Our primary goal is to help you to understand FinTech and to become more confident and persuasive in your ability to analyze and make recommendations to executives within the finance industry regarding how to react to these changes. This FIRST MOOC ON FINTECH IN ASIA-PACIFIC offered by HKUST presents the views of several professors from the top business school in Asia as well as perspectives from industry professionals. HKUST has been ranked for many years as the No.1 EMBA program in the world, as the number one Finance program in Asia, and as the top MBA program in Asia by multiple independent rating and review journals and surveys. This course "FinTech Foundations and Overview" offers the combined strengths of HKUST in Business, Finance, and Technology as one the world's leading academic institutions on an important area of technology and business innovations. For learners from outside Asia, this also gives an insight into changes happening in the most advanced FinTech markets of the world, since Asia leads worldwide in FinTech adoption and creative innovations.
2.15: FinTech Business Applications Summary
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Из курса от партнера The Hong Kong University of Science and Technology
FinTech Foundations and Overview
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The Hong Kong University of Science and Technology
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Курс 1 из 4 — Specialization FinTech: Finance Industry Transformation and Regulation
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FinTech Business Applications
The Business Applications of FinTech are essentially the Fin part of the FinTech world, and in this module, we will examine applications across six categories of FinTech, including lending and personal finance, crowd-finding and business financing, payments and retail transactions, equity, trading and investment applications, various types of cryptocurrencies, and banking infrastructure and tools.
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Theodore Henry King CLARKAssociate Professor
Information Systems, Business Statistics and Operations Management Department
Welcome back to our course on FinTech, foundations and overview
In this module, we've talked about FinTech business applications
which I've said is sort of the Fin in the FinTech, the finance side
And we've talked about a lot of different aspects of FinTech
a lot of different ways in which FinTech is used
We've given you a couple of illustrations
Now, it's important to keep in mind, we're talking about
in excess of 5,000 FinTech companies
So in the few companies that we've been able to look at
during these sessions, these are just illustrative examples
In some case, not the most current, but may be the most successful
We tried to pick some larger, or better known examples
as well as some intriguing younger examples
We've talked about lending and personal finance
going all the way back to eLoan, one of the earliest pioneers in the lending
space which was an interesting company because if you remember
eLoan became successful, did very well, was bought out for
big valuation, a big gain for shareholders by a moderately large bank
And that bank over the next several years merge and integrated in that is
FinTech type capabilities, to where that no longer exists today
So an early pioneer in FinTech gone, part of a large bank
That's intriguing
Much like Security First, the world's first Internet banking firm
was bought by a large bank to integrate in and
help them get up to speed early on in
the idea of an online checking account or virtual banking
And so it's not like virtual banking is dead
It's still quite alive and well
But the earliest pioneer in that is no longer in business
because it was successful enough to be bought out for a nice valuation
And the company that followed on from that, it stayed private for a while
The backend of that helped other banks to develop online banking systems
They got into the software side or the tools and infrastructure side
We've talked about crowd-funding and business financing
And businesses have been doing financing in alternative ways, or
creative ways, for a long time
So this isn't entirely new, but the scale of it, and
the scope of it, is astonishingly new
I can reach out to the world and find people to invest in my new business idea
or to lend me capital from all over the planet
This, we couldn't do before
This was hard
And so we've reached a point where you come up with a creative idea
You don't have to just go to a couple of VCs
You can go to the world and you can find angels out there willing to pony up some
cash or even small investors willing to fund your new movie or
your new creative game or your new idea or your art
So crowdfunding can be both large and small
And it opens up huge opportunity for
bundling ownership in a company with ownership of physical or
tangible products or services or social welfare and goods, as well
So crowdfunding is a big opportunity to do new things that we
couldn't have done before
Payments in retail transactions
Maybe you haven't noticed this in your life
Maybe your life has not turned upside down because of new payment systems
But if you live in China, and you have looked over the past five years
you will say, we went from a country of most people
using cash over a five-year period where any
kind of digital payment or including credit cards, debit cards were rare
They just weren't used that much, to where 63%
of the population are using electronic payments of some sort
And they're using their phone to pay for taxis
groceries, rent, utility bills, many other things
It's just the normal way to pay for things
