer withdraw money from it). Fintech offers a new way of running such
schemes and may make it easier to find other people to form a group with.
Peer-to-peer (P2P) lending enables individuals to obtain loans directly from other individuals,
cutting out the financial institution as the middleman.

The steps below describe the general P2P lending process:

1. A potential borrower interested in obtaining a loan completes an online

application on the peer-to-peer lending platform.
2. The platform assesses the application and determines the risk and credit rating of
the applicant. Then, the applicant is assigned with the appropriate interest rate.
3. When the application is approved, the applicant receives the available options
from the investors based on his credit rating and assigned interest rates.
4. The applicant can evaluate the suggested options and choose one of them.
5. The applicant is responsible for paying periodic (usually monthly) interest
payments and repaying the principal amount at maturity.

The company that maintains the online platform charges a fee for both borrowers and
investors for the provided services
Advantages and disadvantages of peer-to-peer lending
Peer-to-peer lending provides some significant advantages to both borrowers and lenders:

● Higher returns to the investors: P2P lending generally provides higher returns to the
investors relative to other types of investments.
● More accessible source of funding: For some borrowers, peer-to-peer lending is a
more accessible source of funding than conventional loans from financial institutions. This
may be caused by the low credit rating of the borrower or atypical purpose of the loan.
● Lower interest rates: P2P loans usually come with lower interest rates because of the
greater competition between lenders and lower origination fees.

Nevertheless, peer-to-peer lending comes with a few disadvantages:

● Credit risk: Peer-to-peer loans are exposed to high credit risks. Many borrowers who
apply for P2P loans possess low credit ratings that do not allow them to obtain a
conventional loan from a bank. Therefore, a lender should be aware of the default
probability of his/her counterparty.
● No insurance/government protection: The government does not provide insurance or
any form of protection to the lenders in case of the borrower’s default.
● Legislation: Some jurisdictions do not allow peer-to-peer lending or require the
companies that provide such services to comply with investment regulations. Therefore,
peer-to-peer lending may not be available to some borrowers or lenders.
Marketplace Lending :

Marketplace lending is a type of lending that allows business owners to obtain loans
directly from investors, without going through traditional financial institutions.

few key advantages of peer-to-peer lending and marketplace lending, including:

● Competitive interest rates for investors – peer-to-peer and marketplace loans

usually offer attractive rates of interest to balance the risk investors are taking.
● Quick and easy process – typically peer-to-peer lending companies and
marketplace lenders make it easier for borrowers to access finance and get their
loans funded quickly.

A flexible approach to borrowers – peer-to-peer platforms and marketplace lenders do

not have to work to the same criteria as banks. As a result, they are able to take a
more holistic view of the borrower, the project
Unit -4
4.1 RegTech

(Regulatory Technology) is the application of emerging technology to improve the way

businesses manage regulatory compliance. Though relatively young, RegTech is maturing
rapidly. RegTech companies are now engaging machine learning, natural language processing,
blockchain, AI, and other technologies in order to bring the power of digital transformation to
the world of regulatory compliance.

4.2 Characteristics of RegTech

· Some of the important characteristics of RegTech include agility, speed, integration, and
analytics.

· RegTech can quickly separate and organize cluttered and intertwined data sets through
extract and transfer load technologies.

· RegTech can also be used to generate reports quickly.

· It can also be used for integration purposes to get solutions running in a short amount of
time. Finally, RegTech uses analytic tools to mine big data sets and use them for different
purposes.
Benefits of RegTech
For financial services, the benefits of RegTech are substantial:
» Efficiency gains — As regulation continues to grow, it becomes nearly
impossible for compliance personnel to keep up without the aid of
technology. Technology, capable of processing a high volume of data at
incredible speeds, can quickly parse and analyze raw legal text and extract
valuable insights.
» Greater accuracy and comprehensiveness — Manual, siloed
processes tend to create gaps in the compliance operation, leading to
human error and increased exposure. Implementing the right technology
(and integrating those technologies thoughtfully where necessary) shores
up gaps and creates a streamlined compliance process.
» Greater internal alignment — Technology tools enable greater
transparency throughout the business, connecting once siloed people and
processes. The result is better insights between business units that can be
shared faster, which also leads to a stronger culture of compliance.
» Improved risk management — Many RegTech tools help protect
against various types of risk, including market abuse, cyber attacks, and
fraud, by monitoring systems and alerting personnel to suspicious activity.
Three main challenges many firms face when undertaking new RegTech efforts:

