The Fintech Disruption: How Financial Innovation Is Transforming the Banking Industry

395 Pages·2023·7.899 MB·English

by  Thomas Walker, Elaheh Nikbakht, Maher Kooli

PALGRAVE STUDIES IN
FINANCIAL SERVICES TECHNOLOGY
The Fintech
Disruption
How Financial
Innovation Is
Transforming the
Banking Industry
Edited by
Thomas Walker
Elaheh Nikbakht
Maher Kooli
Palgrave Studies in Financial Services Technology
Series Editor
Bernardo Nicoletti, Rome, Roma, Italy
The Palgrave Studies in Financial Services Technology series features orig-
inal research from leading and emerging scholars on contemporary issues
and developments in financial services technology. Falling into 4 broad
categories: channels, payments, credit, and governance; topics covered
include payments, mobile payments, trading and foreign transactions, big
data, risk, compliance, and business intelligence to support consumer and
commercial financial services. Covering all topics within the life cycle of
financial services, from channels to risk management, from security to
advanced applications, from information systems to automation, the series
also covers the full range of sectors: retail banking, private banking, corpo-
rate banking, custody and brokerage, wholesale banking, and insurance
companies. Titles within the series will be of value to both academics and
those working in the management of financial services.
· ·
Thomas Walker Elaheh Nikbakht
Maher Kooli
Editors
The Fintech
Disruption
How Financial Innovation Is Transforming
the Banking Industry
Editors
Thomas Walker Elaheh Nikbakht
John Molson School of Business John Molson School of Business
Concordia University Concordia University
Montreal, QC, Canada Montreal, QC, Canada
Maher Kooli
Department of Finance, School
of Management (ESG)
University of Quebec at Montreal
Montreal, QC, Canada
ISSN 2662-5083 ISSN 2662-5091 (electronic)
Palgrave Studies in Financial Services Technology
ISBN 978-3-031-23068-4 ISBN 978-3-031-23069-1 (eBook)
https://doi.org/10.1007/978-3-031-23069-1
© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer
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Preface
Although banking is a well-known and long-standing concept, the
banking industry and its procedures have experienced many changes
throughout history. In recent years, financial technologies (fintech) have
started to completely transform the banking sector. Thanks to fintech,
banks now use more efficient methods to provide their regular services
and offer new ones to their clients. Yet, despite these advantages, fintech
also brings new challenges to the banking industry. In addition to
affecting the regulation and security of banking operations and creating
environmental opportunities and challenges, fintech paves the way for
new rivals—fintech companies—that offer the same services as traditional
banks at a lower cost. As a result, banks experience a significant rise in
competition from both other banks and newly emerging fintech firms.
This book investigates the effect of fintech on banks and banking proce-
dures and how it revolutionizes the banking sector. Moreover, the book
sheds light on the ethical and privacy issues associated with fintech, as well
as the new competitors emerging in this market.
The book includes contributions from an international community
of scholars and practitioners who work at the interface of fintech,
banking, artificial intelligence, and finance. The authors review and criti-
cally analyze new developments at the intersection of fintech and banking,
and provide different perspectives on its impact on the banking sector.
The book features contributions investigating the technical side of fintech,
exploring the theory and mechanisms behind these innovations, and
v
vi PREFACE
examining their applications in the banking context. Moreover, the book
includes contributions that explore possible challenges that fintech may
pose to the banking industry, and potential policies and solutions to over-
come them. The book concludes with contributions highlighting and
comparing fintech transformations in the banking sector across different
countries and provides tips and lessons learned from these practical cases.
Montreal, Canada Thomas Walker
Elaheh Nikbakht
Maher Kooli
Acknowledgments
We acknowledge the financial support provided through the Jacques
Ménard—BMO Centre for Capital Markets at Concordia University. In
addition, we appreciate the excellent copy-editing and editorial assistance
we received from Meaghan Landrigan-Buttle, Gabrielle Machnik-Kekesi,
Mauran Pavan, Charlotte Frank, Victoria Kelly, Miles Murphy, and Maya
Michaeli.
vii
Contents
1 Fintech and Banking: An Overview 1
Thomas Walker, Elaheh Nikbakht, and Maher Kooli
Part I Financial Technologies and Their Effects on the
Banking Industry
2 Centralized and Decentralized Finance: Coexistence
or Convergence? 11
Axel Wieandt and Laurenz Heppding
3 Fintech and the Digital Transformation
of the Banking Landscape 53
Wesley L. Harris and Jarunee Wonglimpiyarat
4 Shifting Paradigms in Banking: How New Service
Concepts and Formats Enhance the Value of Financial
Services 75
Anna Omarini
5 Competitors and Partners at the Same Time: On
the Role of Fintech Companies in the Latvian
Financial Market 115
Ramona Rupeika-Apoga, Em¯ıls Da¯rzi n¸š, Deniss Filipovs,
and Stefan Wendt
ix
x CONTENTS
6 Non-Fungible Tokens 139
Andrea Barbon and Angelo Ranaldo
Part II Challenges, Opportunities, and Regulations
Regarding Fintech in the Banking Industry
7 Open Banking: Opportunities and Risks 167
Christoph Frei
8 The Rise of Financial Services Ecosystems: Towards
Open Banking Platforms 191
Simona Cosma, Stefano Cosma, and Daniela Pennetta
9 The Cryptoassets Market in the United Kingdom:
Regulatory and Legal Challenges 215
Malgorzata Sulimierska and Agnieszka Sikorska
10 A Preliminary Comparison of Two Ecosystems:
Fintech Opportunities and Challenges for Financial
Inclusion 243
Nadeera Ranabahu
11 Investigating Variables that Increase the Desire
and Loyalty to Utilize Fintech After the COVID-19
Lockdown: A New Normal Behavior 267
Minh T. H. Le
Part III Evidence From Around the World
12 Fintech and Financial Inclusion in Developing
Countries 297
Charles Adjasi, Calumn Hamilton, and Robert Lensink
13 The Cash Holdings of Fintechs and SMEs: Evidence
from OECD Countries 329
Kaleemullah Abbasi, Ashraful Alam, Noor Ahmed Brohi,
Makhmoor Fiza, Shahzad Nasim, and Imtiaz Ali Brohi