Understanding Fintech Ecosystem and Growth

Delving into Fintech
Developed and Facilitated
by Goutama Bachtiar
v2.2.0
Image: Avanade
Instrument, Landscape, Compliance, and Future Perspectives

October 2018Understanding Fintech
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Image: Techforce Infotech

Workshop Agenda
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 Session 1: Intro to Fintech and its Ecosystem
 Session 2: Fintech Market and Growth
 Session 3: E-Payment, Settlement and Clearing
 Session 4: Peer-to-Peer Lending and
Crowdfunding
 Session 5: Risk Management and Investment
Image: Unsplash

Workshop Agenda (cont’d)
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 Session 6: E-Aggregator
 Session 7: Applicable Regulations
 Session 8: Key Challenges
 Session 9: The Future Trends
Image: Unsplash

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• Please kindly set all mobile phones etc on silent mode
• Feel free to interrupt my presentation to ask questions
at any time
• In the end, there is a final Q&A session for deeper
concerns
• Time is slightly relative and I own the clock ☺
• Do actively participate! And don’t forget to have fun!
October 2018 Understanding Fintech
Rule of the Game
Image: Unsplash

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Intro to Fintech and its Ecosystem
Session 1

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According to Indonesia Central Bank (BI)
“Penggunaan teknologi dalam sistem keuangan yang
menghasilkan produk, layanan, teknologi, dan/atau
model bisnis baru serta dapat berdampak pada
stabilitas moneter, stabilitas sistem keuangan, dan/atau
efisiensi, kelancaran, keamanan, dan keandalan sistem
pembayaran”.
What is Fintech
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According to Otoritas Jasa Keuangan (OJK)
Fintech 2.0
Intended for digital financial service provided by
financial institution such as bank, etc.
Fintech 3.0
Intended for digital financial service provided by
technology startup company.
Type of Fintech
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According to Financial Stability Board (FSB) and Indonesia Central
Bank (BI)
1. Payment, clearing dan settlement
Provides payment services and or systems: e-money, e-wallet, payment
gateway
Example: Veritrans, Kartuku, Doku, iPaymu, T-Cash, Sakuku, GoPay,
GrabPay, TokoCash, Finnet
2. E-Aggregator
Collects and analyzes financial data and information for the user to make
financial decision
Example: Cekaja, Cermati, RajaPremi, AturDuit, HaloMoney, Asuransiku.
Category of Fintech
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Risk Management and Investment
Equipped with AI engine/system for providing financial planning, e-
trading and e-insurance services.
Example: Jojonomic, Finansialku, NgaturDuit, Bareksa, KoinWorks.
Peer-to-Peer Lending (P2P) and Crowdfunding
Platform acting as an intermediary entity between lender/investor
and borrower/loanee.
Example: Modalku, Krevido, Investree.
In particular Crowdfunding, they act as intermediary between an
entity seeks for fund and investor as source of fund prior to IPO.
Example: Crowdo, KitaBisa, Indiegogo, KickStarter
Category of Fintech (cont’d)
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12October 2018 Understanding Fintech
Fintech Key Driver
Credit: PwC Global Fintech Report 2017

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For consumer/user
▪ Better product, service, platform
▪ More option on product, service, platform
▪ Lower price of product, service and platform
For fintech firm
▪ Simplifying transaction chain
▪ Lowering operation cost and cost of capital
▪ Improving/enhancing information flow
Benefits of Fintech
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For the country
Encouraging the transmission of economic policy
Accelerating circulation of money therefore in the
end improving/enhancing the economy of the
society
In Indonesia case, supporting Strategi Nasional
Keuangan Inklusif (SKNI)
Benefits of Fintech (cont’d)
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For payment system activities
Substituting the role of formal financial institution such
as bank
Providing the market for the businesses
Acting as supporting aid for payment, settlement and
clearing
Helping more efficient investment activities
Mitigating the risks from conventional payment system
Helping individual and organization that need to deposit,
borrow, lend and invest their funds.
Benefits of Fintech (cont’d)
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Why Fintech?
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Why Fintech? (cont’d)
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Fintech Market and Growth
Session 2

Global Fintech Landscape

Global Fintech Landscape (cont’d)
Total global fintech investment was US$31B (KPMG
Pulse of Fintech Report Q4 2017)
▪ US dominates global fintech investment; Brazil starts
to make waves
▪ Europe VC fintech investment reaches new high for
third straight quarter
▪ Asia fintech funding declines, with less than $750
million raised in the region.