1) Inconsistent regulation. The world has moved towards a more global and standardised
approach to regulation since the 2008 global financial crisis. However, a major problem is
the complex evolution of the national and international regulatory landscape [45]. In
addition to the divergence between regulators in different countries, conflicts can also arise
between regulators in the same jurisdiction [10]. Due to globalisation, many companies
serve customers in different countries worldwide. Therefore, the challenge for these
companies is to manage the different compliance requirements from one country to
another
2) Cybersecurity. Reliance on the internet and information technology has also exposed
many vulnerabilities and given rise to many cybercrimes Cyber criminals have thus taken
advantage of this fertile environment to increase the success of their attacks. Therefore,
companies need to take preventative steps to avoid a possible cyber-attack by choosing
safe and secure measures. Thus, RegTech companies must constantly keep up with
changes in these practices and make software adjustments as needed to earn and
maintain the trust of their consumer base. Companies will face more data breaches if
security is insufficient, and incidents can be minor or have devastating consequences .
3) Legacy systems. Unfortunately, many companies are delaying the adoption of RegTech
solutions, despite its many advantages. This is due to legacy systems that often do not
integrate with new technologies or require many modifications Usually, a lengthy and
expensive project is required to replace these legacy systems. For this reason, migration to
new systems is delayed .In addition, historical data must be migrated to new technologies
and employees must be trained on the software. On top of all this, some companies or
employees are reluctant to change, not convinced of the potential return on investment or
concerned about the longevity of the technology.
RegTech Categories - Types :
Regulatory Monitoring
“Content” -Content is the information contained within communication media. This includes internet,
cinema, television, radio, audio CDs, books, magazines, physical art, and live event content. It’s directed at
an end-user or audience in the sectors of publishing, art, and communication Tools that provide
regulatory content, usually in the form of a content library, feed, or resource center. Content
tools consolidate documents published by regulators into one platform (including the laws,
enforcement actions, guidance, rule updates, and more), making research and horizon scanning
more efficient.
Regulatory Obligations - compliance with KYC (Know Your Customer) and AML (Anti-Money Laundering)
regulations - “Knowledge” -Technology that provides regulatory knowledge is a quantum leap
beyond content. Solutions in this category transform the raw text of regulatory documents into
actionable knowledge, such as the specific obligations that a firm must comply with.
Compliance Management -
“Containers” -Technology that includes GRC(Governance, Risk, and Compliance) platforms and other
workflow systems, considered containers because they contain all of a firm’s regulatory
information — including their regulatory obligations, controls, policies and procedures. Workflow
capabilities allow users to track and manage their compliance efforts.
Execution of Compliance
“Point Solutions” -Once firms have the right regulatory information housed in their preferred
container, they may implement additional point solutions to 1) execute a task in a compliant
way, or 2) assess compliance with an obligation
 regulatory sandbox :

Meaning :The regulatory sandbox framework provides an environment where participants can
demonstrate practical applications of new technologies. It is a proof of concept (POC) conducted with
the approval of regulatory authorities.

Regulatory sandbox refers to live testing of new products or services in a controlled regulatory environment. It
acts as a "safe space" for business as the regulators may or may not permit certain relaxations for the limited
purpose of testing.
The sandbox allows the regulator, the innovators, the financial service providers and the customers to conduct
field tests to collect evidence on the benefits and risks of new financial innovations, while carefully monitoring and
containing their risks.

significant benefits

1. regulatory changes or new regulations

2. users of a sandbox can test the product’s viability without the need for a larger and more
expensive roll-out.

3. Fintechs provide solutions that can further financial inclusion in a significant way.
Unit- 5
Data analytics helps finance teams gather the information needed to gain a clear view
of key performance indicators (KPIs). Examples include revenue generated, net
income, payroll costs, etc. Data analytics allows finance teams to scrutinize and
comprehend vital metrics, and detect fraud in revenue turnover.

Data in FinTech techniques are:

● Differential privacy, where noise is added to an analytical system so that it is
impossible to reverse-engineer the individual inputs
● Federated analysis, where parties share the insights from their analysis without
sharing the data itself
● Homomorphic encryption, where data is encrypted before it is shared, such
that it can still be analyzed but not decoded into the original information
● Zero-knowledge proofs, where users can prove their knowledge of a value
without revealing the value itself
● Secure multiparty computation, where data analysis is spread across multiple
parties such that no individual party can see the complete set of inputs
 Digital Identity :

Digital identity is essentially any personal data existing online that can be traced back
to the real [Link] identity, also sometimes interchangeably referred to as digital
identification or digital ID, is not a new concept.

