Premier University

Subject: Financial Engineering and Derivatives

Topic: Fintech in Derivative Market: Practice and Opportunities
Submitted To-
Name: Afroza Sultana
Lecturer of Finance Discipline
Faculty of Business Studies
Premier University.
Submitted By-
Name ID.
Mohammed Fahad Hossain 0222210004083041
Atiqur Rahman 0222210004083040
Shahadat Rahim Sajjad 0222210004083038
Sipen Chakma 0222210004083001
Amdad Hossain 0222210004083039
Department of Finance
Section: ‘A’
Faculty of Business Studies
Premier University

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Table of Contents
Chapter One............................................................................................................................................................. 4
1.2 What is 'Fintech?............................................................................................................................................ 4
Chapter Two............................................................................................................................................................ 5
2.1 LITERATURE REVIEW..................................................................................................................................... 5
Chapter Three......................................................................................................................................................... 6
3. 1 World Scenario of FinTech............................................................................................................................6
3.2 FinTech Evolution.............................................................................................................................................. 6
3.3 Top Five FinTech Companies........................................................................................................................8
3.4 Advantages and Disadvantages of FinTech............................................................................................9
3.4.2 Disadvantages:................................................................................................................................................. 9
Chapter Four......................................................................................................................................................... 11
4.1 Fintech Innovations Changes The Derivatives Market-.................................................................11
4.1.1 Derivatives Trading: Challenges and Industry Specifics............................................................11
4.2 Betting on the future - Two fintechs making a mark in derivatives markets-.....................14
4.2.1 Ascent Technologies................................................................................................................................... 14
4.2.2 Cloud Margin.................................................................................................................................................. 15
4.3 Fintech current practice in Bangladesh.................................................................................................17
4.4 Comparative Analysis in Fintech between India vs Bangladesh................................................19
4.4.1 Fintech Landscape in India.....................................................................................................................19
4.4.2 Fintech Landscape in Bangladesh........................................................................................................ 20
4.4.3 Digital Payments in India......................................................................................................................... 20
4.4.4 Digital Payments in Bangladesh............................................................................................................20
4.5 Opportunities and Challenges of Fintech in Bangladesh...............................................................22
4.5.1 Opportunities................................................................................................................................................ 22
4.5.2 Challenges of Fintech in Bangladesh...................................................................................................23
Chapter Five.......................................................................................................................................................... 24
5.1 Recommendations.......................................................................................................................................... 24
REFERENCES............................................................................................................................................................ 25

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 Chapter One

1.1 INTRODUCTION

The financial ecosystem is changing rapidly due to the increased use of information
technologies by financial institutions and new competitors. Traditional financial companies
are modernizing their operations, and new competitors are concentrating their activities
on information technologies. Moreover, fintech services are accessible from anywhere and
at any time through online or mobile platforms. Some companies provide products and
services offered by traditional financial entities such as payment processing, trading and
investment, portfolio management, credit granting, and capital raising applying technology
in innovative ways to enhance their operations. Other fintech firms provide new products
such as cryptocurrencies. The growth of fintech is a global phenomenon supported by
venture capital on fintech start-ups.
Although currently low, fintech developments entail new advantages and risks for
consumers as well as new challenges for financial sector regulators and supervisors.
However, the speed of the new developments is generating a knowledge gap that this
document tries to reduce, through:
 Describing about fintech
 Fintech in worldwide and Bangladesh and
 New opportunities and challenges of fintech
The expansion of fintech brings about efficiency gains, but it also carries intensified or new
risks. Often, fintech services are characterized by their cost efficiency, lower information
asymmetries, faster operative processes, and increased client-centeredness. However, at
the same time, the growth of fintech exacerbates cyber-risk, and the perceived potential of
information theft, fraud, and money laundering

1.2 What is 'Fintech?

Fintech is a portmanteau of financial technology that describes an emerging financial

services sector in the 21st century. Originally, the term applied to technology applied to the
back-end of established consumer and trade financial institutions. Since the end of the first
decade of the 21st century, the term has expanded to include any technological innovation
in the financial sector, including innovations in financial literacy and education, retail
banking, investment and even crypto-currencies like bitcoin.

1.3 Fintech Users

Who uses fintech? There are four broad categories:

 B2B for banks
 B2B business clients;
 B2C for small businesses
 Consumers e.g., trends toward mobile banking, increased information, data and
more accurate analytics and decentralization of access will create opportunities for
all four groups to interact in heretofore unprecedented ways.

