Financial Service Providers Research Articles

EXPRESS: AI-based Financial Advice: An Ethical Discourse on AI-based Financial Advice and Ethical Reflection Framework

This article presents a first step in identifying the ethical issues of AI-based financial advice. Consumers must navigate an ever more complex array of financial decisions. (Generative) AI-based financial advice may increase access to and acceptance of financial advice and strengthen consumers’ financial well-being. However, significant ethical challenges exist in designing, developing, and deploying AI-based financial advice. To analyze the perils and pitfalls of AI-based financial advice, we develop a definition of what constitutes good AI-based financial advice and provide a first assessment of ethical challenges related to AI-based financial advice. The iterative multi-stakeholder approach, including workshops and semi-structured interviews with consumers and experts, results in an ethical discourse structured around the four fundamental values of the European Commission’s Ethics Guidelines for Trustworthy AI, human autonomy, explicability, fairness, prevention of harm, and trust as the overall objectives. Based on our analyses, we derive a simple yet comprehensive AI Ethics Framework for Financial Advice (AIFA). The AIFA reflection framework guides public policymakers, managers of financial service providers, and technology developers in incorporating ethical discourse in developing and deploying (generative) AI-based financial advice.

How to Promote Data Sharing of Financial Service Providers Based on Federated Learning Technology

Data sharing between financial service providers (FSPs) can promote the reduction of financial risks, but the reality is that the FSPs may be unwilling to share data with each other due to data security problems. The emergence of federated data technology provides a convenient way to address this issue. In this article, the author proposes using a federated data sharing model for FSPs and two dynamic evolutionary games for evaluating influencing factors. Cooperation results when both FSPs reach a certain level of mutual payoff. The reward and punishment mechanisms are important means by which FSPs actively implement real data sharing. The interaction between the FSP and the federated technology service provider (FTSP) demonstrates the practicality of this new technology. The results show that the data sharing improved the data trust and supported regulatory mechanisms.

Exploring Factors that Affect the Performance of Financial Intermediaries in the Insurance Sector

This article evaluates the prominent factors affecting financial intermediaries’ performance in the insurance industry. It is widely accepted that the performance of financial intermediaries in the insurance industry contributes to both industrial expansion and an increase in the market value of financial service providers. Surprisingly, there is not much research on financial intermediaries’ ability to identify obstacles that hinder their effectiveness. This study thus sought to provide strategies for financial services providers, insurance conglomerates, and senior management to gain a broad understanding and thorough review of the important influential factors that should be considered to enhance the performance of financial intermediaries in the insurance sector. To investigate the factors that enhance the performance of financial intermediaries, a close-ended questionnaire was developed in which 300 responses were collected at a market conduct authority. A quantitative approach was judiciously selected to analyse the data and identify the relationship between several factors. Using logistic regression models, key socioeconomic characteristics impacting the performance of financial intermediaries were identified including organisation, gender, education, level of education, and experience. By examining the interplay of regulatory frameworks, market conditions, and managerial practices, the study identified key drivers and barriers to success in this industry. It is recommended that future researchers adopt the strategies to further explore the complexities surrounding hedge funds and collective investment schemes. The findings of the study may aid in the development of future innovative product designs for financial intermediaries in the insurance sector. Keywords: Financial Intermediaries, Financial Intermediation, Financial Sector, Financial Services Providers

Decoding Users’ Continuance Intentions towards Digital Financial Platforms in the Indian Economy

Indian financial sector has seen a dramatic change in recent years, with digital finance unlocking new possibilities for financial inclusion. This paper investigates the factors influencing the continuous usage intention and advocacy intention, regarding digital finance, in the Indian economy. Utilizing the Stimulus-Organism-Response (S-O-R) model, the study examines how ease of use, credibility and ubiquity (stimulus) could influence user trust, satisfaction, and engagement (organism), ultimately affecting their intention to use and recommend the service (response) continuously. Non-probability convenience sampling technique was used to select the study sample. Based on the results, features of digital financial platforms such as ease of use, credibility and ubiquity, were found to have a significant impact on user trust, satisfaction, and engagement. These factors partially mediate the stimulus and response variables. The research findings provide Digital Financial Service Providers (DFSPs) with practical guidance on creating and implementing user-centric platforms that create engagement and trust. User experience should be prioritized and making sure that platform should be accessible, easy to use and compatible with a variety of devices.

