Risk Management in the Era of Blockchain: A Warning and Welcome for FinTech

Risk Management in the Era of Blockchain: A Warning and Welcome for FinTech

Mohammed Fisal Abu Khaled
Copyright: © 2020 |Pages: 21
DOI: 10.4018/978-1-7998-0039-2.ch007
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Abstract

This chapter intends to document the various ways that the nascent technology, blockchain, and other forms of distributed ledger technology (DLT) can provide both increased and decreased risk as well as offer FinTech industries a fertile environment to pursue key technological advancements that can help shape almost every facet of the financial world. Issues of trust, transparency, and privacy will be explored as it pertains to the execution of blockchain technology within financial sectors. Strengths and weakness will be explored within regulations, legal environments, risk management, and the environment. Based on the findings of a comprehensive literature review, possible solutions and recommendations will be provided for governmental agencies, regulators, and users of financial services with a special focus on Islamic FinTech. Future research directions will also be shared that can assist Islamic FinTech.
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Background

Financial technology has always been a part of finance. Long ago, the ‘technology’ component of this pairing consisted of discovering new ways of securing funds and transactions such as coinage. As soon as money was invented as a means to facilitate bartering, technology has needed to keep up with counterfeiting. As such, those behind the economic purse strings needed ways to ensure that the overall institution was safe and secure because, above all else, the economy, financial institutions, and the processes between those individuals and organizations taking part, needed to be trustworthy. Trust is an implicit cornerstone of the financial world. Without trust, all components of the economy would crumble and become meaningless.

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