Financial Services Industry Research Articles

Regulatory compliance and efficiency in financial technologies: Challenges and innovations

This study explores the integration of Regulatory Technology (RegTech) within dynamic regulatory frameworks tailored to the financial services industry, addressing the critical challenge of aligning fast-paced technological innovations with more traditionally static regulatory environments. The core purpose of this research is to develop adaptable regulatory frameworks that support the implementation of advanced technological tools, ensuring compliance while enhancing the efficiency of regulatory supervision. Utilizing a blend of qualitative and quantitative research methods, this paper analyzes the effectiveness of proposed frameworks through real-world application within financial institutions. Results indicate that integrating RegTech solutions streamlines compliance processes, significantly reduces operational costs, and improves real-time risk management. Interpretations of these findings suggest that adaptive regulatory frameworks facilitate a more proactive regulatory approach capable of supporting continuous technological advancements without compromising the integrity or stability of financial systems. The conclusion drawn from this study advocates for a systematic reevaluation of current regulatory practices, emphasizing the need for regulations that are as dynamic and innovative as the technologies they aim to govern. This approach promises to safeguard against emerging risks and foster an environment conducive to technological advancement within the financial sector.

PENGARUH KINERJA KEUANGAN, STRUKTUR MODAL DAN UKURAN PERUSAHAAN TERHADAP NILAI PERUSAHAAN MELALUI KEBIJAKAN DIVIDEN INDUSTRI JASA SEKTOR KEUANGAN TBK PERIODE 2020 - 2022

This research aims to test and analyze the significant influence of financial performance, capital structure and company size on company value through the dividend policy of the Tbk financial services industry for the period 2020 - 2022. This research uses an explanatory research type of research using a quantitative approach. The sampling technique used the purposive sampling method, a sample of 21 financial sector service industries was obtained from a total population of 51 financial sector service industries. The type of data in this research is secondary data. Data obtained from the official website of the Indonesia Stock Exchange in the form of annual financial reports from the financial sector services industry for the period 2020 - 2022. Data analysis was carried out using descriptive statistics with the SmartPLS tool. Based on the results of data analysis, it shows that financial performance, company size and dividend policy have a positive and significant influence on company value, capital structure has no effect on company value. Financial performance, capital structure and company size have a positive influence on dividend policy. Financial performance, capital structure and company size have a positive influence on company value through dividend policy.

The Effect of Product Involvement, Perceived Value, and Attitude as Mediation on the Intention to Use “POSPAY” Apps by PT Pos Indonesia (Persero) to Create the Right Marketing Strategy through a Marketing 4.0 Perspectives

Pospay is an app from PT Pos Indonesia (Persero). The research’s background highlights the competitive pressures in the financial services industry and the necessity for transformational companies to innovate through digital offerings such as the Fintech app. The implications of this research complete a new understanding for the marketing department at PT Pos Indonesia on how to increase customer intention to use. This research can provide evaluation materials and references for implementing the right marketing strategy from the perspective of Marketing 4.0, especially to increase intention to use it with variable mediation of consumer attitudes. The results of this research can provide an overview of the fact that perceived value is the most powerful variable that contributes to efforts to increase intention to use the Pospay App. The key research problems are the need to identify the determinants of user intention in adopting FinTech apps, the role of consumer attitude in mediating these determinants, product involvement, and the practical implications for marketing strategy development. The research employs a mixed method with a descriptive approach and uses a type-3 problem-solving scenario. Quantitative data is collected through surveys, and qualitative insights are gathered via interviews or focus group discussions. Structural Equation Modelling (SEM) – Partial Least Square (PLS) with WarpPLS software is used to analyze data testing the hypothesis. The research results are as follows: Product involvement does not have a significant effect on the intention to use but has a significant effect on consumer attitudes; Perceived value has a significant effect on the intention to use and consumer attitudes; Consumer attitude has a significant effect on the intention to use and mediates the influence of perceived value on intention to use but does not moderate the influence of product involvement on intention to use. The research will provide actionable recommendations for PT Pos Indonesia, enabling them to tailor their marketing strategies better through a Marketing 4.0 perspective to meet customer needs and preferences.