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 Chapter Two

2.1 LITERATURE REVIEW

Fintech originated from the contraction for Financial Technology, which was first
introduced in 2006 and since then has massed popularity quickly. It can be summarized as
technologies that targets individual business units of banks and aims to separate the clients
from them through creation of services and solution through technology (Omarini, 2018).
One important aspect of fintech to work flawlessly is the creation of platform. Platforms
facilitates easy participation between two or more interdependent groups through the
arrangement of access to channels, IT based functionality and ability to conduct business
processes which increases in value as participation increases and hence data generation
increases. Internet is one such platform that has allowed companies such as Facebook,
Google, Amazon, LinkedIn, Air B&B and so on to become such dominating powers that it
can be hardly overlooked now. Therefore, creation of Fintech platforms over this channel is
vital towards its success (Dhar & Stein, 2016). Fintech is seen as a fusion of finance and
technology that is changing the role of information technology by converging social
computing, internet of things, cloud computing, big data and enabling financial companies
to automate their process through these technologies. They are changing the behavior of
the consumers by creating a more self-service oriented culture. They are changing the
ecosystem of traditional financial sectors through creation of new business models,
platforms and channels. All of these are creating a change in regulations for example
London, Singapore or Hong Kong uses a Fintech “sandbox” to experiment new services and
products (Puschmann, 2017). Fintech can be classified as consisting of the following
characteristics (Drummer, Jerenz, Siebelt & Thaten, 2016):
• Using technology and innovation at the highest degree to gain competitive advantage
through increasing quality and security of services, increasing automation and providing
better quality of service.
• They usually run-on agile business model, hence their popularity in startups.
• They usually target non-traditional marketing channel such as the internet and mobile.
• They focus on customer-centric approach through creation of making customer lives
easier with financial services by lowering cost and time involvement.

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 Chapter Three

3. 1 World Scenario of FinTech

There has been a dramatic change in our everyday lives due to the advancements in
technology. The whole world has been affected or influenced with the latest technology in
many ways. The financial service industry is no different. It has witnessed reform in
regulation and the way in which traditional financial services interact with consumers,
over the past decade. Part of this reform has come from the advances in financial
technology or as the new ambiguous word of FinTech as it’s now known. FinTech is already
revolutionizing the industry as hundreds of new start-ups design new innovative financial
products and services for customers. The traditional financial services model or
frameworks are being challenged by these new entrants.
Fintech Worldwide is a market leading global innovation and events network focusing on
Fintech, Blockchain, Frontier Technologies and social transformation. Over 100,000+
developers, industry, academics, media, start-ups, investors are connected globally by
Fintech Worldwide with a view to empower people to harness Fintech, Blockchain and
other Digital Technologies for their industry and for Global Social Change.
Successful events have been running globally since 2014, and has run over 30 Fintech and
Blockchain conferences throughout the world including; UK, USA, Asia, Africa, and the
Middle- East.

3.2 FinTech Evolution

FinTech is often seen today as the new marriage of financial services and information
technology. However, this interlinkage has a long history and has evolved over three
distinct time periods.
Date 1866 - 1967 1967 - 2008 2008 - Current

Era FinTech 1.0 FinTech 2.0 FinTech 3.0

Geography Global / Developed Global / Developed Developed

Key elements Infrastructure / Traditional / internet Mobile / Start-ups /

computerization New entrants

Shift Origin Linkages Digitalization 2008 financial crisis /

smartphone

 Fintech 1.0
From their earliest stages, finance and technology have been interlinked and mutually
reinforcing. Finance originated in the state administrative systems that were necessary to
transition from hunter-gatherer groups to settled agricultural states. Money is a technology
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evidencing transferable values, and the emergence of early calculation technologies like the
abacus greatly facilitated financial transactions. Finance evolved alongside trade, and
double entry accounting emerged from this in the late Middle Ages and Renaissance. Many
historians share the view that the European financial revolution in the late 1600s involving
joint stock companies, insurance, and banking — all based on double-entry accounting —
was essential to the Industrial Revolution. Thus, the relationship between finance and
technology laid the foundations for the modern period. In the late 19th century,
technologies such as the telegraph, railroads and steamships underpinned financial
interconnections across borders. Then, post- World War I technological developments
proceeded rapidly. By this time, a global telex network was in place, providing the
communications foundation on which the next stage of fintech could develop.

 Fintech 2.0
In the late 1960s and 1970s, electronic payment systems advanced rapidly. The Inter-Bank
Computer Bureau was established in the UK in 1968, forming the basis of today’s Bankers’
Automated Clearing Services. The US Clearing House Interbank Payments System was
established in 1970, and Fedwire became an electronic system in the early 1970s.
Reflecting the need to interconnect domestic payments systems, the Society of Worldwide
Interbank Financial Telecommunications was established in 1973, followed soon after by
the collapse of Herstatt Bank in 1974, which highlighted the risks of increasing
international financial interlinkages. This crisis triggered the first major regulatory focus
on fintech, with the establishment of the Basel Committee on Banking Supervision of the
Bank for International Settlements in 1975, leading to a series of international soft law
agreements. In 1987, stock markets around the world crashed on ‘Black Monday’. The
effects of the crash were a clear indicator that global markets were technologically
interlinked. The reaction led to the introduction of ‘circuit breakers’ to control the speed of
price changes, and led securities regulators worldwide to create mechanisms to support
cooperation. In addition, the Single European Act 1986, the 1986 Big Bang financial
liberalization process in the UK, and the 1992 Maastricht Treaty set the baseline for the full
interconnection of EU financial markets by the early 21st century. The advances through
the mid-1990s highlighted the initial risks in complex computerized risk management
systems, with the collapse of Long-term Capital Management after the Asian and Russian
financial crises of 1997−98.8 However, the next level of development began in 1995 when
Wells Fargo began providing online consumer banking. By 2001, eight US banks had at
least one million customers online. In the late 1990s, the internet provided the
foundational change that made Fintech 3.0 possible a decade later. E-banking and all of the
developments of Fintech 3.0 were a product of the new internet era. The regulatory view
during Fintech 2.0 was that while e-banking was a digital version of the traditional model,
it created new risks. Technology removed the need for depositors to be physically present
at a branch, and could thus indirectly facilitate electronic bank runs. In turn, instant
withdrawal could increase the stress on a financial institution.
Regulators also identified that online banking creates new credit risks. The expectation was
also that e-banking providers would be authorized financial institutions, which are usually
the only entities allowed to describe themselves as ‘banks.
 Fintech 3.0

