Fintech for Dummies
, by O'Hanlon, Steven; Chishti, Susanne; Bradley, Brendan; Jockle, James; Patrick, Dawn
- ISBN: 9781119427261 | 1119427266
- Cover: Paperback
- Copyright: 9/1/2020
Examine the depth and breadth of financial technology
This comprehensive, hands-on guide is the go-to source for everything you need to confidently navigate the ever-changing scene of this booming industry. FinTech For Dummies will shed light on this rapidly changing landscape making it an invaluable source of information for anybody working in or interested in this space. This book provides insights, knowledge and guidance from industry experts Steve O’Hanlon and Susanne Chishti on the following:
- Gaining insight fastest growing market segment of the financial markets
- Learning the core decision making to effect a growth plan
- Securing knowledge of the fastest growing fintech companies in the world
- Navigating the fintech world
- The ingredients into building a FinTech company
Steve O’Hanlon, (NY, NY) is President and Chief Executive Officer of Numerix LLC, the leading provider of cross-asset analytics for derivatives valuations and risk management, is the chief executive and chief architect responsible for the Company’s corporate strategy, sales, operations, marketing and distribution. His contributions to the company have resulted in unprecedented growth in revenues of more than 250% in the past five years. He is also FINTECH’s 2016 Person of the Year.
Introduction 1
About This Book 1
Foolish Assumptions 2
Icons Used in This Book 2
Beyond the Book 3
Where to Go from Here 3
Part 1: Getting to Know Fintech 5
Chapter 1: Navigating the FinTech Landscape 7
What Is FinTech, Anyway? 8
Analyzing FinTech’s Dimensions 10
Understanding What Has Changed in FinTech 13
Highlighting the Size of Global FinTech 15
Discovering a Few Important FinTech Terms 18
Chapter 2: Understanding What’s Disrupting the Financial Industry (and Why) 21
Providing Trust and Value 22
Trust 22
Value 23
Weighing Wall Street against Silicon Valley: Where Disruptors Live 25
Examining the Role of BigTech 28
BigTech and payment platforms 28
BigTech partnership opportunities 29
How BigTech can help utilize data 29
Barriers to greater BigTech participation 30
Understanding Where the Disruptions are Happening 32
Banks 33
Asset managers 34
Insurance 34
Regulation and legal work 35
Payments 36
Looking for the Opportunities 36
Partnership opportunities 36
Exploiting digitalization with AI 37
Enhancing data portability 37
Chapter 3: The Role of Regulation in FinTech 39
Supervising FinTech 40
Understanding that location matters 40
Recognizing that more regulations are coming 42
Leveling the playing field 42
Examining Vendor Risk Issues 44
Introducing the Regulators 45
The United States of America 45
The United Kingdom and Europe 47
Investigating Regulatory Changes 51
Payment Services Directives 51
The General Data Protection Regulation 52
Highlighting RegTech Opportunities 55
Part 2: Learning the Technology 57
Chapter 4: Defining the Tech Underpinning FinTech 59
Finding a Fix in FinTech 60
What’s the problem? 60
Why FinTech now? 61
Creating API Strategies 62
Understanding the concept 62
Looking at API benefits 63
Developing an API strategy 64
Including REST and RAML 65
Trying tips for API success 66
Reviewing APIs and security vulnerabilities 66
Understanding Event-Driven Software 67
Testing and implementation 69
Language support 70
Building on Agile: Microservices and More 71
Waterfall development 71
Agile design 73
Microservices 74
Bundling Efficiencies: Batch Processing 80
Improving Data Management 81
Distinguishing the types of data 81
Validating, enhancing, and cleansing data 83
Making enterprise data management more efficient 83
Working with CPUs and GPUs 85
Comparing CPUs and GPUs 85
Planning for success 86
Estimating the potential improvement 87
Choosing a Programming Language 88
Python 89
Julia 91
R 92
Chapter 5: Confronting the Compute Conundrum 93
Determining Compute Requirements 93
In-memory computing 94
Virtualization 95
Making Sense of DApps 95
Comparing DApps to traditional applications 96
Understanding blockchain 99
Knowing where to find DApps 100
