FinTech - Shaping the Financial World mit course finance technology fintech

Introduction and Key Technological Trends Affecting Financial Services

Financial World

  • Intermediates money and risk
  • Functions
    • Credit
    • Investments
    • Risk transformation
      • Insurance
    • Capital markets and price discovery
    • Advice
  • Sectors
    • Commercial banks/credit unions
    • Asset managers and investment vehicles
    • Insurance companies
    • Investment banks and brokerage firms
    • Exchanges and clearinghouses
    • Financial advisors
  • Data
    • The new oil
    • Investing, market making, marketing, etc.
  • Funding and risk management
  • Risks
    • Credit, funding, liquidity, market
    • Accidents
  • User experience and user interface
    • Tech marrying the financial industry isn't new but the first wave (banking apps, etc.) had pretty bad UI/UX


  • First form of digital money is ~140 years old
    • COVID-19 will likely accelerate this digitization (less paper money, etc.)
  • Buy vs. build
  • Examples of fintech of our time

Fertile Ground and Disruptive Potential

  • The financial industry is ripe for disruption/modernization
    • Digitization of money, securities, credit, etc.
    • Increase in customer data
    • More computational/analytical power
    • Increased public acceptance of technology
  • Potential areas
    • AI for managing risk and targeting products
    • Improving the UI/UX of existing financial products
    • Better inclusion and tailored services
    • Micropayments
    • Efficiencies to increase margins in the financial sector


  • Big finance
    • Fortresses with moats
  • Big tech
    • Data, networks, activities (DNA)
    • Commercializing data
  • Startups
    • Disruptive innovators
    • More flexibility
    • Asymmetric risk takers
      • Not protecting a business model (eg. credit card business)
  • Official sector

Required Readings

Study Questions

  1. What are the major technological trends materially influencing the provision of financial services?
  2. How is the competitive landscape shaping adoption of these new technologies around the globe?
  3. How are FinTech start-ups and Big Tech firms competing and cooperating with incumbents from big finance? How has Big Finance reacted?
  4. What do you wish to achieve in this Fintech course?