Global
Fintech
Landscape
(cont’d)
Source: EY Fintech Adoption Index 2017

Global Fintech Landscape (cont’d)

Source: CapGemini World Fintech Report 2017

October 2018 Understanding Fintech 25

Fintech Services Indonesian Use
Image: DailySocial Fintech Report 2017

October 2018 Understanding Fintech 31Image: DailySocial Fintech Report 2017

Fintech Benefits for Indonesian
Image: DailySocial Fintech Report 2017

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E-Payment, Settlement and
Clearing
Session 3

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E-Payment
Session 3.1
October 2018 Understanding FintechImage: housemarque

Type of E-Payments
Payment
Cards
Electronic
Funds
Transfer (EFT)
E-Cash
Systems
E-Wallets E-Check
Micro
Payment
Systems
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Note: The green are classified as fintech
The rest are classified as conventional electronic payment or payment system services

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▪ Inclusive of e-money, digital currency, crypto currency.
▪ A system allows a person to pay for goods or services by
transmitting a number from one device to another.
▪ Like serial numbers on real currency, their numbers are
unique.
▪ Type: soft token or hard token (card-based)
▪ In Indonesia, 70% transactions is still cash
▪ Examples: T-Cash, Sakuku, Mandiri E-cash, BBM
Money, Dompetku, XL Tunai.
E-Cash

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❖ Another payment scheme that operates like a carrier of
e-cash and other information.
❖ The aim is to give shoppers a single, simple, and secure
way of carrying currency electronically.
❖ At times, uniquely identified through e-mail
address/unique number.
❖ Significant different from e-money, it could accommodate
various e-money/payment methods published by other
organizations
❖ Such examples are GrabPay, Blockchain Wallet,
PayPass Wallet, and DokuWallet.
E-Wallet

Exploring E-Wallet
Serves a function similar to a physical wallet
❖ Holds credit cards, electronic cash, owner
identification, and owner contact information
❖ Provides owner contact information at an electronic
commerce site’s checkout counter
❖ Stores shipping and billing information, including a
consumer’s first and last names, street address, city,
state, country, and zip or postal code

Exploring E-Wallet (cont’d)
Decide on an online site where you would like to shop
Download a wallet from the merchant’s website/Sign up on the website
itself to create your Digital wallet
Transfer fund from your bank account into your digital wallet
When you are ready to buy, click on the wallet button, the buying
process is fully executed
The Digital Wallet’s will check if there is enough E Cash in the wallet
and if yes, then the transaction is completed and the purchase is made

Type of E-Wallet
Server Side
• A server side electronic wallet stores a customer
information on the remote server belonging to a particular
merchant or wallet publisher
Client Side
• A client side electronic wallet stores customer information
on his/her own computer.
• Many of the early electronic wallet were client side wallet
that require users to download the wallet software

Based on Usage
Closed Wallet
A closed wallet is one
that a company issues
to its consumers for in-
house goods and
services only. These
instruments do not
carry the advantage of
cash withdrawal or
redemption
Semi-Closed Wallet
A semi-closed wallet
can be used for goods
and services, including
financial services, at
select merchant
locations or
establishments that
have a contract with
the issuing company to
accept these payment
instruments.
Open Wallet
Such wallets can be used
for purchase of goods and
services, including
financial services such as
funds transfer at merchant
locations or point-of-sale
terminals that accept
cards, and also cash
withdrawals at automated
teller machines
or business
correspondents
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Example of E-Wallet
• Agile Wallet
▪ Developed by CyberCash
▪ Allows customers to enter credit card and identifying
information once, stored on a central server
▪ Information pops up in supported merchants’ payment
pages, allowing one-click payment
▪ Does not support smart cards or CyberCash, but
company expects to soon

Example of E-Wallet (cont’d)
• Microsoft Wallet
▪ Comes pre-installed in Internet Explorer 4.0, but not in
Netscape
▪ All information is encrypted and password protected
▪ Microsoft Wallet Merchant directory shows merchants
setup to accept Microsoft Wallet