Public Perception Towards Insurance Companies in Malaysia

Nowadays, the insurance sector is regulated and driven by profit maximization, just like other providers of financial services. We have been taught that insurance is essential for peace of mind, yet customers generally have a poor perception of insurance providers, and this view is even more evident among younger clients who are so important to the industry's future. The objective of this study is to investigate factors that influence public perception of insurance companies in Malaysia, including fraud, claim settlement, and knowledge. The study adopted a cross-sectional survey research design. This survey was conducted using questionnaires and 110 randomly selected insurance policyholders. The study's findings suggest that the public's perception of insurance companies is significantly influenced by knowledge. As a result, this outcome will assist insurance companies in developing new formulas that take the criteria mentioned above into account to serve the public interest.

Determinant of Family Takaful Adoption Among Puncak Alam Residents

This study investigates the key determinants influencing the adoption of family takaful among residents of Puncak Alam, Selangor. Despite the strategic design of family takaful to provide financial protection, particularly for low-income earners in the event of financial loss, its market penetration in Malaysia remains low. This raises important questions about the barriers to its widespread adoption, despite extensive promotional efforts by the takaful industry. The research aims to address these challenges by identifying and analyzing the factors that hinder the broader uptake of family takaful. A quantitative and descriptive research approach was adopted to gain a deeper understanding of the issue. Data collection was conducted using random sampling techniques, and the responses were analyzed using descriptive statistics with the help of the Statistical Package for Social Sciences (SPSS) software. The study involved a structured survey of 100 respondents from Puncak Alam, which examined the impact of three key variables - price, knowledge, and satisfaction - on the adoption of family takaful. The findings of this study underscore the significance of these three factors in shaping consumers' decision-making processes regarding family takaful. Price, as an indicator of affordability, knowledge about family takaful products, and the level of satisfaction with existing services, were all found to significantly influence adoption rates. By highlighting these critical determinants, the research provides valuable insights for policymakers, takaful operators, and financial service providers to refine their strategies and promote wider adoption of family takaful, ultimately enhancing financial security for the Malaysian population.

The Demographical Analysis Of Indonesian Buy-Now-Pay-Later Users Financial Wellbeing

This study aims to understand what causes financial wellbeing among Indonesian Buy-Now-Pay-Later Users in terms of demographical. A survey from 400 respondents was collected through an online questionnaire from January to June 2024 and analyzed using descriptive statistics, and continued by using Kruksal Wallis and Mann Whitney U in SPSS to test whether there is a statistically significant difference between two or more independent variables. This study is confirmed as the study demonstrates that demographic factors significantly influence financial well-being. These insights emphasize the importance of considering demographic variables when assessing financial health and tailoring financial education, policy-making, and service provision to effectively address the diverse needs of different demographic groups.

CLASSIFICATION OF LEGAL PROVISIONS REGULATING RELATIONS, THE OBJECT OF WHICH IS ELECTRONIC AND DIGITAL MONEY

The article is devoted to the classification of legal provisions regulating relations, the object of which is electronic and digital money. It was determined that legal provisions are the first element of the mechanism of legal regulation of relations, the object of which is electronic and digital money. The legal rules establishing the procedure for the provision of financial payment services by electronic money issuers for the issuance of electronic money and the execution of payment transactions with them (regulatory legal rules) are differentiated into the following groups: legal rules establishing the procedure for opening and maintaining electronic wallets; legal rules establishing requirements for issuers of electronic money and their commercial agents; legal rules establishing the procedure for issuing electronic money; legal rules establishing the procedure for repayment of electronic money; legal rules establishing restrictions on the use of electronic money; legal rules establishing the specifics of performing payment transactions with electronic money. Legal rules regulating relations, the object of which is digital money (regulatory legal rules), are differentiated into the following groups: legal rules establishing the procedure for issuing digital money; legal rules establishing the procedure for storing digital money; legal rules establishing the procedure for repayment of digital money; legal rules establishing the specifics of performing payment transactions using digital money. It is proved that the system of atypical legal provisions regulating relations, the object of which is electronic and digital money, is not extensive (its truncated), since it does not include various types of prescriptions that do not have specific rules of behavior.