Characteristics :

· A digital ID must be personal and non-transferable. That means, only the individual
to whom it belongs has the right to access and use it.

· It is reusable, meaning once you are assigned a digital ID, you can use and reuse it
whenever required.

· It is convenient, so you can access and use it whenever you want without requiring
any technical expertise.

· A digital ID fulfills its intended purposes by allowing the execution of specific

actions
Forms of Digital Identity:

1) Digital ID as credential

This is the type of digital ID that contains specific information you can use to identify yourself. Typical examples include
any government-issued documents such as your birth certificate, social security number, driver’s license, passport, and
so on. Depending on the circumstances, your email ID may also fit this category.

2) Digital ID as user

This version of a digital identity corresponds with the collection of information associated with your digital behavior. In
most cases, a counterparty that you interact online with, along with any third-party that you have granted permission
to, can collect this information and use it to assign an identity to you (often for internal use).The elements that
constitute this identity may include your preferences, habits, and priorities. For example, your browsing habits, your
favorite websites, your online purchases, webinars you attend, and so on.

3) Digital ID as character

This is the type of digital identity an individual creates to uniquely identify themself online. In other words, it is a form
of self-portrayal through actions like self-descriptions, commentary, interactions with fellow users, and other
[Link] most common elements that constitute this identity category include social media profiles, dating app
profiles, and metaverse profiles.

4) Digital ID as reputation

This type of identity is compiled by reputable and authorized entities, and it contains information about an individual’s
history or track record in a particular area. The elements that form this identity type can often influence things like
employment or financial opportunities. Typical examples include employment history, educational background, credit
scores, and criminal records.
· benefits of switching to digital identities include:

· One of the basic premises of having a digital identity is that such an identity
protects all your uniquely identifiable data in a well-organized folder. This often
manifests in a notable increase in operational efficiency.

· Digital IDs reduce costs and regulatory demands drastically. It helps businesses to
reduce operational expenses and litigation issues.

· By deploying a proper digital ID management framework, businesses can

significantly boost the privacy and security of their IT infrastructure.

· The decrease in the number of touchpoints and faster turnaround ensure that you
are privy to an enhanced customer experience.

And finally, digital identity makes it possible to store all available data in a single place
and when required
Artificial Intelligence :

(AI) has a range of uses in government. It can be used to further public policy objectives (in areas
such as emergency services, health and welfare), as well as assist the public to interact with the
government

Uses of AI in government :

1. Resource allocation - such as where administrative support is required to complete

tasks more quickly.

2. Large datasets - where these are too large for employees to work efficiently and
multiple datasets could be combined to provide greater insights.

3. Experts shortage - including where basic questions could be answered and niche
issues can be learned.

4. Predictable scenario - historical data makes the situation predictable.

5. Procedural - repetitive tasks where inputs or outputs have a binary answer.

Diverse data - where data takes a variety of forms (such as visual and linguistic) and needs to be
summarised regularly
Challenges of AI and Machine
Learning-
1. Computing Power

2. Trust Deficit

3. Limited Knowledge

4. Human-level

5. Data Privacy and Security

6. The Bias Problem

7. Data Scarcity
Challenges of 1. Computing Power
The amount of power these power-hungry algorithms use is a factor keeping most developers away. Machine Learning and Deep
Learning are the stepping stones of this Artificial Intelligence, and they demand an ever-increasing number of cores and GPUs to work
efficiently. There are various domains where we have ideas and knowledge to implement deep learning frameworks such as asteroid
tracking, healthcare deployment, tracing of cosmic bodies, and much more.
They require a supercomputer’s computing power, and yes, supercomputers aren’t cheap. Although, due to the availability of Cloud
Computing and parallel processing systems developers work on AI systems more effectively, they come at a price

2. Trust Deficit

One of the most important factors that are a cause of worry for the AI is the unknown nature of how deep learning models predict the
output. How a specific set of inputs can devise a solution for different kinds of problems is difficult to understand for a layman.
Many people in the world don’t even know the use or existence of Artificial Intelligence, and how it is integrated into everyday items
they interact with such as smartphones, Smart TVs, Banking, and even cars (at some level of automation).