Image courtesy of Windows Central

Example of E-Wallet (cont’d)
Google Wallet
• Mobile payment system developed by Google
• Allows users to store debit cards, credit cards, loyalty cards
etc
• Uses Near Field Communication to make secure payments
fast and convenient by tapping the phone on pay press
enable terminal
• Works with 30,00,000+ MasterCard merchant locations

Image courtesy of Android Central

Advantages of E-Wallet
• Convenience
Makes online shopping easier because it fills in an online order
form automatically
• Competitive Advantage
A great advantage for online merchants, because customers
sometimes abandon online purchases if they feel the order
form is too confusing or frustrating
• Greater revenue opportunities
Open up a new aspect of payment methods in large markets
introducing many business opportunities and greater
potential revenue

• System Outages
Information for E-Wallets are stores on the cloud of business
server, therefore the risk of a system malfunction or shut down
is always present.
• Security
Must ensure their customers’ information is encrypted and well
protected.
• Investment
Initial monetary investment is quite large as it requires the
development of the software as well as continual maintenance.
Disadvantages of E-Wallet

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Hardware-based wallet
E-Wallet (cont’d)
Ledger Nano S
Ledger Blue

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Hardware-based wallet
E-Wallet (cont’d)

Digital Currency
• Part of E-Cash or E-Money known as Virtual Currency
• Bitcoin is the first decentralized, crypto digital/virtual
currency
• Peer-to-Peer currency with mathematic protection
• No centralized control/Central Bank
• Based on cryptographic proof (SHA256) instead of trust
• Developed by a person/group under pseudonym of Satoshi
Nakamoto (2008)
• Operational since early 2009
• No financial institutions involved or managed

Digital Currency (cont’d)
Example of Digital/Virtual Currency centralized and not
crypto: https://koinworks.com/lender?locale=id

Navigating Bitcoin Further
•The Satoshi is the smallest unit of bitcoin recorded on
blockchain (it's a one hundred millionth of a single bitcoin
(0.00000001 BTC)
•https://www.cryptocoincharts.info/coins/info claims to be
indexing 4,220 cryptocurrencies
•Bitcoin is one of the Blockchain digital assets.
•Most circulated: Bitcoin, Ethereum, Litecoin

Bitcoin’s Key Concepts
Bitcoins
Transactions
Proof of
Work
Mining
Digital Wallet
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Going Further with Bitcoin

BTC Transactions
• Straight away between owner and receiver
• Broadcasted through Peer-to-Peer (P2P) network
• All are public but anonymous
• Mining nodes collects the transactions into Blocks

BTC Transactions (cont’d)
• Transactions Blocks  Full
page in a Ledger Book
• Block contains information
about transactions and
previous Block (Block
Chain) linking to the first
block when Bitcoin Network
started.

Technology Behind Bitcoin
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•Think of Bitcoin as an electronic asset other than
digital, crypto currency
•A network of computers keeps track of Bitcoin
payments and adds them to an ever-growing list of
them which have been made, called “The Bitcoin
Blockchain”.
•The file that contains data about all Bitcoin
transactions is often called a “ledger”.

Technology Behind Bitcoin (cont’d)
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•Bitcoin value is created through transaction
processing, referred to as “mining”.
•Mining is performed by distributed processors
called “nodes” of the peer-to-peer network.
•Blockchain without digital asset in this case crypto
currency? NO.

Image: Deloitte UK Report 2016

Bitcoin Advantages
• BTC software unchangeable without majority users within entire
network accepting the change
• While majority of nodes are honest, attackers cannot harm the system
• Attacker would need astronomical computer power to corrupt block
chain
• No government can print more money
• Anonymity
• Lower global transaction costs
• New bubble may emerge (?): Oct13 = USD150 while Nov13 is more
than USD500
• March 2013: BTC passed 1 Billion USD (around 11 million Bitcoins in
circulation)

Smart Cards
▪ Any pocket-sized card with embedded integrated circuits
which can process data
▪ Known as Chip Card, Integrated Circuit Card (ICC) Card,
Stored-Value Cards
▪ Example: Flazz, Mandiri E-Toll/E-Money, Starbucks Card, etc
▪ Contact
Have a contact area of 1cm comprising several gold-plated
contact pads
These pads provide electrical connectivity when inserted into a
reader
Pass data to and from the embedded microchip