Connecting DApps, Artificial Intelligence, and FinTech 102
Looking at permissioned blockchain 103
Understanding Quantum Computing 104
How quantum computing works 105
The drawbacks of quantum computing 106
How quantum computing fits into FinTech 107
Chapter 6: Calling Up the Cloud 109
Getting to Know the Cloud 110
Looking at the cloud’s key traits 111
Checking out the benefits of the cloud environment 111
Introducing types of cloud services 112
Choosing between private and public clouds 117
Cloud bursting 120
Developing an Optimal Cloud Strategy 121
Reviewing data security and encryption 121
Surveying data states 124
Considering cloud scalability 125
Understanding cloud-based virtualization 126
Using self-service provisioning 127
Monitoring performance 128
Evaluating potential security risk on the cloud 129
Understanding Privacy Compliance and Government
Requirements 131
Data protection laws 132
Data localization laws 132
Data sovereignty laws 133
Access to information laws 133
Seeing How FinTech Helps with Cloud Strategies 133
Chapter 7: Understanding Blockchain beyond Bitcoin 135
Understanding the Basics of Blockchain 136
Mining and consensus 137
Smart contracts and DApps 138
Blockchain network types 139
Discovering How Blockchain Technology Works 140
Decentralization 141
Security 142
Transparency 146
Looking at Blockchain’s Role in FinTech 147
Chapter 8: Acclimating to the App Mentality 151
Introducing Types of FinTech Apps 152
Surveying the FinTech App Landscape 153
Digital banking 153
Wealth management 153
Payments and peer-to-peer money transfer 154
Lending 154
Looking at the Nonretail Side of FinTech Apps 155
RegTech 155
Capital markets trading 156
Building a GUI Framework 157
Introducing the GUI 158
Getting the GUI right 159
Establishing the Requirements Needed in the Development of an App 160
Chapter 9: Breaking Down BI Tools 163
Taking a Strategic Approach to BI 163
Exploring BI Tools 165
Online analytical processing 165
Querying and reporting 167
Data mining 167
Data visualization 168
Business activity monitoring 169
Data warehousing 170
Digital dashboards 171
Choosing the Right BI Tools for FinTech 172
General BI applications 173
Niche BI applications 174
Chapter 10: Reviewing the Role of Open Source 175
Defining Open Source 176
The open source community 176
Free versus open source 177
Looking at Open Source Development Processes 179
Beginning a project 179
Discussing and documenting 180
Perusing the Pros of Open Source 181
Reduced cost 182
Flexibility 183
Freedom 184
Development speed 184
Considering the Cons of Open Source 186
An untraditional support model 186
Time and resources for maintenance 187
The possibility of uneven documentation 187
Security risks 188
Sustainability issues 191
Licensing issues 191
Other concerns to consider 192
Evaluating Open Source Solutions 192
Developing your own solution 193
Finding help for the right open source solution 194
Introducing open innovation 196
Chapter 11: Grasping Data Management Fundamentals 197
Looking at FinTech’s Role in Helping Companies Manage Their Data 198
Understanding ETL: Extract, Transform, and Load 199
Going over the steps 199
Reviewing ETL software requirements 200
Managing Market Data 201
Cleansing and normalizing market data 202
Segmenting and storing market data 203
Dealing with Databases 204
Data warehouses 204
Data lakes 205
Maintaining Data Lineage 206
Breaking Down Big Data 207
Differentiating between Structured and Unstructured Data 208
Comparing SQL and NoSQL 209
SQL databases 209
NoSQL Databases 210
Chapter 12: Adapting for Future Technologies 211
Harnessing the Power of Artificial Intelligence 211
Defining AI 213
Breaking down artificial neural networks 214
Exploring how AI fits into FinTech 215
Leveraging Machine Learning 216
Supervised learning 216
Reinforcement learning 217
Unsupervised learning 217
Making the Most of Chat Bots 217
Checking Out Alternative Data Sources 218
Companies and devices involved in alternative data 219
Alternative data in the financial industry 220
Sourcing, compliance, and regulation 220
Part 3: Working With Fintech Companies 223
Chapter 13: Deciding Whether to Build, Buy, or Partner 225
