FINA 3317 - Chapter 19

In 2017, former Citigroup chief Vikram Pandit predicted that ______ percent of banking jobs could be wiped out by artificial intelligence by 2022.

30

The number of bank branches in the U.S. grew steadily from approximately ______ in 1948 to over ______ in 2008.

4,200; 82,400

By 2019, global smartphone penetration reached:

66.9 percent.

In a 2015 survey of global CEOs by PwC, ______ percent of the executives surveyed believed that some part of their business was at risk to fintech.

76

In September 2018, Bank of Lithuania launched its regulatory sandbox seeking fintech startups, which enabled startups to obtain an e-money or payment license in ______, which is two to three times faster than in other EU jurisdictions.

90 days

In Europe, a fintech can get access to all bank APIs through registering as either an _____ or a _____.

AISP; PISP

The OCC fintech charter would do all but which of the following?

Allow non-bank fintech companies to take deposits

Which of the following is not one of the advantages that retail banks maintain over fintechs?

Banks are known for having greater agility and a more innovative mindset.

The launch of Marcus by Goldman Sachs is an example of which stage of the evolving relationship between banks and fintech?

Banks developing in-house fintech arms.

BNP Paribas' acquisition of Compte-Nickel is an example of which stage of the evolving relationship between banks and fintech?

Banks taking stake in fintech startups.

DLT can be found on the capital markets infrastructure value chain in all but which of the following?

Bid-ask spread setting

______ is a particular type of DLT that organizes data into batches of transactions which are held together in an append-only data structure.

Blockchain

Which of the following is true regarding the digital crypto exchange platforms?

Due to regulation, fiat exchanges have limited trading pairs.

Open Banking standards do all but which of the following?

Eliminate all risk in the online banking system

As of 2018, Square Cash had the most active accounts of any peer-to-peer payment app.

False

Credit scoring is a way of raising money through the collective effort of family, friends, individual investors, and customers.

False

Fintechs carry the disadvantage of heavy regulation.

False

General Data Provided Recognition (GDPR) is the world's strongest set of data protection rules.

False

In 1865, a device known as the telegraph was invented by Giovanni Caseli and is now widely regarded as the first step in the journey towards fintech.

False

In an environment of declining interest rates, financial institutions generally have a decreased incentive to focus on cost-cutting measures.

False

In comparing fintechs to banks, one of the main differences is that fintechs are agile and flexible due to their very low capital requirements whereas banks have very intricate capital structures.

False

The average fintech adoption rate has steadily declined in recent years.

False

The global financial crisis of 2008 led to heightened sensitivity around protection of personal data and hindered the growth of fintechs.

False

What measures the fintech users as a percentage of the digitally active population?

Fintech adoption rate

The partnership of Avant and Regions Bank to underwrite unsecured loans is an example of which stage of the evolving relationship between banks and fintech?

Fintech firms providing technology and infrastructure to banks.

The advantages of the establishment of the NASDAQ include which of the following? I. It helped reduce the bid-ask spread. II. It ended fixed securities commissions. III. It led to the proliferation of ATMs.

I and II only

The 2018 Cryptocurrency Crash rocked the crypto market. Experts said that this dramatic drop was due largely to the speculative nature of cryptocurrency and point out that cryptocurrency differs from money on three main accounts. Which of the following are noted as the main differences? I. Cryptocurrency is not a good means of payment. II. Cryptocurrency is not a good unit of account. III. Cryptocurrency cannot be held as an investment. IV. Cryptocurrency is not a suitable store of value.

I, II, and IV only

Which of the following regarding banking-as-a-service is/are true? I. It has restricted the financial transparency options for account holders. II. It is an end-to-end process that allows fintechs and other third parties to connect with banks' systems directly via APIs. III. The process begins with a fintech or other third-party provider paying a fee to access the platform.

II and III only

Based on the BCBS survey discussed in the text, the category with the highest number of providers was which of the following?

Payments, clearing and settlement services

______ are online services that use algorithms to automatically perform many investment tasks done by a human financial advisor.

Robo-advisors

The development of the relationship between Marlette Funding and Cross River Bank is an example of which stage of the evolving relationship between banks and fintech?

The "rent a bank" stage.

The financial crisis of 2008 eventually led to the growth of fintech. Which of the following is a true statement regarding this causal relationship?

The pullback of banks during the crises was due to increases in regulatory burdens and risk aversion, which allowed new fintech players to enter the marketplace.

A fintech charter is a special-purpose bank charter for non-bank fintech companies to operate in the banking system providing preemption from many state laws.

True

As of 2020, global venture capital backed fintech funding reached $35 billion.

True

In 1918, the Fedwire was established by the Federal Reserve Banks to transfer funds and connect all 12 Reserve Banks by telegraph using the Morse code-based system.

True

The Payment Services Directive 2 is regulation established to make payments more secure in Europe, boost innovation, and help services adapt to new technologies.

True

The rise of fintechs has led some to question whether banks will exist in the future.

True

Within the payments, clearing and settlement category, retail payment services firms represented the majority of fintech firms identified in an informal survey of the BCBS members.

True

The Payment Services Directive 2 (PSD2) is a European regulation for electronic payments services. The purpose of the PSD2 is to regulate the emerging payment services industry and increase competition by:

allowing participation by non-banks.

The application of computational tools to address tasks traditionally requiring human sophistication is broadly termed:

artificial intelligence.

Since gaining a high level of interest in 2015, the interest in ______ has cooled.

blockchain

The two main monetization strategies of BaaS include:

charging clients a monthly fee and charging a la carte for each service used.

Bitcoin and other digital currencies are underpinned by ______ technology, which is an electronic ledger or database that records and verifies transactions made using the currency.

distributed ledger

Open Banking and PSD2 have catalyzed the development of ______ which provide financial APIs to help incumbent banks comply and compete.

fintech utilities

The ______, which was first released in June 2007, is attributed with launching the mobile revolution.

iPhone

The term ______ refers to the billions of physical devices around the world that are now connected to the internet, all collecting and sharing data.

internet-of-things

2) The Financial Stability Board defines fintech as "technology-enabled innovation in financial services that could result in new business models, applications, processes or products with an associated ________ effect on the provision of financial services."

material

A ______ is an application that runs exactly as programmed without any possibility of downtime, censorship, fraud, or third-party interference.

smart contract

In 2011, the introduction of Google Wallet (which later became Google Pay) allowed consumers to use smartphones equipped with near-field communication chips to make:

tap payments.

In 1966, the ______ replaced the ______ as the standard for long-distance instantaneous communication of information.

telex network; telegraph