Smart Cards (cont’d)
▪ Contactless/Promixity
Communicates
with and is
powered through
RFID
Require only
proximity to
antenna to
communicate

Smart Cards (cont’d)
Smart Card Reader
Activates and reads the contents of the chip on a smart card, usually
passing the information on to a host system
Smart Card Operating System
Special system that handles file management, security, input/output
(I/O), and command execution and provides an application programming
interface (API) for a smart card

Payment Cards
Electronic card that contains information and used for payment
purposes
Membership Cards known as Charge Cards
• Issued by non-financial organizations often times by strategic
partnership with banks
• Utilized to maintain their customers/buyers
• Part of the organization’s Customer Relationship
Management (CRM).
• Mostly could only be topped-up through bank transfer and
credit card.
• Example: Starbucks card, Indomaret Card, Alfamart Card,
Circle K Card.

Payment Cards (cont’d)
Other than Membership Cards are Credit Cards and Debit
Cards.
▪ Processing activities
Authorization
Determines whether a buyer’s card is active and whether
the customer has sufficient funds
Settlement
Transferring money from the buyer’s to the merchant’s
account

Payment Cards (cont’d)
Address Verification System (AVS)
Detects fraud by comparing the address entered on a Web page
with the address information on file with cardholder’s issuing bank
Card Verification Number (CVN)
Detects fraud by comparing the verification number printed on the
signature strip on the back of the card with the information on file
with the cardholder’s issuing bank
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Use Case of Smart Cards
Retail Purchases
E-Purse
Smart card application that loads money from a card holder’s bank
account onto the smart card’s chip
Common Electronic Purse Specification (CEPS)
Standards governing the operation and interoperability of e-purse
offerings
Transit Fares
To eliminate the inconvenience of multiple types of tickets used in public
transportation, most major transit operators in the US are implementing
smart card fare-ticketing systems
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Use Case of Smart Cards (cont’d)
E-Identification
Because they have the capability to store personal information, including
pictures, biometric identifiers, digital signatures, and private security keys,
smart cards are being used in a variety of identification, access control,
and authentication applications.
Health Care
▪ Storing vital medical information in case of emergencies
▪ Preventing patients from obtaining multiple prescriptions from different
physicians
▪ Verifying a patient’s identity and insurance coverage
▪ Speeding up the hospital or emergency room admissions process
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Near Field Communication
• NFC is the latest payment method introduced to the
world.
• It is not based on cash in the wallet but storing card
information on the phone to be used in a mobile wallet or
to use NFC.

Electronic Credit Cards
• Credit-card-sized device holds
other credit cards
• Swap from card to card
• Even store gift cards inside its
ultra-thin innards
• Uses low-power Bluetooth to
connect to our iOS device
coupled with a standard credit-
card reader
• Holds up to eight cards
• EMV-NFC ready
• Video 1 and 2
Image courtesy of Techcrunch

Nuts and Bolts of Payment Cards
• Advantages
1.Atomic, debt-free transactions
2.Feasible for certain value of transactions
3.(Potentially) anonymous
4.(Potentially) currency-neutral
5.Security of physical/virtual storage
• Disadvantages
1.Low maximum transaction limit mostly due to laws and regulations (not
suitable for B2B or most B2C)
2.High infrastructure costs (not suitable for C2C)
3.Security of physical/virtual storage

Elements of e-Payment
▪ Client Software
Use of web browser for browsing encrypted information
▪ Merchant Server Software
Some solution providers design custom application software for
the merchant, while others integrate functions with the web
server
▪ Payment by the Customer
Customer can make payment using a credit card, buy e-cash
from a participating bank, or through an automated clearing
house (ACH)

Elements of e-Payment (cont’d)
▪ Payment to merchant
In debit based transaction, merchant gets payment immediately,
from customer’s bank in his account, through ACH, through a bank
transfer
▪ Transaction Cost
Cost per transaction varies for credit and debit transactions and
with the service provider
▪ Risk
In most of the solution provided, the risk is the merchant for
fraudulent transactions