Expectancy Theory As A Determination Of Net Promoter Score (Nps): Increasing The NPS Value Of Services

The wave of digital transformation had been boosted and accelerated by the pandemic, but whether or not this opportunity is leveraged by the industry especially the financial service industry remains a big question. The question around which aspect of digital transformation would best impact the industry is another challenge. In the discussion of reputation management, the customer aspect is a critical factor, thus the question of whether or not the customer perceived the benefit or accepted the digital transformation also need to be discover. Let’s go back to the financial service industry which is the focus on this research, are the services provided by financial service company had fulfilled their expectation and thus would result in a higher Net Promoter score for the company. This research uncover that providing digital services is not enough when it comes to NPS it requires understanding of the customer hopes and acting upon it.

Enhancing digital access and inclusion for SMEs in the financial services industry through Cybersecurity GRC: A pathway to safer digital ecosystems

This research paper explores the enhancement of digital access and inclusion for Small and Medium Enterprises (SMEs) in the financial services industry by implementing Cybersecurity Governance, Risk Management, and Compliance (GRC) frameworks. It begins by analyzing the current state of digital access for SMEs, highlighting the significant benefits of digital transformation, including operational efficiencies, enhanced customer experiences, and new market opportunities. The paper identifies key barriers to digital access, such as cybersecurity risks, regulatory compliance challenges, financial constraints, and the lack of digital expertise. The study then reviews existing initiatives aimed at enhancing digital access for SMEs, including government programs, industry collaborations, cybersecurity awareness and training efforts, and fintech solutions. The paper argues that while these initiatives are beneficial, they often fail without a comprehensive GRC framework to address underlying security and compliance issues. A detailed conceptual model is proposed, comprising digital strategy and planning, a robust cybersecurity framework, effective governance and compliance practices, proactive risk management, continuous training and awareness, technological innovation, and collaboration and partnerships. Each component systematically addresses the identified barriers and facilitates a safer, more inclusive digital ecosystem for SMEs. The implementation of this model is outlined in four phases: initiation, implementation, operational, and evaluation, ensuring a structured approach to digital transformation. The paper concludes with recommendations for SMEs to adopt this model, emphasizing the importance of stakeholder engagement, resource allocation, and continuous evaluation. Keywords: Digital Transformation, SMEs, Cybersecurity, GRC, Financial Services, Digital Access.

Formulation of Risk Management Strategy for Sharia Mortgage Products during the Covid-19 Pandemic

The COVID-19 pandemic has had a significant impact on the development of the world economy, including the banking and financial services industry. One of the financing products at Bank BTN Syariah is the Home Ownership Financing-Mortgage (Sharia KPR), where the more financing funds are channeled, of course, the greater the potential for risk. The purpose of this study was to formulate a risk management strategy for Sharia KPR products that Bank BTN Syariah KC Bekasi can use during the Covid-19 pandemic. To analyze and develop the bank strategy, we use the Grand Strategy Matrix method by blending internal and external factors, where the analysis and strategy selection process is divided into three stages: Input stage, matching stage, and Decision stage. The results of the study showed that several internal and external factors occur in Bank BTN Sharia KC Bekasi that affect the development of Sharia KPR products; Bank BTN applies risk management based on the 5C principle to minimize the occurrence of risks that may occur. Managerial implications of this research are credit risk management, management, increased risk monitoring, effective communication, product innovation, conducting education and training, and Sharia compliance.

Detecting Earning Manipulation Using the Beneish M-Score Model: Evidence from Public Listed Companies in Malaysia

This paper aims to examine the association between earning manipulation using the Beneish M-Score Model and share price with market capitalisation as the control variable among public listed companies (PLCs) in Malaysia. The study was performed over a four-year period from 2017 to 2020 using the financial data of 65 PLCs under the Financial Times Stock Exchange (FTSE) Bursa Malaysia Top 100 Index, including various industries except the financial service industry. The Beneish M-Score Model comprised eight variables or ratios to identify earning manipulations, namely Days Sales in Receivable Index (DSRI), Gross Margin Index (GMI), Asset Quality Index (AQI), Depreciation Index (DEPI), Sales Growth Index (SGI), Sales, General and Administrative Index (SGAI), Total Accruals to Total Assets (TATA), and Leverage Index (LVGI). The market price was measured using the year-end share price. The findings found that there was a weak negative association as well as a statistically insignificant relationship between earning manipulation and share price, which suggests that earning manipulation is influenced by other factors excluding share price. The findings did not support the argument that there was a significant relationship between earning manipulation and share price where companies had been discovered to have engaged in earning manipulation. The study is crucial for the stakeholders that expect companies to achieve the maximum returns and stability in investments and to protect owners’ rights.

