The document discusses innovations, disruptions, and transformations in financial markets. It notes recent scams and non-performing assets that have impacted the financial sector. New financial instruments and regulatory changes by SEBI are aimed at innovation. Technological advances have increased connectivity and allowed for faster transactions. However, challenges remain around access issues, regulatory uncertainties, and security concerns like fraud and money laundering with digital payments and cryptocurrencies.

1. “Innovation, Disruption and
Transformation in Financial Markets”
by
Prof. (Dr.) Saurabh Agarwal
Ph D (FMS, Delhi University), M. Phil. (DSE, DU), M. Com. (DSE, DU), B. Com.
(H) (SRCC), UGC (NET)
Professor of Accounting & Finance & Dean, Indian Institute of Finance
Associate Editor, Finance India
Member, Governing Body, CBWE, Ministry of Labour and Employment, GOI
Member, Managing Committee, ASSOCHAM
sa@iif.edu
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2. Current Status
• Scams
– Nirav Modi - LOUs
– NPAs
• SEBI
– New Instruments
– Innovations
– Disruptions
• Way out
– Size & Magnitude % of people connected
• Rise of Tech Giants like Facebook, Amazon,
Google, Paytm
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4. Introduction
• Financial Markets and Institutions exist to
mobilize savings and facilitate the exchange of
goods and services
• Mere Knowledge of financial literacy or access to
Financial services does not make a person a user
of financial service
• Voluntary and involuntary exclusions need to be
reduced.
• The availability of finance determine growth, job
opportunities and development in an economy
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5. Introduction
• Relationship banking has been given an edge to
the banks over market and non banking financial
institutions in lending.
• Corruption has been the biggest impediment for
the growth of lending activities in India.
• Asset based lending such as factoring, equipment
financing, leasing, trade finance, fixed asset
lending are financial innovations that have
effected the manner in which finance has
innovated itself .
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6. • Limitations of Traditional Banking System
– Speed
– Service Availability
• Now, Matter of Hours to complete transaction
• Connectivity and Functionality enabled by communication
and computing technologies have allowed consumers
– to exchange messages,
– place orders,
– make comparisons,
– take instant decisions,
– obtain digital payments and
– engage in activities in real time
– Automated Credit Scoring using advanced analytics & massive
data
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Innovations in Financial Markets

7. Innovations in Financial Markets
• Promise growth
• More jobs and Services
• Make business more productive
• Help Government deliver public services
efficiently
• Improve poor record of government initiatives
• Create better transparency and accountability
• Less corrupt world
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8. Innovations in Financial Markets
Challenges
• More than 2 billion people have no access to any
financial services today
• About 59% Men and 50% women in developing
countries have an account with a regulated financial
institution
• 60% of the World Population is still Offline
• 7.4 Billion total Population has access to information
and communication Technologies
– 1.1 billion have access to high speed internet
– 3.2 billion total Internet Users
– 5.2 Billion mobile phone users
– 7 Billion within the coverage of mobile phones
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9. Innovations in Financial Markets
Challenges
• Need for Better Connectivity
• Safe Internet
• Digital divides of age, gender, income, education,
financial literacy continues to haunt the
accessibilities of innovation
• Regulatory Uncertainties
• Congestions on Digital Platforms
• Vested interest continue to create concentrations
in different segments of the industry.
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10. Innovations in Financial Markets
• Cash Subsidy Transfers; Jan Dhan Yojana;
Mobile/Aadhar based banking enabled Financial
Inclusion to Common Man
• Major Innovations in Digital Payments
– Mobile Money Systems
• Bharat Interface for Money (BHIM)
• Unified Payment Interface
• *99#
• Issued RuPay Cards
• Aadhar Enabled Payment System
• Bharat Bill Payment System
– Credit and Local Currencies are alternative units of account
– Digital Currencies
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11. Innovations in Financial Markets
Concerns
• Increasing number of online frauds
• Cyber Attacks
• Massive Theft of important financial information
• Money Laundering (Cyber Laundering)
• Terrorist Financing
• Illegal Money (Smuggling/Drug Trafficiking/Flesh
Trade) transfers
• Proceeds of other Illicit financial flows (Tax Evasions
/ Corruption ) transferred easily
• Cyptocurrency
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19. Thank you
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