Secure Electronic Transaction
❖Widely known as SET (Protocol) is jointly designed by
MasterCard and Visa with backing of Microsoft, Netscape,
IBM, GTE, SAIC, and others
❖Designed to provide security for card payments as they
travel on Internet
❖ Contrasted with Secure Socket Layers (SSL) protocol, SET validates consumers and
merchants in addition to providing secure transmission
❖ SET specification
❖ Uses public key cryptography and digital certificates for validating both consumers and
merchants
❖ Provides privacy, data integrity, user and merchant authentication, and consumer
nonrepudiation

How SET Works

SET Security Requirements
▪ Authentication (only authorized individual or group
does and is allowed for the transaction)
▪ Integrity (money doesn’t change during the transfer)
▪ Non-Repudiation (No party can deny its role in the
transaction)
▪ Privacy (money and good are exchanged atomically)
▪ Safety (money is not lost during a transfer)

Secure SET Infrastructure
• Authentication
– Many tools available to confirm the authenticity of a user.
– Passwords and ID numbers are used mostly
• Public Key Cryptography
– Use one public and one private to encrypt and decrypt data
– Sender can then encrypt the message with the public key and receiver can use
the private key to decrypt the message.
• Digital Signature
– An electronic one use to authenticate the identity of the sender of a message

Secure SET Infrastructure (cont’d)
• Secure Sockets Layer (SSL)
– Commonly used protocol for managing the security of a message
transmission
– Uses the public-and-private key encryption system
– Program layer located between HTTP and TCP
• Certificate
– The issuer verified the identity of the individual
– Symantec Certificates
– GeoTrust

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Settlement and Clearing
Session 3.2
October 2018 Understanding FintechImage: housemarque

Payment Gateway
▪ A system that provides and authorizes payments
▪ Protects payment and credit cards details encrypting
sensitive information.
▪ Make sure information passes securely between
customer and merchant and also between merchant
and payment processor
▪ Let us know whether a charge is approved by
cardholder’s bank, and then submits charge to the bank
for settlement

How Payment Gateway Work

Payment Service Provider
• As known as Payment Processor (PP)
• A system that connects cardholder’s bank with
merchant’s bank, and card brands (e.g. Visa, Mastercard,
Discover, etc.)
• Take money from cardholder’s bank account and deliver it
to merchant’s bank account
• More than 900 payment providers in the world (300 offer
services for Europe and North-America)

Payment Service Provider (cont’d)

Indonesia Payment Players
October 2018 Understanding Fintech 95Source: DailySocial Fintech Report 2017

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Peer-to-Peer Lending and
Crowfunding
Session 4

The Current Trends
Source: World Economic Forum Report on The Future of Financial Services

The Current Trends (cont’d)

Source: DailySocial Fintech Report 2017

Market Share in Indonesia

Compliance Point-of-View

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Risk Management and
Investment
Session 5

The Current Trends

Indonesia Players in this Pad

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E-Aggregator
Session 6

The Current Trends

Indonesia Player in this Pad

Market Share in Indonesia

Market Share in Indonesia (cont’d)

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Applicable Regulations
Session 7

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▪ According to Indonesia Central Bank (BI), the
organization need to protect the user/consumer
particularly data and information privacy and
confidentiality through cyber security network.
▪ In saving, lending, and equity pads, the player
must comply with macroprudential, have adequate
knowledge in financial market, payment system to
support cyber security and operational activities.
What the Regulator Do?
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▪ In investment and risk management sphere,
same things applied in saving, lending, and
equity pads.
▪ In payment, settlement, and clearing areas,
the organization have to ensure the protection
of the user/consumer particularly in regard to
data and information privacy through cyber
security network.
What the Regulator Do? (cont’d)
Image: Wall2born

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▪ Facilitator
Provide playing fields of payment network and
traffic.
▪ Intelligent Business Analysis
Through strategic partnership with international
authority and organizations, BI act as analyst for
fintech firms to give them perspectives and
guidance on how to develop safe and secure
payment system.
BI Initiatives on Fintech