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The critical difference in Fintech 3.0 lies in: first, who is providing financial services, with
start- ups and technology firms supplanting banks in providing niche services to the public,
business and the banks themselves; and second, the speed of development. In many
markets, there has been a shift in customer mindset as to who has the resources and
legitimacy to provide financial services, combined with an entirely new speed of evolution,
particularly in emerging markets.

3.3 Top Five FinTech Companies

Here is a look at the top ten FinTech companies from around the world:
1. Ant Financial
Ant Financial is a China-based platform that is a byproduct of the Alibaba Group (BABA).
Officially founded in 2014, it has originated from Alipay, the world’s leading third-party
payment platform founded in 2004. Today, Ant Financial runs Alipay, Ant Fortune, Ant
Financial Cloud, and other financial services. Ant Financial along with its affiliates cover
wealth management, credit reporting, private bank, payments, and cloud computing. Its
business value was estimated at a whopping $75 billion in 2016. Ant Financial tops the list
of the most anticipated IPOs.
2. Adyen
After being founded in 2006, Adyen provides businesses with a single platform to accept
payments through any sales channel anywhere in the world. The Netherlands-based Adyen
serves more than 4,500 businesses to process payments through mobile, online mode, or
in-store. With an impressive roster of customers, including, Facebook, Uber, Netflix, Spotify,
L’Oréal, Burberry, Symantec, and Microsoft, Adyen continues to grow at a fast pace. Its
2016 revenue surpassed $700 million, up from $365 million in 2015. Adyen processed $90
billion in transactions with an increase of 80% year-on-year, during 2016.
3. Qudian
Qudian is a China-based FinTech firm belonging to the category of lending that was
founded in 2014. It broadly operates as a student micro-loan site, an installment payment,
and investment management platform. In the Western countries, many purchases are made
through credit cards which allow payback in installments but much of that mechanism is
not currently used by the the consumers in Chinese markets and this created scope for
platforms such as Qudian. Partnerships with several e-commerce, digital services, and
financial services has formed by the company in a bid to attract consumers. Qudian which
is likely to go public soon and it is expected to raise $800 million to $1 billion.
Approximately 33 billion yuan in loans was facilitated, the figure is projected to more than
double to 80 billion yuan in 2017.
4. Xero
Xero was founded in 2006 in New Zealand. It is considered one of the fastest growing
"software as a service" companies. The company develops easy-to-use online accounting
software for small businesses and has more than 1 million subscribers. Its product lineup
includes a full accrual accounting system with a cashbook, automated daily bank feeds,
invoicing, debtors, creditors, sales tax, and reporting. Last year, over NZ$1.4 trillion
transactions was recorded by Xero. Forbes introduced it as the World’s Most Innovative
Growth Company in 2014 and 2015.

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 5. SoFi
“A new kind of finance company”, which is taking a non-traditional approach to lending
and now wealth management. Four students who met at the Stanford Graduate School of
Business created the company in 2011. It is based in San Francisco. The company now
offers student loan refinancing, mortgage loans, personal loans, wealth management, and
life insurance. SoFi has since grown to become a multi-billion-dollar company with over
$19 billion of loans funded to date and more than 300,000 members.

3.4 Advantages and Disadvantages of FinTech

3.4.1 Advantages:

 Savings:
Not only for companies that are avoiding the hiring of a local rental staff, are the
operating costs reduced exponentially. In general, all cases involving. For normal
people, it also includes transportation and time savings. At present, the time is
invaluable, especially if you have to spend hours trained to make payments or even
just to make deposits or withdraw money.
 Flexibility:
Allows you to save information, query data in different alternatives that you could not
previously. It also gives you the flexibility to be able to do it anywhere, anytime.
 Transparency:

Companies can manage in a transparent and fast way. All in one click on your
home community from your computer.

3.4.2 Disadvantages:

 Security:
Data that is available online can easily be stolen by third parties. They could be used for
other lucrative purposes or even for identity theft. In fact, one of Finch’s top priorities is
safety. So, you can choose the companies instead of the traditional means because they
represent a form at least equal or more secure than the traditional methods of banking.
 Only applies to large companies:

Effectively large companies started using the Fintech. At the present time, the end users
are the ones who benefit most from such solutions.
How you can see instead of disadvantages are really fears or myths that people have
created over time not to use the Fintech. If you do not know how to use these tools, it
is just a matter of asking your bank if there is an online banking option and what you

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need to do to activate it. After this is very simple operation.