Effect of Organization Capabilities on the Growth of Fintech Providers in Kenya

Purpose: The Fintech industry has become a central service sector that has revolutionized financial services provision and fostered financial inclusion. However, the revolutionary nature of the various Fintech firms has resulted in their operations being unclear as their conduct in the market remains unsupervised. Further the Fintechs fail in diversifying their products and services thus limiting their growth within the country. This research sought to establish the effect of organization capabilities on the business growth of fintech providers in Kenya. The specific objectives of the research sought to establish the effect of resource capabilities, marketing capabilities, leadership capabilities and technological capabilities on the business growth of fintech providers in Kenya. The survey was grounded on the dynamic capabilities theory. Methodology: The study used a descriptive cross-section research design with study population drawn from the association of Fintech providers in Kenya. There are a total of 63 firms that was considered in the study with the three senior managers from each of the firm considered as the respondent. The research utilized random sampling in selecting the 189 participant. Data collection was carried out using a structured questionnaire with drop and pick method applied in the study. The research data was analyzed using descriptive, correlation and regression analysis. Findings: The study established that there is a statistically significant relationship between organization capabilities and the business growth of fintech providers in Kenya (R2 = .487, Sig = .000). The findings of the first objective revealed that there was a positive and significant effect of resource capabilities on business growth of fintech providers in Kenya (coefficient β1 = .448, sig = .000<.05). Analysis of the second objective revealed that there was a positive and significant effect of marketing capabilities on business growth (β2 = .049, sig = .001<.05). The results of the third objective revealed that there was a positive and significant effect of leadership capabilities on business growth (β3 = .139, sig = .004<.05). Regression for the fourth variable showed that there was no significant effect of technological capabilities on business growth of Fintech Providers (β4 = .007, sig = .1936>.05). Unique Contribution to Theory, Practice and Policy: Based on the conclusions, the study recommends that the government should develop and maintain robust technology infrastructure that enables fintech providers to innovate and integrate advanced technologies. The study also recommends that fintech firms should continue to encourage open feedback and communication to build strong, collaborative teams. The study further recommends that firms should enhance social media marketing efforts to broaden market reach and engage with potential customers by investing in digital marketing tools.

Development of the bank of russia’s fast payment system in modern conditions

The financial market development in Russia and in the world is currently characterized by a number of processes such as emergence of a large number of new products and new formats implementation for their provision, expansion of the geography of financial institutions presence, national boundaries erasure in acquisition and provision of financial services, sales channels improvement for financial products and services, including remote ones, using modern information technologies. The article studies issues related to the current state and prospects of the fast payment system (hereinafter referred to as FPS) development considering the synergetic impact of payment services digitalization and sanctions restrictions. It analyzes the changes taking place in the FPS service in recent years, focusing on innovative business models, new functions implementation, technological transformations, as well as regulatory and risk aspects. The study pays special attention to the financial technology impact on development and functioning of the system as a key element of the payment industry. The potential of FPS in the context of ensuring the Russian payment infrastructure security represents an important direction for strengthening user confidence and system sustainability. The paper considers a number of promising areas for further development of FPSs, including their applicability to cross-border payments.

Does Digitization Affect Social and Financial Performance in Microfinance Institutions?