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▪ Assessment
BI monitor and assess any activities related to
fintech and technology-supported payment.
▪ Coordination and Communication
BI maintain the relationship with related authorities
to support the existence of fintech payment
system. Also commit to support businesses in
Indonesia by regularly provide the guidance on
fintech.
BI Initiatives on Fintech
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To support innovation within financial sphere by
considering customer protection principle, being
prudent and risk management perspective, they
have issued:
1. Peraturan Bank Indonesia (PBI)
2. Peraturan Anggota Dewan Gubernur (PADB)
on
Fintech and Regulatory Sandbox.
Indonesia Central Bank
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Issued on 29Nov17 about Implementing Fintech
i. They, who provide payment system activities,
are urged to register to BI.
ii. Exception is applied for a) those
organizations that already have the permission
from BI and b) those providers under other
institution authorities i.e. OJK but doesn’t
provide payment system service.
PBI 19/12/PBI/2017
Image: Wall2born

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On Fintech Provider’s Regulatory Sandbox (RS) issued on
30 November 2017 about ‘Ruang Uji Coba Terbatas
(Regulatory Sandbox) Teknologi Finansial’.
The fintech provider, upon being successfully
listed at BI, are urged to do the demonstration
on their product/service/technology/business
model to BI through RS.
PADG 19/14/PADG/2017
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They have to fill-in the respective form and submit
numerous supporting documents as required in ‘Formulir
Penyampaian Dokumen Regulatory Sandbox’.
Through another regulation PADG 19/15/PADG/2017, the
methodology and testing processes have also been
unveiled.
Requirements to enroll the sandbox: i) successfully listed at
BI then ii) requested by BI.
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The current payment system provider, if they launch new
product/service/technology/have new business model
related to fintech are also urged to provide the info on their
product, service, technology and or business model.
They need to fill-in pre-designed form and submitt relevant
documents referred to the form named in ‘Formulir
Penyampaian Informasi’.
Image: Wall2born

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After getting BI approval, the fintech provider is also urged
to provide the information on their product, service,
technology and or business model.
They need to fill up the pre-designed form and submitt
relevant documents as referred to the form named ‘Formulir
Penyampaian Informasi’.
Image: Wall2born

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Monitoring
Fintech firms must submit all data and information
requested by BI.
Controlling
Applied to fintech organization playing in payment system
pads that have attained BI approval, been operating for a
while and complied with the central bank rules and
requirements.
Monitoring and Controlling
Image: Wall2born

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The full list could be seen at
www.bi.go.id/id/sistem-
pembayaran/fintech/Pengumuman-
Penyelenggara/Contents/default.aspx
Fintech
Companies
Registered at
BI
Image: Wall2born

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▪ Warning Letter
▪ Fine
▪ Temporary freezing of the organization either partially or fully
business activities
▪ Getting delisted from the BI list
▪ Certain actions related to the provision of payment system
activities
▪ Recommendation to the official authority to revoke the firm’s
business license
▪ Revoke the firm’s license as payment system service
provider
Sanctions towards PBI
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Issued on 29 December 2016 on Peer-to-Peer Lending
(‘Layanan Pinjam Meminjam Uang Berbasis Teknologi
Informasi’)
Constitutes of
1. The regulation itself (POJK Fintech)
2. The explanation (Penjelasan POJK Fintech)
3. The appendix separated document (Lembar Pemisah
Lampiran)
4. The Appendix (Lampiran POJK Fintech)
5. The form (Formulir 3 Fintech)
POJK No. 77/POJK.01/2016
Image: Wall2born

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Issued on 15 August 2018 on ‘Inovasi Keuangan Digital di
Sektor Jasa Keuangan’
Constitutes of
1. The regulation itself (POJK Fintech)
2. The explanation (Penjelasan POJK Fintech)
3. The appendix separated document (Lembar Pemisah
Lampiran)
4. The Appendix (Lampiran POJK Fintech)
5. The form (Formulir 3 Fintech)
POJK No. 13/POJK.02/2018

129
PBI No. 18/40/PBI/2016 on ‘Penyelenggaraan Pemrosesan
Transaksi Pembayaran’ issued on 9 November 2016.
Surat Edaran Bank Indonesia (SE BI) No. 18/22/DKSP on
‘Penyelenggaraan Layanan Keuangan Digital’.
PBI No. 18/17/PBI/2016 on ‘Uang Elektronik’.
SE BI No. 18/21/DKSP on ‘Penyelenggaraan Uang
Elektronik’.
Other PBI and POJK

