Description
Book SynopsisThis book, written jointly by an engineer and artificial intelligence expert along with a lawyer and banker, is a glimpse on what the future of the financial services will look like and the impact it will have on society.
The first half of the book provides a detailed yet easy to understand educational and technical overview of FinTech, artificial intelligence and cryptocurrencies including the existing industry pain points and the new technological enablers.
The second half provides a practical, concise and engaging overview of their latest trends and their impact on the future of the financial services industry including numerous use cases and practical examples.
The book is a must read for any professional currently working in finance, any student studying the topic or anyone curious on how the future of finance will look like.
Table of Contents Chapter 1 - The Digital Triumvirate of Computation, Data, and Connectivity 13
1.1 Increasing computational power 13
1.2 Increasing data collection and availability 16
1.3 Increasing digital connectivity 18
1.4 Bringing computation, connectivity and data together in the cloud 20
Chapter 2 - New Interfaces for the Digital World 22
2.1 The evolution of visual displays 23
2.2 Voice as a user interface 24
2.3 Wearables and the body as an interface 25
The Fundamentals of Fintech 27
Chapter 3 - The Rise of Fintech 28
3.1 Drivers of the fintech revolution 29
3.1.1 A changing economic/regulatory landscape 29
3.1.2 A rapidly evolving technology environment 29
3.1.3 Shifting customer expectations 30
3.2 Types of fintechs 31
3.2.1 Fintech and payments 31
3.2.2 Fintech and lending 36
3.2.3 Fintech and wealth management 38
3.2.4 Fintech and insurance 41
3.2.5 Fintech and digital banking 43
3.2.6 Regtech: A different sort of fintech innovation 45
3.3 Challenges faced by fintechs 49
3.3.1 Access to talent 49
3.3.2 Regulatory compliance 51
3.3.3 Customer trust 53
3.3.4 Scaling the customer base 53
3.3.5 Raising capital 55
Chapter 4 - Incumbent Financial Institutions and their Response to Fintechs 55
4.1 Impediments to incumbent innovation 56
4.2 Incumbents building/replicating fintech offerings 58
4.3 Incumbents investing in fintechs 61
4.4 Incumbents partnering with fintechs 62
Chapter 5 - The Emergence of Techfin 64
5.1 The case for tech to techfin 64
5.2 China as a template for the growth of techfin 65
5.2.1 Alibaba and Tencent’s transformation of payments in China 65
5.2.2 Alibaba and Tencent’s expansion beyond payments 66
5.2.3 Alibaba and Tencent’s international expansion 67
5.3 Early techfin developments outside of China 68
Chapter 6 - The Changing Structure of the Financial Ecosystem 70
6.1 Incumbent collaboration with techfins 70
6.2 Fintech collaboration with techfins 71
Chapter 7 - Financial Innovation and Inclusion 72
7.1 Fintech as a driver of financial inclusion 72
7.2 Government as an enabler of inclusive fintech solutions 75
The Fundamentals of Crypto-assets 76
Chapter 8 - The Basics of Cryptography and Encryption 77
8.1 Early encryption 77
8.2 Asymmetric or public key cryptography 78
8.3 Early experiments with cryptocurrencies 79
Chapter 9 - The Rise of Bitcoin 80
9.1 The Bitcoin white paper 81
9.2 The technical foundations of Bitcoin 84
9.2.1 The role of cryptography in Bitcoin 84
9.2.2 The role of decentralization in Bitcoin 86
9.2.3 The role of immutability in Bitcoin 87
9.2.4 The role of proof-of-work in Bitcoin 87
9.3 The growth of Bitcoin 89
9.4 Challenges facing Bitcoin 93
Chapter 10 - Blockchain as an Enabling Technology 95
10.1 Defining the characteristics of a blockchain 96
10.2 Challenges 99
10.3 Use cases of blockchains 100
Chapter 11 - The Proliferation of Crypto-assets 103
11.1 The emergence of new crypto-assets 103
11.2 Mechanisms for distributing new crypto-assets 105
11.2.1 The creation of new tokens via mining 106
11.2.2 The creation of new tokens via a hard fork 106
11.2.3 The distribution of new tokens via sale 108
11.3 A closer look at ICOs 108
11.3.1 Technical structure of an ICO 109
11.3.2 The regulatory treatment of ICOs 112
11.3.3 Advantages and challenges of ICOs 115
Chapter 12 - A High-Level Taxonomy of Crypto-assets 117
12.1 Establishing a taxonomy of crypto-assets 117
12.2 Payment tokens 119
12.2.1 Characteristics of a payment token 119
12.2.2 Challenges facing payment tokens 120
12.2.3 Regulation of payment tokens 121
12.3.4 Stable coins 122
12.3 Utility tokens 124
12.4 Investment tokens 126