3. Limited Knowledge

Although there are many places in the market where we can use Artificial Intelligence as a better alternative to the traditional systems.
The real problem is the knowledge of Artificial Intelligence. Apart from technology enthusiasts, college students, and researchers, there
are only a limited number of people who are aware of the potential of AI.

4. Human-level

This is one of the most important challenges in AI, one that has kept researchers on edge for AI services in companies and start-ups.
These companies might be boasting of above 90% accuracy, but humans can do better in all of these scenarios. For example, let our
model predict whether the image is of a dog or a cat. The human can predict the correct output nearly every time, mopping up a
stunning accuracy of above 99%.
5. Data Privacy and Security
The main factor on which all the deep and machine learning models are based on is the availability of data and resources
to train them. Yes, we have data, but as this data is generated from millions of users around the globe, there are
chances this data can be used for bad purposes.
For example, let us suppose a medical service provider offers services to 1 million people in a city, and due to a
cyber-attack, the personal data of all the one million users fall in the hands of everyone on the dark web. This data
includes data about diseases, health problems, medical history, and much more. To make matters worse, we are now
dealing with planet size data. With this much information pouring in from all directions, there would surely be some
cases of data leakage.
Some companies have already started working innovatively to bypass these barriers. It trains the data on smart devices,
and hence it is not sent back to the servers, only the trained model is sent back to the organization.

6. The Bias Problem

The good or bad nature of an AI system really depends on the amount of data they are trained on. Hence, the ability to
gain good data is the solution to good AI systems in the future. But, in reality, the everyday data the organizations
collect is poor and holds no significance of its own.
They are biased, and only somehow define the nature and specifications of a limited number of people with common
interests based on religion, ethnicity, gender, community, and other racial biases. The real change can be brought only
by defining some algorithms that can efficiently track these problems.

7. Data Scarcity

With major companies such as Google, Facebook, and Apple facing charges regarding unethical use of user data
generated, various countries such as India are using stringent IT rules to restrict the flow. Thus, these companies now
face the problem of using local data for developing applications for the world, and that would result in bias.
The data is a very important aspect of AI, and labeled data is used to train machines to learn and make predictions.
Some companies are trying to innovate new methodologies and are focused on creating AI models that can give accurate
results despite the scarcity of data. With biased information, the entire system could become flawed.
Data Processing Cycle?

Data processing is defined as the re-ordering or re-structuring of data by people or machines to

increase its utility and add value for a specific function or purpose. Standard data processing is
made up of three basic steps: input, processing, and output. Together, these three steps make up
the data processing cycle. You can read more detail about the data processing cycle

· Input: The input data gets prepared for processing in a convenient form that relies
on the machine carrying out the processing.

· Processing: Next, the input data form is changed to something more useful. For
example, information from timecards is used to calculate paychecks.

· Output: In the final step, the processing results are collected as output data, with
its final form depending on what it’s being used for. Using the previous example,
output data becomes the employees’ actual paychecks.
Metadata is information that describes and explains data. It provides context with details such as the source, type, owner, and relationships to
other data sets, thus helping you understand the relevance of a particular data set and guiding you on how to use it.

Metadata can be classified into 6 types:

Technical: This includes technical metadata such as row or column count, data type, schema, etc.

Governance: This includes governance terms, data classification, ownership information, etc.

Operational: This includes information on the flow of data such as dependencies, code, and runtime

Collaboration: This includes data-related comments, discussions, and issues

Quality: This includes quality metrics and measures, such as dataset status, freshness, tests run, and their statuses

Usage: This includes information on how much a dataset is used, such as view count, popularity, top users, and more
Differential Policy:

Differential privacy (DP) is a system for publicly sharing information about a dataset by describing the patterns of groups within the dataset while
withholding information about individuals in the dataset.

Steps in Differential Policy:

steps:

1. After having calculated the privacy budget, we need to determine the sensitivity of the function, which corresponds to how much a single
individual can affect the output of the function in the worst case. In that case, the sensitivity is one because adding or removing a single patient
from a data set, be it with or without this medical condition, can change the result of the count by at maximum one.

2. Next, we need to choose a differentially private mechanism for adding noise to the output of the function. In this case, we could use the Laplace
mechanism.

3. Once we have chosen the Laplace mechanism, we can apply it to the function to add noise and protect the privacy of individuals in the dataset. It
would produce a noisy version of the count of patients with the condition that is differentially private.