Impact of Non-Performing Assets on Financial Health of Banks

The banking sector is a crucial financial service industry that supports development plans by channelling funds for productive purposes, facilitating the flow of funds from surplus to deficit units, and aiding in the implementation of government financial and economic policies. Banks fulfil social objectives through priority sector lending, extensive branch networks, and employment generation. Maintaining asset quality and profitability is essential for the survival and growth of banks. However, a significant challenge faced by the banking sector is the prevalence of Non-Performing Assets (NPAs). The Reserve Bank of India defines an NPA as “an asset, including a leased asset, that ceases to generate income for the bank.” Major causes of NPAs include wilful default, misuse of borrowed funds, and inadequate pre-loan inquiries. As of June 30, 2018, the Gross NPA of Indian banks was ₹10.03 lakh crores, with Public Sector Banks accounting for 88.74% of this total. The top five Public Sector Banks—SBI, PNB, IDBI, BOI, and BOB—make up 46.67% of the Gross NPAs. Private Sector Banks hold 11.26% of the total Gross NPAs, with leading banks being ICICI, AXIS, and HDFC. The primary aim of this paper is to examine the causes and effects of NPAs in the banking sector.

Gender, Race and Sectoral Inequality in Megacities: Case Study of Banking and Financial Services Industry

This article explores the issue of inequality by using the example of the banking and financial services industry workers’ wages in 2022 in the most famous American metropolitan areas, focusing on 3 of its dimensions: gender inequality, racial inequality, and pay gaps in this sector compared to others. The study is based on data from the American Community Survey (ACS) conducted by the Census Bureau. Population-level figures are derived using the replicate weights calculated in the article using STATA 16.1 software (the information in the ACS is contained in raw microdata form, the ACS is a probability sample, so the sampling weights derived by factoring in the non-response bias are essential to arrive at the population-level estimates). The financial services sector plays a significant role in the economies of these metropolitan areas, employing an average of 7.77% of adult workers (the highest in Phoenix (10.41%) and Dallas (9.77%)). The study showed that in these megacities, financial services workers earned 64.77% more in 2022 than workers in other sectors of the local economy, with the highest gap in New York (111.24%) and Boston (80.81%). Women in the financial sector of these cities earn, on average, 65.59% less than men, with the largest gender gap in Chicago (71.84%) and Dallas (71.26%). The earnings gap for black and non-white workers compared to their white counterparts in the cities studied averaged 36.16%, with the largest sectoral gaps in Houston (60.14%) and Riverside (55.06%). The findings can inform the development of policies that promote equitable pay practices, enforce stronger anti-discrimination laws, and support diversity and inclusion initiatives within the industry.

The impact of Business Process Outsourcing on Sustainable Competitive Advantage in the Financial Services Industry in Zimbabwe

Business process outsourcing (BPO) is a fairly new field within research in Zimbabwe. Most companies are in a bid to remain competitive within the financial services industry. The study sought to investigate the impact of BPO on sustainable competitive advantage in the financial services industry. The research adopted the positivism research philosophy which resulted in a quantitative research design. The data was analyzed using IBM SPSS bivariate correlation analysis. Raosoft calculator was used to determine the sample of 148 units from the target population of 240. The findings were that business process outsourcing has a direct relationship with sustainable competitive advantage. According to the results, innovation, highly capable IT teams and cost reduction were all a result of outsourcing of IT services. Accounting outsourcing, through the study, showed that it allowed companies to have access to expertise which are not available internally. It also showed that companies can focus on their core competencies whilst they outsource processes that can be done externally. The study suggested that the factors considered for sustainable competitive advantage are directly affected or impacted by outsourcing of services and processes. The study recommended that due diligence should be taken when implementing BPO. It also recommended that cost-benefit analysis and risk assessment be carried out before deciding on whether to outsource or not.

Digital Assistant for Video KYC Framework in India

The Know Your Customer (KYC) operations in India need to be done securely and efficiently due to the financial services industry's fast digitalization. The creation of a digital assistant that is customized for the Video KYC framework and prioritizes user experience over compliance requirements is suggested in this abstract. The digital assistant uses artificial intelligence and natural language processing to automate the KYC process and guarantee accuracy, dependability, and compliance with rules like those issued by the Reserve Bank of India (RBI). The assistant improves security protocols by utilizing advanced facial recognition, document verification, and biometric authentication, hence reducing the potential for identity fraud and data breaches.