12.4.1 Tokenization of new investment instruments 126
12.4.2 Tokenization of pre-existing investment instruments 127
12.5 Non-fungible tradable tokens 130
12.6 Non-fungible non-tradable digital assets 131
Chapter 13 - The Crypto-asset Ecosystem 132
13.1 Crypto-asset exchanges 133
13.1.1 Centralized crypto-asset exchanges 133
13.1.2 Decentralized crypto-asset exchanges 136
13.2 Crypto-asset custodians and wallets 136
13.2.1 Crypto-asset custodians 137
13.2.2 Crypto-asset wallets 138
13.3 Advisory and consumer services for the crypto-asset ecosystem 139
The Fundamentals of Artificial Intelligence 139
Chapter 14 - Understanding Artificial Intelligence and its Capabilities 140
14.1 The surprisingly tricky problem of defining AI 140
14.2 Why artificial intelligence matters 142
14.3 Selected AI techniques 143
14.3.1 Machine learning 143
14.3.2 Neural networks and deep learning 144
14.3.3 Genetic and evolutionary algorithms 145
14.3.4 Limitations of these techniques 145
14.4 Selected capabilities of AI 145
14.4.1 Machine vision 146
14.4.2 Natural language processing 146
14.5 High-level implications of AI for business 147
Chapter 15 - Applications of Artificial Intelligence in Financial Services 148
15.1 Key artificial intelligence opportunities for financial institutions 148
15.1.1 AI-enabled automation 149
15.1.2 AI-enabled improved decision-making 150
15.1.3 AI-enabled customization 150
15.1.4 AI-enabled new value propositions 150
15.2 Specific applications of AI in sub-sectors of financial services 151
15.2.1 Key applications of artificial intelligence in lending 151
15.2.2 Key applications of artificial intelligence in wealth and asset management 153
15.2.3 Key applications of artificial intelligence in insurance 155
15.2.4 Key applications of artificial intelligence in payments 157
15.3 Key challenges to the deployment of artificial intelligence in financial institutions 159
15.3.1 Data challenges to deploying of AI in financial institutions 159
15.3.2 Technology challenges to deploying of AI in financial institutions 160
15.3.3 Talent challenges to deploying of AI in financial institutions 160
15.3.4 Regulatory challenges to deploying of AI in financial institutions 162
Future Trends in Fintech, Crypto, and AI 163
Chapter 16 - Fintech and the Future of the Financial Ecosystem 164
16.1 The changing shape of the financial ecosystem 165
16.1.1 The shift from in-person to digital channels 165
16.1.2 Larger shifts in the financial ecosystem on the horizon 167
16.2 A new approach to customer experience 168
16.2.1 Open banking and the ‘platformization’ of the customer experience 168
16.2.2 Who will own the financial platform of the future? 170
16.2.3 Broader challenges of a platform model of customer experience 171
16.3 New market dynamics for competing financial products 172
16.4 Renovating the back office and shared financial infrastructure 174
16.4.1 Outsourcing the back office 174
16.4.2 The much needed modernization of financial infrastructure 175
Chapter 17 - The Continuing Evolution of Crypto-assets 176
17.1 Regulators provide improved clarity on crypto-assets 177
17.1.1 A positive disposition to crypto-assets 177
17.1.2 A neutral approach to crypto-assets 178
17.1.3 A negative approach to crypto-assets 179
17.1.4 The future of crypto-asset regulation 180
17.2 Financial incumbents as facilitators of crypto investments 181
17.2.1 Institutional investors and crypto-assets 181
17.2.2 Incumbent financial institutions as crypto-asset service providers 182
17.3 Large tech firms’ forays into crypto 183
17.4 Central bank-backed digital currencies 185
Chapter 18 – Future Trends in Artificial Intelligence 189
18.1 The perils of predicting AI developments 189
18.2 The democratization of artificial intelligence 191
18.3 AI trends in financial services 193
18.3.1 Alternative data and ‘quantamental’ asset management 194
18.3.2 AI-as-a-service by and for financial institutions 196
18.3.3 AI enabled ‘self-driving finance 198
18.4 Responsible regulation of AI in financial services 201
Artificial Intelligence Meets Cryptoassets 202
Chapter 19: Selected Scenarios for a Crypto-AI World 203
19.1 Real-time auditing 203
19.2 Artificially intelligent distributed autonomous corporations 206
19.3 Blockchain based identity powered by AI data managers 208
19.4 Data marketplaces and the democratization of AI 210
19.5 AI catalyzing the adoption of cryptoassets 213
19.6 The machine-to-machine payment economy 214
A Financial Future Full of Possibilities 217