In addition to the Fintech hand in hand with the banks, there are Fintech
companies that are developing very interesting business proposals such as personal
loans without banks within reach of a click through your computer or your mobile
phone.

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 Chapter Four

4.1 Fintech Innovations Changes the Derivatives Market-

4.1.1 Derivatives Trading: Challenges and Industry Specifics

In finance, derivatives are contracts whose value is dependent (or derived) from underlying assets. As
such, futures, options, warrants, stocks, bonds, interest rates, and swaps are examples of derivatives. As
the value of the underlying asset fluctuates, the value of derivatives changes accordingly. Because of the
many factors impacting their value, the market for derivatives is volatile and highly unpredictable.

These factors include laws and regulations which are currently forcing market players to completely
rethink their trading ecosystems, and devote more attention to the post-trade processes, rather than
back-office operations like years ago. Automating the process of approving the transaction, changing
records of ownership, and arranging for the transfer of securities and payments has become a major
challenge.

The current changes in European regulations force parties involved in derivatives trading to rebuild their
database structures to ensure seamless reporting of additional data, such as, for example, the type of
trading model used in a particular transaction.

Technologies Transforming the Derivatives Trading

So let’s now take a closer look at technologies that are helping modern traders adapt to the pace of
changes and meet regulatory requirements.

Data Analytics

Modern derivative trading places a great emphasis on data processing, aggregation, and analytics.
Automated reporting is no longer a problem, the main challenge is data quality and diversity. For
example, in the past, you may have needed ten pieces of data to assess pricing interest rate swaps for
risk management. Today, you need 100 pieces of data to correctly assess all possible risks.

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Traders use AI and analytics to extract more information from data, to gain insights about what is
available and how they can use this info to their strategic advantage. They also leverage NLP and
Machine learning to sift through massive amounts of documents and text and pull meaningful insights
from phrases and patterns.

As of today, massive data platforms like Iguazo, help investors to aggregate, process and analyze
immense amounts of data for market surveillance, fraud detection, and making strategic decisions.

Data visualization

A lot of emerging solutions focus on data visualization helping buyers and sellers make sense of market
data and draw connections between a range of seemingly disparate factors. Complex financial data is
automatically translated into visual maps and dashboards, which help investors understand the
numerous factors that shape financial risks. Coupled with AI analytics data, visualization platforms are
utilized to make sense of structured financial data, including trades, payments, asset and equity prices.

The use of virtual reality in data visualization, for example, portrays high data volumes and many
interconnections between data points in a multidimensional view. This type of immersive experience
allows financial analysts, traders, and financial managers to quickly detect anomalies and avoid mistakes
in making vital decisions.

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Block chain

Although blockchain is still in its development, many firms are harnessing its potential to sell and buy
derivatives. Market players are joining forces to develop blockchain-driven platforms for trading stocks,
options, futures, and swaps, or leverage smart contracts for secure trading.

For example, the International Swaps and Derivatives Association is advocating the use of blockchain as
a means of cutting costs and generating extra efficiencies and is using blockchain to modernize
documentation and for automated execution of intended lifecycle events.

Blockchain distributed ledgers are also used for building unhackable platforms for credit default swaps
and other OTC derivatives.

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RegTech

In a highly regulated derivatives market, technologies helping buyers and sellers meet the regulatory
requirements are in high demand. Companies are offering traders new means of meeting the
compliance challenge by offering tools that help them track their compliance processes and making sure
nothing gets omitted or skipped. A range of solutions is also targeted at tracking communications that
take place at trading desks and making sure that buyers and sellers are not breaking any rules.

4.2 Betting on the future - Two fintechs making a mark in derivatives markets-

4.2.1 Ascent Technologies

Ascent Technologies was founded in 2015 to help derivatives firms and other financial institutions
determine their regulatory obligations and keep pace with regulatory change — more efficiently, more
accurately, and at lower cost. As regulators and lawmakers around the globe embarked on a massive
program of regulatory reform that created new frictions for the derivatives industry, Ascent dedicated
itself to the idea that technology can ease regulatory burdens.

"By and large, derivatives firms and other financial institutions are trying their best to be in compliance,
but it is incredibly difficult," said Brian Clark, Ascent's CEO. Not only must they decipher actual
obligations amid "oceans of regulatory text," the rapid pace of change means tomorrow's requirements
could be significantly different, and keeping these obligations up-to-date in one place is a huge pain
point for many in the market. The result is increased regulatory risk and rising odds of missing a
compliance requirement.

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Ascent was built specifically to address this challenge, using machine learning and natural language
processing to break down regulatory text into what Clark calls "granular obligations" – precise, individual
acts imposed on the firm, detailed down to the line level of regulation. Ascent's technology then maps
these requirements to an organization based on its specific operations, and continues to monitor future
changes to update the firm’s obligations accordingly.

The goal is simple: save market participants time and money, reduce their regulatory and reputational
risk, and keep them from getting fined. Ascent saves customers save 99%+ of their time per regulation in
getting to their obligations, and with greater accuracy.