The Impact of Blockchain Technology on the Financial Services Industry

The Impact of Blockchain Technology on the Financial Services Industry

RegTech and Insurance Sector: An Opportunity to Explore

In a rapidly evolving turbulent business world of today, compliance with regulations is critical to maintain the integrity of one’s operations and stakeholders’ trust. Simultaneously it has become very complex for companies, specifically those operating in finance, healthcare, and other such sectors, to keep up with these regulatory changes and ensure adherence to complex compliance standards. The financial services industry in general and insurance industry in particular is highly regulated to ensure transparency and protect customer interest. Consequently, an emerging paradigm namely Regtech, combining regulatory compliance and technology is a game changer for insurance companies. Regtech solutions enable companies to adhere to multiple complex regulations effectively, streamline compliance processes, lessen costs and mitigate the risks associated with non-compliance, ultimately fostering a more compliant, efficient, and competitive business environment. However, to ensure effective implementation of Regtech solutions in insurance, certain concerns over data security and privacy need to be addressed and fruitful collaboration between regulators and Regtech companies is a prerequisite. In this article an attempt has been made to explore the strategic significance of Regtech solutions and their applications in insurance industry. Further certain prerequisites have been suggested to ensure its effective implementation.

The Digital Insurance Paradigm: A Theoretical Exploration

The advent of technology has significant impact on the economy as a whole. Technology is attributed to the transition such as from traditional mode to online mode. Financial services industries such as banking, insurance are also witnessed huge growth in their businesses. Several technologies such as artificial intelligence, cloud computing, internet of things, block chain technology etc are gaining momentum these days. Insurance companies are using electronic mode as a alternate channels for communication, sales and distribution. The study focuses on the acceptance of electronic channels for availing digitalized insurance services by policyholders. The main aim of the study is to develop conceptual model for explaining user’s behavior intention towards adoption of digital life insurance services. The study has used unified theory of acceptance and use of technology model while incorporating some external variables such as trust, self efficacy etc. Attitude has also been used as a mediator for explaining the relation between other constructs and behavior intention. Keywords: Online Insurance, Trust, Attitude, Technology, Financial Services, Unified Theory of Acceptance and Use of Technology.

REVIEW OF DATA ANALYTICS AND INFORMATION SYSTEMS IN ENHANCING EFFICIENCY IN FINANCIAL SERVICES: CASE STUDIES FROM THE INDUSTRY

This study explores the transformative impact of integrating data analytics and information systems on enhancing efficiency in the financial services industry. The research highlights significant improvements in operational efficiency, risk management, and customer satisfaction through detailed case studies of JPMorgan Chase, Allstate Insurance, BlackRock, and Bank of America. The findings reveal that AI-driven analytics tools at JPMorgan Chase led to a 30% reduction in fraud-related losses and a 20% increase in customer satisfaction. Through predictive analytics, Allstate Insurance achieved a 40% reduction in claims processing time and a 25% improvement in underwriting accuracy. BlackRock reported a 35% increase in portfolio returns due to machine learning and predictive analytics. In comparison, Bank of America experienced a 22% increase in customer retention and a 15% rise in satisfaction through data-driven CRM systems. These outcomes underscore the critical role of advanced data analytics and information systems in driving innovation and operational excellence in financial services. The study emphasises the importance of continuous technological advancements and strategic implementation to maximise the benefits of these tools in the industry.

Generative Artificial Intelligence in the Financial Services Industry

Generative Artificial Intelligence in the Financial Services Industry

The journey towards a responsible AI future: Hype, fear and hope

This paper discusses artificial intelligence’s (AI’s) growing prominence in, and impact on, various aspects of our daily lives, with a focus on the financial services industry. It highlights the evolution of use cases in banking against the backdrop of the hype cycle that we are in today and discusses how the technology can be used to streamline operations, increase productivity, drive new business opportunities and improve financial inclusion. It also urges readers to be mindful of the multifaceted impact of the technology and the responsibilities that organisations must bear to ensure reliability, transparency, safety, security, explainability, privacy and fairness. The author emphasises the importance of trust as a cornerstone and advocates for diversity in AI development and data representation to avoid reinforcing biases and inequities in our society. The paper is a call to action for a more thoughtful approach to innovation — urging stakeholders to recognise the shared responsibilities in shaping a human-centric, inclusive and trustworthy future.