Transforming Your Company Digitally 226
Exploring Reasons to Build or Buy 228
Looking at reasons to build 229
Checking out reasons to buy 230
Finding the balance between new and legacy software 232
Finding a FinTech Partner 234
Weighing the pros and cons of partnership 235
Researching and scouting potential FinTech partners 236
Working with partners on evolving solutions 239
Describing the Licensing Models 241
Subscription 241
Perpetual 242
Term 243
Source code transactions 243
An open source approach 244
Chapter 14: Managing Integration with Legacy Systems 247
Understanding and Tackling the Challenges of Legacy Infrastructures 248
Comparing old and modern systems 248
Determining whether a legacy system is too old 249
Estimating the cost of doing nothing 250
Discovering how FinTech can help 251
Planning for success 252
Walking through the Technical Steps of Updating a Legacy System 253
Noting areas of concern 253
Making your plan 253
Assembling the team 254
Implementing the plan 256
Avoiding the pitfalls 257
Simplifying Integration with Microservices Architecture 258
The benefits of microservices 258
Migration strategy options 259
Chapter 15: Preparing Your Team for a Successful Project 261
Assembling a Transformation Team 262
Recruiting the right team members 263
Counting on communication 264
Shifting the leadership paradigm 264
Assigning roles 265
Setting Realistic Expectations and Timelines 268
Supporting Change Agents 269
Retaining Good Employees during Change 272
Why employees leave 272
Retention strategies that work 273
Career paths and organizational change 274
Understanding Data-Driven Decision-Making 275
Breaking the Silos 277
Chapter 16: Investing in FinTech Companies 279
Understanding the Players 280
Challenging financial institutions 281
Offering collaborative solutions to financial institutions 281
Navigating the Investor Landscape 282
Crowdfunding 282
Angel investors 284
Venture capital 285
Corporate venture capital 286
Private equity 287
Conducting Due Diligence 288
Performing primary research 288
Doing secondary research 289
Analyzing data 290
Evaluating a Company’s Growth Strategies 291
Studying the competition 291
Listening to customers 292
Asking about technology 292
Inspiring innovation 292
Considering a Company’s Culture 293
Chapter 17: Figuring Out the FinTech Endgame 295
Bringing the Board Up to Speed on FinTech 296
Noting the challenges that financial boards face 297
Embracing digital transformation 298
Developing digital skills 300
Figuring out how to participate 301
Looking into the Future of FinTech 303
Authentication methods 303
Voice technology 304
Artificial intelligence 305
Identifying Industry-Driven Networks, Accelerators, and Incubators 306
The FinTech Innovation Lab 306
Startupbootcamp FinTech 306
Techstars 307
FINTECH Circle 307
Level39 308
Mulling Over Mergers and Acquisitions 308
Consolidation 309
Corporate venturing strategies 310
Part 4: The Part of Tens 313
Chapter 18: Ten Symptoms of Ailing Legacy Technology 315
A Band-Aid Overload 315
A Lack of Backward Compatibility 316
Incompatibility with Other Systems 317
Disparate Data 318
Spreadsheet Risk 319
Latency 321
Increasing Demand for Support and Maintenance 322
Short-Term Gains and Long-Term Pains 323
A Shrinking Talent Pool 323
Lost Market Opportunities 323
Chapter 19: Ten Questions for Determining Whether to Build or Buy 327
Is This Functionality Core to Our Business? 327
Is the Application Unique? 328
Which Approach is More Cost-Effective? 328
Should This Application Be Built? 329
What are the Risks of Building versus Buying? 330
When Does Open Source Make Sense? 331
When Does Building Make Sense? 332
How Can We Accelerate a Build? 333
When Does Buying Make Sense? 334
How Do We Select a Vendor and a Product? 335
Chapter 20: Ten Considerations When Using Open Source Technology 337
Your Business Model 338
Open Source Community Health 338
Tech Support 339
Security 340
Code Audits 341
Reliability 342
Hidden Costs 343
Updates and Upgrades 345
Potential Hardware Impact 346
Legal Considerations 347
Appendix: Building A Fintech Company From the Ground Up 351
Index 361
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