In the five years since the Chicago-based company was featured in FIA's Innovators Pavilion, it has
expanded and enhanced its platform. It also has won the confidence of major investors, including a
$19.3 million Series B funding round in 2019 led by Drive Capital, with additional investments from ING,
Wells Fargo, and Alsop Louie.

Ascent continues to evolve as it looks to the future, including a recent upgrade of its user interface as
well as integration with IBM OpenPages that allows customers to feed regulatory data from Ascent
directly into IBM’s GRC (governance, risk, and compliance) platform. And with a flurry of pandemic-
related regulatory changes in 2020, many firms are relying on Ascent to help them navigate the current
environment by both generating their obligations and keeping them updated as rules change.

"Ascent was founded in response to the 2008 global financial crisis to allow our customers to fully
understand their regulatory obligations and risk at a fraction of the time and cost. As a result, we fully
understand the uncertainty and fear that our customers might be feeling right now. Clark Said that,
Ascent exists to alleviate that uncertainty, providing complete transparency into each and every
regulatory compliance obligation and risk.

4.2.2 Cloud Margin

The pandemic has created market volatility and with that a greater need for effective collateral
management and automation and security of the process. One firm that has seen demand for its
services grow during the crisis is CloudMargin.

The London-based company was founded in 2014 with the aim of bringing operational and cost
efficiencies to collateral management. Thanks to its use of cloud technology, CloudMargin bypasses
many of the shortfalls of legacy, on-premise software, enabling clients to quickly implement and access
its secure collateral management platform for all asset classes and dealer data. Workflow steps are
available in one place and users can fully automate or create checks across the process.

"Centralization and automation give control back to teams at a firm-wide level. With full visibility into
the collateral management process and data across the enterprise, firms have the ability to be more

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efficient with their collateral," said Stuart Connolly, a former managing director at Goldman Sachs who
joined the company in 2019 as CEO.

"CloudMargin has been sought after to provide that secure opportunity for firms to get up and running
quickly and to put risk management practices in place across collateral and exposure. On a long-term
basis, given the impact of COVID-19 beyond market volatility, we are seeing more interest and priority
among firms to transform their tech stack to a cloud/agile environment," he added.

Underscoring the strength of its business model, CloudMargin closed a $15 million investment round in
September this year with three major financial institutions – Deutsche Börse and existing clients
Deutsche Bank and Citi.

"These institutions, which have a deep understanding of collateral management challenges the industry
is facing, now have an important voice on our board," said Connolly. "The investment will help
CloudMargin execute our strategy from a product, people and regional standpoint. Our vision is to solve
the true tail of manual process still occurring in the industry by building a networked platform as a single
central point."

The company plans to invest the new funds in research and development and in scalability, as well as
expand its footprint in the US and Asia with additional sales and client services resources.

Other important milestones for CloudMargin have been the partnerships it has developed in the
industry. For example, in July 2019 it announced a strategic partnership with AcadiaSoft, a provider of
risk and collateral management services for the non-cleared derivatives community. This allowed
AcadiaSoft to integrate CloudMargin’s service into its core platform, thus establishing an end-to-end
solution addressing all agreement, margin call reconciliation and collateral processing needs in one
place.

"The partnership with AcadiaSoft gives us the ability to provide a seamless workflow across messaging
to settlement and the only one-stop-shop for Uncleared Margin Rules (UMR) compliance," Connolly
said.

Last month, CloudMargin announced a partnership with global fintech firm Finastra to deliver an
integrated collateral and margin management solution, a move that will likely further expand its global
reach.

"There has been a lot of automation and efficiency created in the industry, but this has a tendency to
trail off at the post-trade level. CloudMargin is all about trying to create more of that efficiency in the
collateral lifecycle, taking out risk wherever possible. Modern technology and SaaS [software-as-a-
service] have democratized the cost of this process as well as the access," Connolly said.

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4.3 Fintech current practice in Bangladesh

The adoption of FinTech in Bangladesh was a progressive move for stepping into the
emerging markets from a frontier market. In Bangladesh 35 million people were
excluded under the modern financial industry. Thus, the emergence of FinTech was
essential to address the large unbanked population of Bangladesh.
One of the platforms of FinTech is Digital Financial Services (DFS), which opened up a
new dimension and helped individuals and businesses to have more control over
personal finances and, to make prompt decision and transactions. DFS consists of a
broad range of financial services that are accessed and delivered through digital
channels; such as payments, credit, savings, remittances and insurance. The DFS also
includes mobile financial services (MFS). One of the most important impacts of
FinTech in Bangladesh that has not been intervened much yet is its ability to address
poverty.
The four key elements of the Government’s “Digital Bangladesh Vision” are human
resource development, people involvement, civil services and finally use of
technology in businesses. Since use of technology in businesses is of the key elements
of making “Digital Bangladesh Vision”, MFS has made the most significant
improvement over the years. However, still only 47% of the population are financially
included. Meaning only 47% of the population have access to useful and affordable
financial products and services that meet their needs transactions, payments, savings,
credit and insurance delivered in responsible and sustainable ways.
 Digital Financial Services (DFS): Encompasses all products, services,
technology and infrastructure that enable individuals and companies to have
access to payments, savings, and credit facilities via the Internet (online)
without the need to visit a physical bank or any direct interaction with financial
service providers. Bringing together the agents and the networks of other third-
party intermediaries, DFS expands the delivery of traditional banking services
to their customers through Internet banking, mobile-phone-enabled solutions,
electronic money models and digital payment platforms, and lowers the overall
service delivery cost. It has already been introduced in other parts of the world
and it is helping the economies to be developed at a fast pace.
 Automated Teller Machine (ATM): Provide money debits and all the
necessary bank information that can easy traditional banking services. These
platforms allow banks to operate internet and mobile banking and Automated
Teller Machine (ATM) services.
 Money Transfer & Remittances: Using master card international money
transfer and tracking platforms. For international payment its can possible with
master-card.
 Capital Markets: Sales & Trading, analysis and infrastructure tools
for financial institutions.
 Internet Banking: using the internet or software to transfer money and
manage our Bank Account.