4. Finally, we can release the noisy version of the count of patients with the condition, which will not reveal any information about individual
records in the dataset. We have applied differential privacy and ensure the protection of the data thanks to differentially private mechanisms.
1. data-driven organization : use the data as strategic decisions based on data and interpretation.

1. Reimagine your finance model by connecting finance and operations

For finance to become data-driven, they need to connect and align key decisions across finance and operations.

This is where connected enterprise planning really starts to add value. It aligns goals and plans across finance and operations;
importantly, it does so by making sure everyone is making decisions using all the relevant financial and operational data. This
integrated planning process helps finance leaders to become strategic advisors by partnering with lines of business and
operations.
Oracle Cloud EPM delivers a single, unified platform for connected enterprise planning, with built-in best practices and prebuilt
capabilities for all financial and operational planning. It gives you the ability to use AI, machine learning, and predictive analytics
in the context of every financial and operational decision.

2. Empower decision making with data

Every organization is influenced by economic conditions and competitive actions, so external data representing these factors must
be considered when making strategic decisions. Imagine if you could spot trends in customer sentiment and buying behavior
across your product portfolio in different geographies and use that to forecast demand and financial performance more accurately.

Further, many organizations have invested in data science platforms like AWS, Microsoft Azure ML, Google TensorFlow, or Oracle
Data Science—but they’re often challenged to incorporate these investments in the context of daily decision-making.

2. Oracle Cloud EPM is designed to leverage all available data—internal and external. It also provides best-of-both-worlds flexibility:
you can define models locally in Cloud EPM, or import existing models from data science platforms to enrich your decision
making.
Future Driven – finance

Automate tasks with intelligent automation

1. Intelligent automation is the key to freeing up finance to focus on higher-value activities. It’s about reimagining and
modernizing every EPM process using automation, as well as AI and machine learning technologies.

2. Finance spends an inordinate amount of time preparing and analyzing data to uncover issues, trends, or
anomalies—long before taking any action based on these insights. The more data finance must consider, the more
time and effort this process will take. Clearly, business value comes from acting on the insights, not from analyzing
and reporting on data.

3. Oracle delivers a key capability—we call it IPM Insights—to automate data analysis and reduce the time spent
from days to minutes. Intelligent algorithms analyze vast amounts of data in the background to uncover anomalies,
trends, and exceptions—allowing finance to focus on collaborative actions that blend data insights with financial
and operational intuition.

4. In our view, leveraging advanced technologies to help finance become data-driven in all decision-making isn’t an
option—it’s an imperative. In the articles to follow, we’ll discuss the key requirements to become data-driven and
provide more detail on how Oracle can help make your vision a realty
significant benefits.

Firstly, regulators obtain first-hand empirical evidence on the benefits and risks of emerging technologies and their implications, enabling them to take a
considered view on the regulatory changes or new regulations that may be needed to support useful innovation, while containing the attendant risks.

Incumbent financial service providers, including banks, also improve their understanding of how new financial technologies might work, which helps them to
appropriately integrate such new technologies with their business plans.

Innovators and fintech companies can improve their understanding of regulations that govern their offerings and shape their products accordingly.

Second, users of a sandbox can test the product’s viability without the need for a larger and more expensive roll-out. If the product appears to have the
potential to be successful, the product might then be authorised and brought to the broader market more quickly.

Third, fintechs provide solutions that can further financial inclusion in a significant way. Areas that can potentially get a thrust from the sandbox include
microfinance, innovative small savings and micro-insurance products, remittances, mobile banking and other digital payments.

In India, financial regulators such as the Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority
and the International Financial Services Centres Authority run their own sandboxes.

The RBI sandbox scheme, introduced in 2019, is based on thematic cohorts. The first four cohorts were on retail payments, cross-border payments, MSME
lending, and prevention of financial frauds, respectively.

In September, the RBI announced the fifth cohort and based on feedback received from various stakeholders, it has kept the theme neutral. Innovative
products, services or technologies cutting across various functions in RBI’s regulatory domain would be eligible to apply.

The central bank has had a few successful cases under its sandbox initiative. Meanwhile, markets regulator SEBI’s regulatory sandbox framework has
remained a slow starter. Since 2020 when the framework was introduced, SEBI has received 10 applications for its approval. Of this, three have been
rejected, five withdrawn, one under process, and one approved.