This research aims to explore the effects of the digitization of microfinance institutions (MFIs) on their social and financial performances, and on the trade-off between them given the double mission pursued by these institutions. To reach this objective, we performed ordinary least squares (OLS), logit, and two-stage least squares (2SLS) regressions on a sample of 331 microfinance institutions from the ATLAS database. Findings reveal evidence of significant mixed effects of digitization on social and financial performance indicators. They also show that there is no significant effect of digitization on trade-offs. The novel aspect of this research lies in the approach used to measure social performance which is proxied by the SPI4 -Social Performance Indicators-developed by Cerise and Social Performance Task Force (SPTF), while previous research on the topic have used social mission outcomes indicators. The SPI4 tool allows financial service providers to evaluate the implementation of Universal Standards for Social Performance Management (USSPM). This study also provides evidence on the effect that digitizing MFIs operations may have on trade-off between their social and financial performances. The findings have significant implications for institutions, especially on the way they can implement and interconnect their digitization process, USSPM and financial strategy. Firstly, the significant effect of digitization on social performance reveals synergies between the adoption and use of digital solutions and the implementation of good practices of SPM. Secondly, the mixed effects of adopting digital solutions on financial performance suggest that while this process appears to drive efficiency within institutions, it does not necessarily improve their profitability, since capital expenditure appears to increase more than profits. Finally, since digitization does not appear conducive to trade-off, MFIs should better align their financial and investment strategy with their social objectives when going digital.

Customers on the Move: Predicting Customer Satisfaction among Mobile Banking Users in Malaysia

In recent decades, the financial industry has seen rapid modernization of information technology and increased competition. Nevertheless, numerous past studies have shown that technological adoption in mobile banking is relatively low in certain Southeast Asian countries. Customers' opposition to mobile banking services is mostly attributed to a lack of knowledge, security worries, and technological difficulties. Therefore, financial service providers need to comprehend and meet customer expectations to enhance the mobile banking experience. This, the present research seeks to examine the determinants of customer satisfaction with mobile banking among Malaysian consumers. The findings demonstrate that perceived ease of use, efficiency, and responsiveness were significant in influencing customer satisfaction. However, interoperability, privacy and security, and reliability were not significant in affecting mobile banking satisfaction. The findings have implications for both theoretical and practical perspectives, highlighting the need for efficient mobile banking services, enhancing financial inclusion, and empowering individuals.

Towards a Sustainable Financial Future: Exploring the Influence of E-Wallet Adoption Among Gen Z in Malaysia

The COVID-19 pandemic has prompted a shift in payment approaches, with a preference for e-wallets. Despite their potential, Malaysians lag in adopting e-wallets. It is necessary to gain a deeper understanding of the factors influencing e-wallet adoption, especially through Gen Z. Therefore, we conducted this study using the Unified Theory of Acceptance and Use of Technology (UTAUT) framework to explore the factors influencing e-wallet adoption among Gen Z. Interviews with eight members of Gen Z reveal that advantages like time savings and the ability to manage and monitor transactions drive the adoption of the e-wallet payment method. Emergent themes, such as government incentives and the convenience of donating, further delineate the adoption of e-wallets. The adoption of e-wallets will eventually promote sustainable consumption by replacing cash transactions and reducing carbon emissions due to the reduced physical transit of financial resources. This study enhances the UTAUT and suggests prospective avenues for the growth of e-wallets in Malaysia. Practically, the findings are advantageous for financial service providers that are enhancing their e-wallets, as well as for government initiatives to transition to a cashless society and ultimately achieve sustainable development goals.

Impact of digital financial inclusion on economic growth: a study on Bangladesh

PurposeThe purpose of the study is to find out the impact of Digital Financial Inclusion (DFI) on economic growth [(Industrial Production Index (INDP)] of Bangladesh.Design/methodology/approachUsing the monthly data over the period 2018 M12 to 2021 M12, this study applied the Auto-regressive Distributed Lag (ARDL) model to assess the effect of DFI indicators on INDP. The secondary data was collected from the Bangladesh Bank and CEIC Global Economic Data.FindingsThe study found that the majority of DFI indicators are positively associated with INDP. From the short-run ARDL, it is seen that one unit positive increase in Point of Sales Transactions (POST) can increase the INDP by 0.055 units. From the long-run ARDL, it is seen that POST and e-commerce transactions (ECOMT) have a significant positive impact, while Automated Teller Machine Transactions (ATMT) have a significant negative effect on INDP. One unit increase in POST and ECOMT increases INDP by 0.13544 and 0.11611 units, respectively.Research limitations/implicationsDuring the era of the fourth industrial revolution, the findings will be beneficial for policymakers, financial technology service providers, manufacturers, consumers, corporations and investors as they pave the way for a more inclusive approach to financial transactions for economic growth.Originality/valueThe study’s novelty is that it explored the influential DFI indicators and shed light on both short-run and long-run relationships between the indicators and macro-economy from the context of a developing nation.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-04-2023-0306