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 Payment Bills: Payment processing more easer then past, using credit card you
can pay anything where support card payment system.
 Insurance: Companies Selling insurance digitally or providing data analytics
and software for insurance.
 Smart-Cash-Book: Smart-Cash-Book provides accounting, inventory, and
payroll software to SMBs. The features offered through the products are
bookkeeping, accounts payable/receivables management, accounts
reconciliation, financial reporting, fixed asset management, inventory
management and payroll management. The price of the standard version of the
product starts from $300.
 DBSE-BD: DBSEBD provides currency exchange services in Bangladesh. Users
can buy, sell and exchange dollar via the platform. Users can buy and sell a
maximum of $100 USD. They can exchange a maximum of $200 USD and
minimum of $5 USD.
 E-Wallet: E-Wallet is the online payment portal providing services like bill
payments, multicurrency exchange, money transfer, online shopping, ticket
booking, etc.
 Bd-tax: Bd-tax is an online tax preparation, processing and submission
software for consumers. It lets user prepare tax and file electronically with
National Board of Revenue (NBR). It offers plans for individual and
professional.
 Mobile Financial Services (MFS): as the term suggests, involves the use of a
mobile phone to access financial services and execute financial transactions. It
includes mobile banking, mobile payments, mobile money, mobile insurance,
mobile credit, and mobile savings. It has proved to be the finest integration of
finance and technology in Bangladesh. It has significantly contributed to the
rural-urban fund flow as efforts are being made to popular mobile money as a
viable alternative to physical money.
 BKash: BKash is a subsidiary of BRAC Bank, started as a joint venture between
BRAC Bank Limited, Bangladesh and Money in Motion LLC, USA. It is a mobile
first service, allowing users to send money via their mobile phone app or dial a
number to initiate the transaction, fill in the bKash account, amount and the
money will be sent to the receivers' mobile. Beneficiary can cash out at the
participating agent locations or at partnered locations of Western Union or at
ATMs.
 Sure-Cash: Sure-Cash is pre-paid reloadable mobile wallet that allows users to
pay utility bills, education payments, online payments and money transfer. User
needs to visit an agent location to top-up the wallet and can withdraw the
balance as well. Sure Cash is working with 6 local banks, 5 microfinance
institutes, around 300 payment partners and more than 35,000 retail agents to

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 provide banking and payment services to more than 700,000 end customers.
Sure-Cash is product offered by Progoti Systems Ltd.
 I-Pay: I-pay is an online wallet in Bangladesh. It is an online payment platform
allowing users to make payments for purchases, utilities, and other services in
a cashless form. Users can link bank accounts in iPay and transfer to and from
the wallet. Allows users to scan QR codes at merchant outlets and ay utility bill
payments and mobile top-ups.

4.4 Comparative Analysis in Fintech between India vs Bangladesh

Bangladesh is far leg behind India in Fintech. According to ‘Global Fintech Ecosystem
Ranking 2021‘, Bangladesh scored 78 out of 83 countries, whereas India ranked 23.

4.4.1 Fintech Landscape in India

India is one of the largest fintech markets in the world. It is also the 2nd highest funded
sector of India, after e-commerce. However, in the previous six years, the capital inflow has
risen considerably in fintech companies, reaching up to 45%, compared to 20% for e-
commerce. It has around 2174 fintech startups as of June 2020. Among them,
approximately 67% were introduced in the last 5 years. According to economic times, the
total valuation of the Indian fintech industry is estimated at $50-60 billion in 2021 and is
expected to grow over 150-160 billion by 2025. Mumbai and Bengaluru became two of the
biggest fintech hubs of India.

According to a report of the National Payment Corporation of India (NPCI), 32% of Indian
households are using digital payment systems. In the fourth quarter of 2019, for the first
time in Indian economic history, card and mobile payments totaled Rs 10.57 lakh crore /
$140.69 billion, surpassing ATM withdrawals, which came in at Rs 9.12 lakh crore /
$121.39 billion at the same time. That indicates that India is entering into a cashless
economy and the era of digital banking.

