Abstract
New technological innovation has incorporated frontier technologies in transforming the way we access and use existing products and services. The economy is becoming increasingly disrupted by revolutionary enterprises using technologies such as cloud computing, extensive use of artificial intelligence and data analytics, integration of interoperable internet of things (IoT) devices and the blockchained decentralization, including advanced materials. At the same time, regulatory and legal systems need to be strengthened in order for the ecosystem be protected from cyber risks and threats to allow for the market actors to flourish. In order to enjoy the benefits brought on by digital technologies, there are regulatory issues that come with technological adoption along with financial stability implications and consumer protection, with suggestions that regulators themselves adopt advanced technologies (RegTech) to embark on the new era of market supervision and monitoring to enhance cybersecurity.
TopCurrently, financial services institutions are increasing their investment in digital technologies as it brought various benefits such as providing better customer service. Data collected through the cloud system, AI and robotics could help the financial services institutions to predict and understand their customer’s behaviour and expectation better. It provides opportunities to the financial institutions to develop new or personalise products and services to cater to their customers’ needs. Similarly, digital technologies could help to perform fraud management. According to PwC (2016), financial institutions are using AI to spot abnormal behaviour to detect market abuse and rogue trading. Also, AI and robotics were used to defend cyberattack through monitoring possible threats and identifying potential security risk. These technologies allowed financial institutions to react immediately in order to protect their customers’ personal and account details. Apart from that, blockchain technologies started to be widely adopted by financial services institutions. Although blockchain technologies are often related to cryptocurrencies, however it could benefit the financial services institutions. Blockchain technologies allow a distributed database that holds a growing number of records and the distributed ledgers are continually updated and synchronised across multiple computers in a network. It helps to reduce the costs spending on infrastructure as authorised participants could perform without relying on an intermediary or authority, increase efficiency and reduce errors. These digital technologies also help to improve the service quality as manual processes are automated, employees could focus on providing more specialised services such as planning, budgeting, tax and treasury.
Beyond finance, there are a host of technologies divided into four categories threaten to disrupt and reshape growth strategies for emerging economies. According to a convenient categorization by the OECD these are: digital, biotechnology, advanced materials, and energy and environment. (See Figure 1 below).
Key Terms in this Chapter
ICO: An initial coin offering (ICO) is the cryptocurrency industry’s equivalent to an initial public offering (IPO). ICOs act as a way to raise funds, where a company looking to raise money to create a new coin, app, or service launches an ICO.
CTF: Combating the financing of terrorism (CFT) involves investigating, analyzing, deterring, and preventing sources of funding for activities intended to achieve political, religious, or ideological goals.
CITI: These are critical infrastructure sectors whose assets, systems, and networks, whether physical or virtual, are considered so vital that their incapacitation or destruction would have a debilitating effect on security, national economic security, national public health or safety, or any combination thereof.
AML: Anti-money laundering (or AML) rules help authorities detect and banks to report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.
STO: STOs can be viewed as a hybrid approach between cryptocurrency ICOs and the more traditional initial public offering (IPO) because of its overlap with both of these methods of investment fundraising. A security token represents an investment contract into an underlying investment asset, such as stocks, bonds, funds and real estate investment trusts (REIT).
SDLC: Systems development lifecycle (SDLC) is a process for planning, creating, testing, and deploying an information system. The systems development life cycle concept applies to a range of hardware and software configurations, as a system can be composed of hardware only, software only, or a combination of both.