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FTMBA 2023_II Financial Technologies

Course code
MBA FIN635, MBA FIN635 SI
Course type
FT MBA Course
Weekly Hours
2,0
ECTS
2.0
Term
FS 2023
Language
Englisch
Lecturers
Prof. Dr. Besim Burcin Yurtoglu
Please note that exchange students obtain a higher number of credits in the BSc-program at WHU than listed here. For further information please contact directly the International Relations Office.

The financial industry had until recently a very high degree of concentration. This situation is rapidly changing as disruptive technologies enable new forms transacting, reduce the barriers to entry and intensify the competition among financial service providers. New and disruptive technologies are leading to major changes in the realms of payments, lending and borrowing, insurance, wealth management, venture capital. To understand these massive changes, we need to have a good understanding of technological innovations as well as of the economics of the financial sector.

This course studies technology-driven innovations in the financial sector; highlighting the potential role and applications of blockchain, cryptocurrencies, and artificial intelligence in various stages of the financial services industry. Such innovations can potentially disrupt existing industry structures, reshape their boundaries, and change the way firms create and deliver products and services. At the same time, they create privacy, regulatory and law-enforcement challenges.

The framework of the course combines three major building blocks:

(1) Two-sided Markets / Platform Businesses: The rise of FinTechs cannot be solely understood by focusing on advances in technology. Equally important is the structure of many financial markets. In the words of Rochet & Tirole "...many if not most markets with network externalities are two-sided. To succeed, platforms in industries such as software, portals and media, payment systems and the Internet, must “get both sides of the market on board.” Accordingly, platforms devote much attention to their business model, that is, to how they court each side while making money overall."

(2) The Role of Technology: We focus broadly on Blockchain and AI, but treat these terms as broad categories within which many finer classifications are useful (such as smart contracts, machine learning and deep learning methods)

(3) Regulation: The emergence of players that offer digitally enabled financial services poses both opportunities and risks at many levels of analysis. Changes in regulatory frameworks will shape various outcomes and are therefore a necessary ingredient for a sound understanding of upcoming developments in this area.

We study these issues in a format, which combines lectures, case studies, and expert opinions and state-of-the-art practices from the industry.

Date Time
Monday, 19.06.2023 09:00 - 16:30
Tuesday, 20.06.2023 09:00 - 16:30
Tuesday, 27.06.2023 09:00 - 16:30
Wednesday, 19.07.2023 23:50 - 23:55
The students should be able to understand the importance of Financial Technologies (FinTech) within the Financial Services Industry, and also the roles of disruptive technologies such as blockchain and AI in the context of platform businesses and the workings of the regulatory framework.
1. Introduction: Why Fintech?Das, S.R., 2019, The Future of Fintech, Financial Management 48 (4): 981-1007.Dhar, Vasant and Stein, Roger, 2016, FinTech Platforms and Strategy, MIT Sloan Research Paper No. 5183-16.Philippon, T., 2016, The Fintech Opportunity. (Working paper). Manhattan, NY: New York University.2. Financial Systems, Money, and BlockchainDuffie, D., 2019, Digital Currencies and Fast Payment Systems: Disruption is Coming, Manuscript for presentation at the Asian Monetary Policy Forum.Friedman, Milton and Anna J. Schwartz, 1986, Has Government any Role in Money? Journal of Monetary Economics 17(1): pp. 37-62.McLeay, Michael, Amar Radia, and Ryland Thomas, 2014, Money Creation in the Modern Economy, Bank of England Quarterly Bulletin Q1, pp. 14–27.Nakamoto, Satoshi, 2008, Bitcoin: A Peer-to-Peer Electronic Cash System.Narayanan et al, Preface pp 3-22.The Economist, 2015, The Great Chain of Being Sure About Things.The Economist, 2017, Disrupting the Trust Business.Varian, Hal, 2004, Why Is That Dollar Bill in Your Pocket Worth Anything? New York Times (January 15, 2004).3. Blockchains, Capital Markets, and FinTechsDarolles, S., 2016, The Rise of FinTechs and their Regulation, Financial Stability Review 20, pp. 85-92.Foley, Sean and Karlsen, Jonathan R. and Putnins, Talis J., Sex, Drugs, and Bitcoin: How Much Illegal Activity Is Financed Through Cryptocurrencies? (December 14, 2018). Review of Financial Studies, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3102645.Goldman Sachs Equity Research, 2016, Profiles in Innovation: Blockchain.Harvey, Campbell R., 2016, Cryptofinance, Available at SSRN: https://ssrn.com/abstract=2438299.Yermack, David, 2017, Corporate Governance and Blockchains, Review of Finance 21(1): pp. 7–31.4. Machine Learning, Artificial Intelligence, and Deep Learning, and their Applications in FinanceBerg, T., Burg, V., Gombović, A., & Puri, M.(2019).On the Rise of Fintechs: Credit Scoring using Digital Footprints.The Review of Financial Studies,https://doi.org/10.1093/rfs/hhz099.European Commission Joint Research Center, 2018, Artificial Intelligence: A European Perspective. Available online at: https://ec.europa.eu/jrc/en/publication/eurscientific-and-technical-research-reports/artificial-intelligence-european-perspective.Gentzkow, Matthew, Bryan T. Kelly, and Matt Taddy, 2017, Text As Data, Working Paper 23276.Jagtiani, Julapa and Catharine Lemieux, 2019, The Roles of Alternative Data and Machine Learning in Fintech Lending: Evidence from the LendingClub Consumer Platform, Financial Management, 1009-1029.Judea Pearl and Dana MacKenzie, 2018, Chapter 10: Big Data, Artificial Intelligence, and the Big Questions, in The Book of Why – The New Science of Cause and Effect, pp. 349-370.Routledge, Bryan R., 2019, Machine Learning and Asset Allocation, Financial Management, 1069-1094.
Lectures

Guest lectures

Case studies

Exam (60%)

interactive grading elements (class participation, quizzes, case studies) (40%)

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