4.1. Introduction to regulation and payment services

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From the course by Moscow Institute of Physics and Technology

Capital Markets and Financial Institutions – How to Survive Them

1 оценка

Moscow Institute of Physics and Technology

Capital Markets and Financial Institutions – How to Survive Them

1 оценка

Course 1 of 5 in the Specialization Understanding Modern Finance

Capital markets and financial institutions are all around us. This is an enormous industry in which powerful players oftentimes challenge investors and the public at large and expose them to significant risks. This Course provides for the deep understanding of the core ideas, concepts, and mechanisms of the modern capital market in a learner-friendly way. We will analyze the market’s most fundamental problems, realize the intrinsic interests of the market participants, reveal the true meaning of certain financial terms, and uncover credible signals of the likely behavior of economic agents – all that with little math and a lot of fun. The learners will be much better positioned with respect to the financial environment. They will see through the financial news, reveal the risks of the financiers’ wishful thinking promises, and protect themselves against dangerous adventures. The learners will get the opportunity to use the obtained knowledge, skills, and understanding for the successful professional career in the financial and other business areas, as well as in their day-to-day life.

From the lesson

Bank Regulation and Reform. Payment Services. Mobile Banking. Bank 3.0

Week 4 of the Course consists of two parts. The first part is devoted to the discussion of challenges and development of banking regulation. We consider the S&L market crash of the 1980’s as a trigger to the initiation of the worldwide regulatory movement. You will get introduced to the Basel process as the basis of the modern bank regulation. The second part of Week 4 shifts focus somewhat. We will talk about the payment services that are tantamount to banking for the majority of population, at least in the developed world. We will discuss how the fast development of IT technologies, the Internet and the social media influences banking business. But we will see that the most important functions of banking – asset monitoring and liquidity creation – do not disappear but take a new shape. At the very end we will drop a few words about private banking – a very specific area of banking services for high net worth individuals.

4.1. Introduction to regulation and payment services4:20

4.2. The S&L crisis of the 1980’s. Zombie S&L’s. The sources and reasons of bank regulation8:14

4.3. Bank regulation (1) – nature, goals, and importance13:09

4.4. Bank regulation (2) – mechanism. The Basel Accords14:46

4.5. Payment services – history, development, and technology5:37

4.6. Mobile banking (1) – technology and services. Bank 3.011:21

4.7. Mobile banking (2) – loans and monitoring at Bank 3.012:42

4.8. Private banking. Mobile banking and traditional banking – from conflict to synergy7:52

Meet the Instructors

Konstantin Kontor
Director and Professor of Finance and Strategy
American Institute of Business and Economics (AIBEc)

Welcome, everyone, to the fourth week of our course about capital markets and

financial institutions.

In this short introductory episode, I will tell you what we will do throughout this

week because it's kind of different in its structure.

We will cover, not one major topic, but

basically two topics that are just somewhat connected.

Well, first of all, in our first part, we will discuss bank regulation.

That is what follows from our discussion of the last week.

And we will discuss, first of all, the trigger for the modern bank regulations.

This was the S&L crisis of the 80s that sort of shows some

details about how this moral hazard problem resulted in a large scale

problem in capital markets that cost more than $0.5 trillion to US taxpayers.

And then we see that ever since the regulatory bodies

introduced some kind of a process by which banks started to be regulated.

And this process is developing.

It's sort of lagging behind new challenges.

But it's when these challenges are recognized,

then the process introduces new instruments, new requirements, new terms.

And still the developing process is sort of adequate to what’s going on.

That, unfortunately, does not prevent a major crisis from happening.

But at least, to some extent,

people do learn on the lessons of previous crises and

they provide adequate measures to mitigate them in the future.

And then we will change the topic a little bit.

I will talk about something that so far seems to be, in the first place,

not very much related to what we talked about before.

Namely, at a first glance it seems to be far from problems caused

by private information.

But on the other hand, we will see that this is not so.

But we will talk about the thing that for the majority of the people watching

this course, and not only them, is the face of modern capital market and

the face of a modern financial institution.

We will talk about payment services and

we will talk about modern banking in the era of the Internet and social media.

So we will follow the very well-known book of the British specialist,

Brett King, who published the book Bank 2.0 and then Bank 3.0.

So that is all about this Bank 3.0.

And we will see that although at a first glance, it's

far from what we talked about before, but actually it's very much linked to that.

And we will see that the things that we studied in this simple arithmetic,

namely, monitoring private information and others.

They, although are not on the surface of this recent development,

but they have not disappeared from the scene.

And we will wrap up the week by studying some other special services

provided by banks, namely private banking, as a process by which

when an individual starts being just a regular depositor at the bank.

And then, hopefully, becomes much wealthier.

And at some point in time, starts buying services from financial

institutions that are, again, very

seriously based on the need to cope with these private information problems.

So we will see, again,

that even if it seems at the first glance that we are far from that, but

our good old friends, problems caused by private innovation, will catch up with us.

And again, say [SOUND], please do not forget about us,

otherwise you will be in trouble.

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