A Contract Service Provider Model for Virtual Assets

With the recent rise in the cost of transactions on blockchain platforms, there is a need to explore other service models that may provide a more predictable cost to customers and end-users. We discuss the Contract Service Provider (CSP) model as a counterpart of the successful Internet Service Provider (ISP) model. Similar to the ISP business model based on peered routing-networks, the CSP business model is based on multiple CSP entities forming a CSP Community or group offering a contract service for specific types of virtual assets. We discuss the contract domain construct which encapsulates well-defined smart contract primitives, policies and contract-ledger. We offer a number of design principles borrowed from the design principles of the Internet architecture.

The Impact of Fintechs on Financial Intermediation: A Functional Approach

We analyze fintechs and their impact on the traditional financial system from a functional perspective. Following the approach suggested by Merton (1995) [A Functional Perspective of Financial Intermediation, Financial Management 24(2), 23–41], we show how the six core functions of financial intermediation are affected by the technological developments. This analysis provides a new perspective on the future of financial services and their regulation.

Fintech Lending and Mortgage Credit Access

Following the 2008 financial crisis, mortgage credit tightened and banks lost significant mortgage market share to nonbank lenders, including to fintech firms recently. Have fintech firms expanded credit access, or are their customers similar to those of traditional lenders? Unlike in small business and unsecured consumers lending, fintech mortgage lenders do not have the same incentives or flexibility to use alternative data for credit decisions because of stringent mortgage origination requirements. Fintech loans are broadly similar to those made by traditional lenders, despite innovations in the marketing and the application process. However, nonbanks market to consumers with weaker credit scores than do banks, and fintech lenders have greater market shares in areas with lower credit scores and higher mortgage denial rates.

Blockchain Use Cases for Inclusive FinTech: Scalability, Privacy, and Trust Distribution

Few blockchain centric projects have gone beyond their white paper or proofs-of-concept. While many have fallen below expectations and failed to address the fundamental issues of scalability, privacy, and trust distribution, there are a few “imperfect” projects that are making an impact on society. We describe the lessons learned from three projects and highlight their “improvisions” in achieving their vision of serving the underserved, and identify areas of possible improvements. Our research has shown that mass adoption of blockchain technology will accelerate in financial industry and supply chain with private permissioned blockchains, but these e-inclusion projects using “Inclusive” Blockchain will take a longer time with OnChain/OffChain complexities. A long-term view is needed to build a Noah’s Ark as the rush to build the Tower of Babel to harness short term gain may not bring net benefits to the economy and society.

The Age of FinTech: Implications for Research, Policy and Practice

FinTech is inducing changes in how financial services (FS) are perceived, developed, promoted, delivered and consumed. Future of FinTech, however, is rooted in deliberate integrated actions to improve framework conditions related to consumer trust, regulation and scalability. Building on limited scholarship, this paper identifies the building blocks for the future of FinTech and provides prescriptive areas of focus to guide research, policy and practice. In sum, the purpose of the paper is to serve as a catalyst and a call for an integrative approach in developing a common understanding and interpretation of FinTech as a socially-constructed phenomenon at the intersection of research and technology management.

Toward a Public-Key Management Framework for Virtual Assets and Virtual Asset Service Providers

The recent Financial Action Task Force (FATF) Recommendations define virtual assets and virtual asset service providers (VASPs), and require under the Travel Rule that originating VASPs obtain and hold the required and accurate originator information and the required beneficiary information on virtual asset transfers. In this paper, we discuss the notion of key ownership evidence as a core part of originator and beneficiary information required by the FATF Recommendations. We discuss the approaches to securely communicate the originator and beneficiary information between VASPs, and review the existing standards for public-key certificates as applied to VASPs and virtual asset transfers. We propose the notion of a trust network of VASPs in which originator and beneficiary information, including key ownership information, can be exchanged securely off-chain while observing the individual privacy requirements.