130
Key Challenges
Session 8

Numerous Hurdles

Numerous Hurdles (cont’d)

134
Future Trends
Session 9

Future State of E-Wallet
• Automatic Bill Payments
Will be able to make bill payments on behalf of the used by
scheduling payment intervals for electronic bills and
invoices
• Loyalty redemption
Real time reporting of points accrued under loyalty schemes
• Personal Information access
It will become a single access point to all personal
information including medical, insurance, mortgage etc.

Future State of E-Wallet (cont’d)
• Preemptive Purchasing
It can make a list of purchases based on your purchase
habits and remind the consumer to make these purchases
on a regular basis
• Person to Person Payments
It’ll be possible to transfer a payment from one person to
another simply by pointing two “wallet enabled devices” at
each other

E-Wallet Global Growth

Blockchain is the Future
138October 2018 Blockchain Essentials

Blockchain is the Future (cont’d)
139
• A technology that permits
transactions to be gathered
into blocks and recorded.
• Cryptographically chains
blocks in chronological order.
• First introduced in
whitepaper “Bitcoin: A Peer-
to-Peer Electronic Cash
System,” by Satoshi
Nakamoto in 2008.
October 2018 Blockchain Essentials

What is Blockchain?
140
• A Distributed Transaction Ledger
• Every block contains multiple transactions
• Massively duplicated across network nodes
• Shared with a P2P file transfer protocol
• All network nodes perform transaction validation and
clearing.
• Updated by peculiar nodes, known as miners, appending
new blocks of transactions
• Miners perform the additional work required for settlement.

What is Blockchain? (cont’d)
141
Whilst Bitcoin themselves:
• No reliance on trust
• Digital signatures
• Peer-to-peer network
• Proof-of-work
• Public history of transactions
• Honest, independent nodes control majority of CPU computing
power
• Nodes vote with CPU computing power
• Rules and incentives enforced through consensus mechanism

What is Blockchain? (cont’d)
142
To imagine:
“Giant interactive
Google doc
spreadsheet that
anyone can view
and administrators
(miners)
continually verify
and update to
confirm that each
transaction is
valid”

How Blockchain Works (cont’d)

October 2018 Blockchain Essentials 144

How Blockchain Benefit Business
146
• Transparency and cryptography add resilience of data
• Audit electronic actions to easily complete forensic
analysis if a hack occurs
• If something was changed, Blockchain would become
invalid at that point and broadcast the error to all
nodes
• Immutable logging and connection of data to create a
tamper-proof chain of data

How Blockchain Benefit Business (cont’d)
147
• Immutable data means accurate reporting and
analytics
• Immutability means that it allows any fraud or error to
be identified and corrected, eliminating any single
point of failure and making it easy to have a correct
record of all behaviour at any point in time.
• If a past data entry is tampered, it will make the block
invalid, which both cancels the upcoming transaction
and shows data that was tampered with.

How Blockchain Benefit Business (cont’d)
148
• Immutable data means accurate reporting and
analytics
• Immutability means that it allows any fraud or error to
be identified and corrected, eliminating any single
point of failure and making it easy to have a correct
record of all behaviour at any point in time.
• If a past data entry is tampered, it will make the block
invalid, which both cancels the upcoming transaction
and shows data that was tampered with.

Blockchain Market Overview
Source: World Economic Forum (WEF) Report, 2017
Note
DLT: Distributed Ledger Technology

Image: Melanie Swan

October 2018 Blockchain Essentials 153Credit: Melanie Swan

Credit: Melanie Swan

Potential Applications
157October 2018 Blockchain EssentialsImage: Baltana

158
Final Q & A
Understanding FintechImage: Pinterest

Thank You!
Image: Telindus 159October 2018 Understanding Fintech
Looking forward to catching up again soon
Goutama
Bachtiar
Digitally signed by
Goutama Bachtiar
Date: 2018.10.30
18:55:03 +07'00'
Adobe Acrobat
Reader version:
2019.008.20080

Understanding Fintech Ecosystem and Growth

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