FINANCIAL INCLUSION AND THE INFORMAL SECTOR DURING AND POST-COVID 19 ERAS: STATUS, CHALLENGES AND WAY FORWARD

COVID 19 is one of the major disasters that significantly disrupted the socio-economic statuses of various businesses and nations at large. The purpose of the study was to explore the extent to which COVID 19 affected financial inclusion in Zimbabwe. The quantitative research methodology and the purposive sampling technique were employed. Data was collected using in-depth and focus discussion group interviews from 35 participants. Data was analysed using thematic data analysis approach. Barred people in rural areas from accessing financial services which directly and indirectly increased the magnitude of poverty among people running informal businesses. Financial inclusion, is a key driver to poverty reduction; hence the negative impact of on financial inclusion significantly propels poverty in societies. Digitalizing financial services is one of the strategies which can be utilized to promote financial inclusion in the post- era. Financial institutions should use technology in financial services, so that those in rural areas do not incur transport and logistical costs for accessing financial services. Digital finance and other various financial innovations should be used to achieve financial inclusion in rural areas. Policies that encourage the delivery of formal financial services in rural areas should be developed. Governments should consider granting subsidy to providers of financial services so that they can offer basic financial services at low cost to the excluded population. Thus, governments ought to commit themselves to the delivery of accessible, affordable, appropriate and cost-effective financial services to unserved or underserved households. The study provides managers of financial institutions with various techniques of providing financial services to the informal sector in the post- eras in rural areas. It also provides managers with information pertaining to the risks in providing financial services in post-pandemic era in rural areas. Managers of internet service providers has a role in making sure that the rural folk have access to the facility so that digital banking systems become realizable.

FINANCIAL SERVICES IN THE DEVELOPMENT OF THE BIGTECH ECOSYSTEM

The Covid-19 pandemic has transformed the needs of consumers of goods and services. As a result, there was an increase in the volume of BigTech activity. At the same time, BigTech took into account the expectations of consumers in obtaining complementary services. This led to the growth of BigTech's offerings of financial services to its clients. The purpose of the article is to clarify the place of financial services in the BigTech ecosystem and to identify the priority areas of activation of the provision of financial services by BigTech firms. The article describes the BigTech ecosystem from an institutional point of view. The study presents the composition of participants of the BigTech ecosystem, which are connected by a digital platform and the use of information technologies that contribute to the sale of goods and the provision of services, including financial ones. The technical, economic, legal, and marketing prerequisites for providing BigTech financial services have been identified. This made it possible to substantiate the influence of consumer needs on the formation of the policy of providing BigTech financial services. It has been confirmed that BigTech implements a policy of providing financial services that meet customer expectations. The weaknesses and strengths of BigTech financial services are identified. The threats and opportunities of providing BigTech financial services are substantiated. The conducted research made it possible to formulate geographical, product, and client directions for the development of the provision of BigTech financial services.

Significance of the insurance market for the financial system of Ukraine

In conditions of developed market relations and strengthening of globalization processes, the development of the insurance market is determined by the socio-economic needs of the society’s development. The paper examines the definition of “insurance market” and shows the place of insurance companies among other key players in the financial system of Ukraine. The results of the study showed that the insurance market should be considered as a special sphere of monetary relations, where the subject of purchase and sale is a specific service—insurance protection—and where supply and demand for this service are formed. The development of the insurance market is determined by two main aspects. Firstly, this is due to the need of the population and business entities for insurance protection due to many risks. Secondly, the insurance fund as a whole has a monetary form, which makes it a full participant in the country’s monetary system and a method of interaction with other participants in the money market. Insurance companies are providers of financial services in Ukraine along with banks, investment, leasing, brokerage companies, credit unions, payment institutions and other participants in the financial system. The essence of insurance companies is revealed due to their functions. Among the functions of the insurance market, risk, financial, incentive, control, social, redistribution, investment and accumulation functions are identified. The main aspects characterizing the positive impact of the insurance market on the development of Ukraine are also noted and disclosed. Among the components through which insurance companies have a positive impact on the development of Ukraine are financial protection and stability, attracting investment, supporting entrepreneurship, social security, increasing financial literacy of the population, and promoting the development of international relations. The conducted research allows us to assert that the level of development of the insurance market reflects the possibilities of economic growth of Ukraine and is one of the main indicators of the developed financial system of the state.

