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43 GenAI in Banking & Finance : Machine Learning and Supervised Learning in FinTech

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Machine Learning and Supervised Learning in FinTech Mathematical Foundations with Business Interpretation 1. Introduction The rapid digitization of financial services has fundamentally transformed how decisions are made in banking, payments, lending, and investment management. Traditional rule-based systems—where developers explicitly define decision logic—are increasingly insufficient in dynamic, data-rich environments. Fraud patterns evolve, customer behavior shifts, and market volatility changes constantly. Machine Learning (ML) addresses this challenge by enabling systems to learn from historical data and make predictions without being explicitly programmed for every possible scenario. In mathematical terms, ML attempts to approximate an unknown function: f : X → Y f: X \rightarrow Y where: X X X represents input variables (features) such as income, credit score, transaction amount Y Y Y represents the outcome (loan default, risk score, predicted return) The goa...
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42 GenAI in Banking & Finance : Exploratory Data Analysis (EDA) in the Context of FinTech

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Exploratory Data Analysis (EDA) in the Context of FinTech Understanding Financial Data Before Modeling and Decision-Making 1. Introduction In the FinTech ecosystem, data is the most valuable asset. Every digital interaction—payments, lending, investments, insurance, and customer onboarding—generates vast amounts of financial data. However, raw data by itself has limited value. Before advanced analytics, machine learning, or artificial intelligence models can be applied, it is essential to understand the structure, quality, and behavior of the data. This preliminary and critical step is known as Exploratory Data Analysis (EDA) . Exploratory Data Analysis refers to the process of examining datasets to summarize their main characteristics, identify patterns, detect anomalies, and uncover relationships. In FinTech, EDA plays a foundational role by bridging the gap between raw financial data and reliable, business-ready insights. Poorly understood data can lead to inaccurate models, re...
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41 GenAI in Banking & Finance : Digital Payments as a Business Function in FinTech

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From Physical Instruments to Real-Time Digital Platforms 1. Introduction Payments constitute the most fundamental business function within any financial system. Every economic exchange—whether between individuals, businesses, or institutions—ultimately requires a reliable mechanism for transferring value. Historically, payment systems evolved slowly, constrained by physical instruments, manual processes, and geographic boundaries. However, the emergence of FinTech and the digital economy has transformed payments into a fast, secure, and always-available digital service. In the FinTech ecosystem, digital payments are no longer a back-office banking operation. Instead, they function as core infrastructure , enabling commerce, financial inclusion, platform-based business models, and innovation across lending, investments, and insurance. To understand this transformation, it is essential to examine the evolution of payment instruments—from cash and cheques to modern real-time digital ...
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40 GenAI in Banking & Finance : The Ten Building Blocks of a Sustainable Digital Financial Ecosystem

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The Ten Building Blocks of a Sustainable Digital Financial Ecosystem Abstract The growth of Financial Technology (FinTech) is inseparable from the broader transition toward a digital economy. Unlike traditional process-driven economic systems, the digital economy relies on data, connectivity, and trust among participants who often interact without physical presence. This paper examines the ten foundational building blocks required to enable FinTech development within a digital economy. These building blocks include trusted digital identity, data hubs, consent architectures, public digital infrastructure, data governance policies, scalable computing, open architectures, digital talent, experimental policymaking, and cybersecurity. Together, these elements create the institutional, technological, and regulatory framework necessary for secure, inclusive, and innovative financial services. Keywords Digital Economy, FinTech Building Blocks, Digital Identity, Consent Architecture, Open APIs,...
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