A token-based operating model unifying traditional and token-based operations for security services

Asset tokenisation is expected to have an impact on the financial services industry in the future. This paper examines the necessity for traditional custodians to enter tokenised markets to propose a future operating model for traditional custodians. We explore the advantages, such as leveraging regulatory expertise and existing customer bases and challenges, including the adoption of new technology stacks involved in such a model. Our proposed operating model utilises a blockchain infrastructure that relies on the use of tokens that spans both traditional and digital assets to create an automated platform. This platform can include the automation of credit risk and liquidity across multi-asset classes and multi-jurisdictional operations. Notably, our model introduces two types of tokens: value tokens (the fully digital or tokenised assets as well as tokenised money) and proxy tokens (among others, representing traditional assets). While value tokens carry value and represent tokenised assets, proxy tokens do not carry value. These proxy tokens are an internal representation of traditional assets that can facilitate managing the intra-day liquidity and extended credit lines offered to customers. Within our proposed operating model, all transaction instructions, whether in the traditional or tokenised realm, are streamlined through a unified ‘instruction worklist’. We conclude the paper with a proposed schematic architecture for the technical implementation of the operating model.

Save the Bank: Centralized Digital Bank — Centralization and Digitalization as Strategic Imperatives

This thesis explores the transformation of traditional banks into centralized digital banking systems as a strategic response to the burgeoning challenges posed by decentralized finance (DeFi) technologies such as blockchain and cryptocurrencies. As these technologies disrupt traditional financial paradigms, offering more direct, efficient, and transparent financial services, traditional banks face increasing pressure to adapt and evolve. This work argues for the necessity and feasibility of centralized digital banking as a comprehensive countermeasure to DeFi. Through a detailed examination of current banking challenges, including inefficiencies in customer service, transaction processing, and compliance, the thesis proposes a model of banking that leverages centralization and digitalization to address these issues. The proposed model not only enhances operational efficiency and customer engagement but also fortifies the banks’ competitive edge in a digital economy. Furthermore, the thesis discusses the long-term implications of such transformations, predicting that centralized digital banks will not only coexist with DeFi platforms but may also lead the financial services industry by adopting innovative technologies that drive customer satisfaction and operational excellence. Recommendations are provided for both banks and policymakers to foster an environment conducive to the development of robust, secure, and customer-focused digital banking services. In summary, this thesis affirms that centralized digital banking is not merely a defensive strategy against the rise of DeFi but a forward-looking approach that will define the future of banking.

Legal accountability and ethical considerations of AI in financial services

Artificial Intelligence (AI) is revolutionizing the financial services industry, offering unparalleled opportunities for efficiency, innovation, and personalized services. However, along with its benefits, AI in financial services raises significant legal and ethical concerns. This paper explores the legal accountability and ethical considerations surrounding the use of AI in financial services, aiming to provide insights into how these challenges can be addressed. The legal accountability of AI in financial services revolves around the allocation of responsibility for AI-related decisions and actions. As AI systems become more autonomous, questions arise about who should be held liable for AI errors, misconduct, or regulatory violations. This paper examines the existing legal frameworks, such as data protection laws, consumer protection regulations, and liability laws, and assesses their adequacy in addressing AI-related issues. Ethical considerations in AI implementation in financial services are paramount, as AI systems can impact individuals' financial well-being and access to services. Issues such as algorithmic bias, transparency, and fairness are critical in ensuring ethical AI practices. This paper discusses the importance of ethical guidelines and frameworks for AI development and deployment in financial services, emphasizing the need for transparency, accountability, and fairness. The paper also examines the role of regulatory bodies and industry standards in addressing legal and ethical challenges associated with AI in financial services. It proposes recommendations for policymakers, regulators, and industry stakeholders to promote responsible AI practices, including the development of clear guidelines, enhanced transparency measures, and mechanisms for accountability. Overall, this paper highlights the complex interplay between AI, legal accountability, and ethical considerations in the financial services industry. By addressing these challenges, stakeholders can harness the full potential of AI while ensuring that it is deployed in a responsible and ethical manner, benefiting both businesses and consumers.