D367 Innovation in Finance - Set 3 - Part 3

Correct Answer: Each block is cryptographically linked to the previous one

Each block contains a cryptographic hash of the previous block, so altering one block would change all subsequent hashes. Combined with distributed copies, this makes tampering extremely difficult to conceal.

Correct Answer: Integrating financial services directly into non-financial platforms and apps

Embedded finance integrates financial services, such as payments, lending, or insurance, directly into the products and platforms of non-financial companies, letting customers access these services seamlessly in context.

Correct Answer: Funds are transferred and available almost instantly

Real-time payment systems settle transactions and make funds available almost instantly, around the clock, improving cash flow and convenience compared with traditional batch-processed transfers that take days.

Correct Answer: Using alternative data to assess borrowers with limited credit history

Machine learning credit models can incorporate alternative data, such as payment and behavioral patterns, to assess creditworthiness for people with thin or no traditional credit files, potentially expanding fair access to credit.

Correct Answer: A unique digital asset recorded on a blockchain

An NFT is a unique, non-interchangeable digital token recorded on a blockchain that certifies ownership of a specific digital or physical asset, unlike fungible cryptocurrencies where each unit is identical.

Correct Answer: Their potential use in money laundering and lack of consumer protection

Regulators worry that cryptocurrencies can facilitate money laundering and illicit finance and that their volatility and limited consumer protections expose investors to significant risk, prompting calls for oversight.

Correct Answer: Allowing different software systems to communicate and share data securely

APIs let different software systems communicate and exchange data in a standardized, secure way, enabling fintech firms to build new services on top of existing platforms and integrate with banks and other providers.

Correct Answer: To securely verify who a customer is during online transactions

A digital identity securely verifies a customer's identity for online transactions and onboarding, supporting KYC compliance, reducing fraud, and enabling faster, remote access to financial services.

Correct Answer: Forecasting future outcomes such as customer behavior or credit risk

Predictive analytics uses statistical models and machine learning on historical data to forecast future outcomes, such as customer churn, default risk, or market trends, supporting proactive decision-making.

Correct Answer: Reduced processing time and fewer manual errors

Automating repetitive back-office tasks, such as reconciliation and data entry, reduces processing time and manual errors, lowers costs, and lets staff focus on higher-value, judgment-based work.