Cluster-based Systematic Literature Review: Understanding FinTech Adoption and Challenges

The FinTech market globally is emerging as an alternative to the traditional cash-driven economy. Although most of the population has adapted to the innovation that has taken place in the financial services sector, a substantial proportion of the population remains unbanked. It has a shallow awareness of the financial products and services available. Banks, financial service providers, investment advisers and business houses are attempting to adopt new technologies in collaboration with FinTech companies. Understanding consumer adoption and their experience of new technologies can help FinTech service providers integrate ideas and deliver seamless offerings. This article employs a systematic literature review of a total of 111 publications from 2016 to 2023 on the consumer adoption/acceptance of FinTech products and services. It identifies seven research clusters from the extant literature to note the trends in adoption and enlist the challenges faced by the usage of FinTech along with emerging trends in attention. The study used VOSviewer to provide the results of keyword analysis, world distribution and linkages of selected publications. The article explored the acceptance and reception of financial innovation in the past eight years as per the identified clusters which was shown by the increase in the number of publication’s chart. It also contributes to the field by mentioning the benefits that have been reaped across industries and sectors with the adoption of FinTech by discussing the participation of authors in various clusters in detail.

Strategic alliances and competitive advantage of commercial banks in Kenya

Commercial banks in Kenya operate in quite dynamic financial market environment and continue to experience stiff competition in the provision of financial services. The liberation of the financial markets has resulted into an upsurge in the number of institutions providing financial products and services, threatening the future of Kenyan commercial banks. This study aimed at determining the effect of strategic alliances on competitive advantage of commercial banks in Kenya. The objectives were to determine effect of joint ventures, equity alliances, and joint research and development on the competitiveness of Kenyan banks. The following theories informed this research; Resource Based View theory, competitive theory, and resource dependence theory. Causal research design was adopted where all the 42 Kenyan commercial banks formed the target population. Census survey sampling design was applied and semi-structured questionnaire used. Reliability and validity results were used to improve the research instrument prior to the actual data collection. Data was analyzed using descriptive and inferential statistics. Study found that joint venture (?=0.435, p=0.000) equity alliances (?=0.227, p=0.018), and joint research and development (?=0.0.612, p=0.000) had positive significant effects on competitive advantage. With a coefficient of determination (R-square) of 68.9% and overall p-value of 0.000, the study concluded strategic alliances have a statistical significant effect on competitive advantage. The study recommends that managements of commercial banks should fast-truck implementation of such alliances to for improved competitiveness.

Penyuluhan Interaktif Literasi Keuangan Guna Mencegah Jebakan Pinjaman Online Ilegal

This service activity aims to increase public awareness regarding the dangers of online loans (Pinjol) and good financial management literacy. The method of implementing this community service used interactive counseling techniques. The target was 17 students of Jenderal Soedirman University. This activity consisted of 4 (four) stages which included initial analysis of needs, preparation, coordination of implementation, and evaluation of activities in the form of distributing questionnaires which are analyzed descriptively. The results of this service showed that any increase in knowledge and skills in using financial service providers for online loans (Pinjol), is especially illegal. The participants had been able to plan, control, manage, and save finances well and were able to prioritize their respective needs. Meanwhile, regarding financial literacy, the participants already have good basic financial knowledge, were quite familiar with the ins and outs of savings and loans and the dangers of illegal online loans, and were quite knowledgeable about the importance of insurance and healthy investment.