BaaS or Banking as a Service, has played a significant role in fintech adoption in India. By
interacting with traditional banks, fintech, or any non-banking third party via API, BaaS
fundamentally helps to bring innovation in banking services. Thus, open-API such as
Aadhaar Enabled Payment System (AEPS), Unified Payments Interface (UPI), Mobile
Wallets, as well as traditional tools like banking cards, USSD, mobile banking, and POS
terminals, have improved the digital banking experience. Digital-only banks, biometric
security, blockchain technology, artificial intelligence, neobanking, and innovation on
payment systems has become the new trends of the Indian fintech landscape. There are
several sub-segments within the Indian fintech ecosystem including digital payments,
lending, wealth technology, insurance technology, regulation technology, cyber security,
robo advising, and many others.

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4.4.2 Fintech Landscape in Bangladesh

Until 2010, Bangladesh’s fintech landscape was mostly limited to debit and credit cards,
ATM booths, POS terminals, and to a smaller extent internet banking of the country’s banks.
According to a research paper by Mr. Salekul Islam published in Research Gate, Dutch
Bangla Bank was the first to introduce Internet banking in Bangladesh in 2003. Despite
that. people’s access to banking services was relatively limited. According to the World
Bank’s Global Findex Database, Bangladesh’s financial inclusion rate in 2011 was only 32
percent. Bangladesh’s fintech landscape began to change in 2011 when Bangladesh Bank
introduced the Bangladesh Electronic Funds Transfer Network (BEFTN) for the first time
to improve the adaptability of electronic payment methods and mobile financial services.
Then, in 2012, National Payment Switch Bangladesh (NPSB) was introduced to increase
interoperability among banks. Agent banking was introduced in 2013 in continuation of
MFS. The Digital Financial Services (DFS) Lab was set up in the country in a collaboration
between Bangladesh Bank and A2i for the growth of the fintech ecosystem. The adoption of
fintech in Bangladesh is constantly increasing by utilizing mobile technology. According to
the latest Global Findex Database, Bangladesh’s financial inclusion rate rose to 50% in
2017. According to Gomedici, the total monthly transaction volume processed by financial
technology in Bangladesh is approximately $4 billion. According to Tracxn, There are 118
fintech startups in Bangladesh, as of September 2021.

4.4.3 Digital Payments in India

Among Indian digital payment-related fintech, Paytm is the largest startup, valuing
approximately $25 billion. It is currently offering Paytm wallet, Paytm payments Bank,
Paytm Insurance, Paytm Credit Cards, Paytm Postpaid, Paytm Mall, and some other services
for merchants and individuals. They have partnered with companies like Ola, Uber,
MakeMyTrip, RedBus, and Dominos to better serve their customers. They claimed that
almost 50% of merchants hold Paytm payments bank accounts to transact with customers.
They have more than 450 million registered users. Phonepe comes next with offering a
mobile payment solution and money transfer facility. In 2021, they had over 300 million
registered users. According to NPCI, among Indian households who do digital payments,
80% of them use Paytm or Phonepe type apps. Also, there are several other popular
platforms for digital wallets like Amazon Pay, Google Pay, BHIM, MobiKwik, etc. On the
other hand, Razorpay and Instamojo are quite popular among the payment gateways. In
addition, Pine Labs is one of the most popular merchant platforms in India, providing
financing and retail transaction technology. Besides that, CRED offers credit card payment
facilities to customers as well as rewards on the basis of payments. In addition to these
platforms, Airpay, PayU, Citrus, instantpay, Kissht, Billdesk, QuikWallet are some of the
notable players in the digital payment industry.

4.4.4 Digital Payments in Bangladesh

Bangladesh’s MFS are at the forefront of the country’s digital payment services. MFS began
operations in the country in 2011 with the launch of Dutch Bangla Bank Mobile Banking.
BRAC Bank launched their own MFS, bKash, in the same year. In addition to these two,

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several other banks later launched their own MFS, such as Islami Bank’s mCash and UCB
Bank’s Upay.

Outside the banks, Nagad – an MFS of the Bangladesh Postal Department, started its
journey in 2019. For the first time, the financial services platform has come up with the
facility to open an account through ‘Electronic Know Your Customer or E-KYC’ registration
process to make it easier for users to open an account. At first, the company was offering
the facility of opening an account with a NID card and a user’s picture through the app.
Later, with the assistance of mobile network providers, the procedure of opening an
account via USSD dial was incorporated into Nagad, with a focus on rural users. Later, other
MFSs and banks began to use the Nagad invention to facilitate account opening. Nagad
users are currently sending money to any number free of cost, and using the ‘cash out’
function at the lowest rate. Aside from ‘send money’ and ‘cash out’ the country’s MFS’s offer
saving schemes as well as online and e-commerce payments, utility bills, university fees,
and credit card bill payments. According to Bangladesh Bank, 15 banks are currently
operating MFS in Bangladesh. As of July 2021, there are more than 10.27 crore registered
MFS accounts in Bangladesh. Apart from MFS, several app based digital wallet services are
also operating in Bangladesh. These include Grameenphone’s Gpay, and Robi’s e-wallet
providers such as RobiCash, Paywell, iPay, Dmoney, and TopUp.

