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ITE 441

Financial Technology

TU BITM · Semester 7 · BITM curriculum and programme regulation

Requirement
elective
Credits
3
Study Guide
6 units available

Chapter notes

Authoritative study guide across 6 syllabus units

Open a unit to read its study notes.

Unit 1: Introduction· 8 LHs· ~10 marks

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Part 1: Core Concepts (2 Marks)

  • Financial Technology (FinTech): Technologically enabled innovation in financial services that could result in new business models, applications, processes, or products with an associated material effect on the provision of financial services.
  • FinTech 3.5 Evolution: The transition from internal banking IT infrastructure (FinTech 1.0: 1866-1967) and digital ATMs/online banking (FinTech 2.0: 1967-2008) to mobile-first startup disruption (FinTech 3.0) and emerging market leapfrogging (FinTech 3.5 in Asia/Africa).
  • Disintermediation: The elimination of traditional financial intermediaries (commercial banks, brokers) by connecting borrowers and lenders directly via peer-to-peer algorithmic platforms.
  • National Payment Switch (NPS - Nepal): Nepal Rastra Bank’s central routing infrastructure integrating domestic payment gateways, QR switches (NepalPay), cards, and digital wallets to settle transactions in NPR without foreign interchange fees.

Part 2: Structural Frameworks (10 Marks)

FinTech Collaborative Ecosystem Model

REGULATORY FOUNDATION: Central Bank

  • (Nepal Rastra Bank - Payment Systems Department)
  • ^
  • Sandbox & Compliance Policies
  • INCUMBENT FINANCIAL ENTITIES| TECH ENABLERS & FINTECH STARTUPS
  • Commercial Banks (Class A)| - Payment Service Providers (PSP)
  • Microfinance & Insurance | - Payment Service Operators (PSO)
  • Core Banking Systems (CBS)| - Open Banking APIs, Biometrics
  • v
  • END USERS: Retail Consumers & MSME Merchants
  • (Financial Inclusion, Digital Wallets, QR Code Payments)

Part 3: Distinction Tables

Basis of Comparison Traditional Banking Infrastructure Modern FinTech Platform
Architecture Monolithic legacy mainframe Core Banking Systems (CBS) Cloud-native microservices with RESTful Open APIs
Customer Onboarding In-person physical branch visits, manual paper KYC Instant digital e-KYC via biometrics and national ID
Transaction Processing Batch settlement during business hours (T+1 / T+2) Real-time gross settlement 24/7/365
Cost Structure High overhead from physical branch networks Low marginal cost per digital transaction

Part 4: Worked Problems & Exam Traps

Analysis of Digital Payment Adoption Drivers in Nepal

  1. Smartphone and 4G Penetration: High mobile internet access across urban and semi-urban hubs.
  2. Regulatory Mandate: NRB directives capping retail bank transfer fees and mandating interoperable QR standards (NepalQR).
  3. Remittance Integration: Direct API pipes channeling overseas worker remittances into domestic digital wallets (eSewa, Khalti, IME Pay).

TU Exam Trap: Do not confuse a Payment Service Provider (PSP) (e.g., eSewa, Khalti - customer-facing wallets) with a Payment Service Operator (PSO) (e.g., NCHL, Fonepay - interbank routing and clearing switches) under Nepal Rastra Bank licensing regulations.