Apart from MFS, there are several payment gateways for digital payments in Bangladesh.
SSLCOMMERZ is the first & leading payment gateway aggregator of Bangladesh. Other
renowned payment gateways are Portwallet, which is now operating as Portpos, Lebupay
and Surjopay. AamarPay also provides digital wallet services via mobile apps, as well as
payment gateway services. On the other hand, the government’s a2i initiative includes a
payment gateway called Ekpay. Payment gateways enable customers to make online
payments using debit or credit cards, MFS, and Internet banking.

fintech startups Between Bangladesh and India-

Fintech Startups

2021

India Bangladesh

2174 118

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According to Tracxn, there are 118 fintech startups in Bangladesh but in India there are
2174 fintech startup, as of September 2021.

4.5 Opportunities and Challenges of Fintech in Bangladesh

4.5.1 Opportunities

Right now, Bangladesh is on an advantageous point and can get a great benefit by
using fintech. Bangladesh has a large proportion of younger generation who are
related to many financial activities. Young generation always has a high interest to
any kind of technology. So, this generation can easily and willingly adopt financial
technology faster and potentially. Nowadays, we can see people are being more
interested to pay using debit card and credit card instead of cash. Syed Mohammad
Kamal said, country of MasterCard, “At present, the country’s e commerce business is
worth about Tk 2,000 crore a year and at best 25 percent of the amount is transacted
using either a bank’s digital payment gateway or mobile financial service” so people
of Bangladesh are adopting the new features of fintech Mobile banking, a part of
fintech has a great opportunity on business sector of Bangladesh. Right now, it made
trade and business easy for Bangladeshi businessman. According to BRTC, right now
52.68 million registered mobile bank account exist in our network, where people are
transacting money on daily basis within or outside the country. This mobile banking
made money sending and receiving process easy for Bangladeshi emigrants, who are
sending remittance in our country and making our economy strong. Bangladesh has a
great chance to attract more foreign investors by fintech. A report from ‘Deloitte’
shows that the fintech investments in south east Asian countries in 2018 have exceed

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 up to 30%. One of the major sectors in Bangladesh is SME (small and medium
enterprise). Large part of this SME sectors is in Rural area where communication and
financial inclusion is very slow. BUT it’s a hope for us that the usage of financial
mobile app like Bkash, Sure cash etc. are helping those entrepreneurs to do their
financial activities Fintech is a blessing for Bangladeshi freelancer. young generation
is being interested for freelancing. By using mobile banking, debit card, credit card
freelancers are getting their payment easily.

4.5.2 Challenges of Fintech in Bangladesh

A large proportion of Bangladeshi people have technophobia. They feel uneasy and
fears while using any technology. So, they don’t want to invest money or save money
for this reason
Most of the Bangladeshi people are simple minded. They easily trust others. So,
there are many frauds are taking chance by cheating them through fintech.
Bangladesh government made a hard law for this fraud but still it is a great
challenge. Some people are who are connected with financial activity don’t want to
adopt fintech because they think it will make them
jobless, and in reality, sometime it happens. Bangladesh economy is still not strong to
cover up this unemployment rate. So, this is a great challenge.

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 Chapter Five

5.1 Recommendations

The research designed to find the growth of Fintech and the importance of technology in
the financial sector substantially established that there is in fact substantial growth of
Fintech in Bangladesh with Block chain technology being the most prominent after Fund
Transfer that is disrupting the financial sector. Mobile application has the largest impact
now with websites ranked as the next biggest source of growth as a channel for Fintech
technologies. However, traditional business models and data storage problems have been
ranked as the biggest challenges facing fintech growth and majority of the technology
targeted towards customer retention activities.

5.2 CONCLUSION

In a developing country with a booming economy such as that being experienced by

Bangladesh, which is also being governed by a political party which aims to transform the
country to ‘Digital Bangladesh’ (under its Vision 2030 plan), traditional financial sector is
bound to witness rapid digitalization. However, without adapting new features of fintech,
in this time our life will be complicated. By using fintech we can fasten our financial activity
and can make our economy strong. But while using a great use of fintech, we also have to
stay safe and concern.

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REFERENCES

Financial Technology (Fintech): Its Uses and Impact on Our Lives ([Link])

Ashraf, S. (2019). Intellectual Capital in Fin-Tech Services: A Study on Selected Firms of

Bangladesh. Journal Of Business Studies

[Link]
fintech-ecosystem-globally.

Chakraborti, A. (2020). The promise of FinTech for Bangladesh

Dhar, V., & Stein, R. (2016). FinTech Platforms and Strategy. SSRN Electronic Journal

Rural Banking System in Bangladesh: An Exploratory Study. International Journal of

Science and Research

Lee, I., & Shin, Y. (2018). Fintech: Ecosystem, business models, investment decisions, and
challenges. Business Horizons

Mollick, E. (2014). The dynamics of crowdfunding: An exploratory study

Omarini, A. (2018). Fintech and the Future of the Payment Landscape: The Mobile Wallet
Ecosystem

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