just like we would think of a bank account as a normal way to pay for things
But you would rather have your WeBank
than to have a traditional bank and not have electronic payment systems
And so, these retail transactions are being facilitated by this, and
the cost is also declining a lot, these new digital wallets
Some of them are expensive and some people say
I don't like PayPal, a dominant payer because they're too expensive
Well, I don't know if you remember what your traditional bank might have charged
you to change currency or your traditional bank might have charged you for something
Maybe you're critical of PayPal because you think their fees are too high
But that’s just because you are excited about some other payment systems that has
lower fees, try going back to where you were five or ten years ago and
look how much you would pay to do anything in transferring funds
Now, there is something to be said for large transfers, maybe cheaper
to do with a funds transfer, a wire transfer between banks than using PayPal
But you could also argue that using a crypto-currency might be a whole lot
cheaper than a wire transfer for a large funds transfer
So, at any rate, payments and
retail transactions being facilitated by a whole lot of new service providers
and some of them having very, very good credibility with consumers
People trust Apple more than they trust their bank
And so Apple Pay is gaining traction, gaining popularity, and
people say, I like this
Equity, and trading, and investments, more and more stock trading, more and
more retail transactions are moving into alternative service providers
Some of which, like Robinhood, are charging no fees
They're making money off the interest you put in the account and they say
that's enough
You say, well, I used to have interest with they might keep that, but
they would also charge me a lot
Well, welcome to the new world fees are gone down low
The cost of ROBO fund is much cheaper than the cost of human advisor refund
The cost of index trading funds is way down
The cost of trading in general is way down
E-Trade turned brokerage firms on their head and said, holy cow
those commissions are so light, and they're lighter now than they were then
And so investments, trading, we also see the advent of algotrading or
high velocity computer program directed trading, which matters
It's not the majority of trades, but it's enough trades to
where many computer trading algorithms or based firms are making money
Some are not
Some have gone by the wayside
But some are making very good money and mathematics can matter in trading and
investments and being very, very fast can give you a significant advantage
And so that's a plus of ROBO trader or ROBO executor of code
can trade thousands of times faster than the fastest of humans
So you could trade based on your algorithm, faster than you can even
think about whether you should trade, as a human being
Cryptocurrencies, big opportunity
Big risk, big reward
Now, one of the intriguing things about cryptocurrencies, if you remember in week
one, or our first module, we talked about the investor perspective and
Joshua was with us for cryptocurrencies, he was also with us in
our first module talking about investor perspective and FinTech and why it's fun
Crytpocurrencies are a roller coaster
They're going up, they're going down
They're highly volatile, they're very risky
And if you love that risk, if you love the Batman ride at Six Flags or
Magic Mountain, you probably will like cryptocurrencies as well
because they're scary but they're also fun in some ways
If you really enjoy going to a casino, you may really
enjoy the challenges and opportunities and risks of a cryptocurrency
I'm not saying they're all gambling, I'm saying there's fundamental value, but
the valuation is so volatile that they feel at least half gambling
And maybe half some fundamental value which may be there long term
The good news about cryptocurrencies is that most of them limit the amount
of currency that can be created, and this is one of their claims to fame
is that it can't be inflated away the way a government
issued currency might be or the wrong politicians in office
And we're not saying that all governments are bad, or that all regulators are bad
but we're saying there's a tendency for human beings to get a little loose
with their limitations and to want to inflate away a currency
And therefore we like gold or
we like cryptocurrencies as skeptical investors who are skeptical of government
I'm skeptical of government, but I'm also skeptical of cryptocurrencies, as well
At least in their current incarnations and current valuations
So I think that it's helpful to have a sense of skepticism but
not to dismiss something that does have fundamental value
Blockchain is real
And I suspect that many of our cryptocurrencies today
will still be with us in 10 or 20 years
I'm not in the camp that they're going to be worth 1,000 times what they are today
I do not believe that's the case
But I will become much more a believer in cryptocurrencies
if I see these growing at 5% a year for the next 3 years
I will like that as a currency and that's a model that I could get behind and
be enthusiastic about
If I see them growing, remaining as volatile as they have been over the past
two years, I think I'll stay on the sidelines and see what are those ends up
Finally, infrastructure tools, logistics, other capabilities
there's many things enabled by FinTech technologies
Many things that are touching upon the FinTech market space, or
many tools for enabling better banking or better infrastructure
some of them by startup, some of them by large institutions
They're related to or
part of the application space of FinTech as broadly perceived
They're not consumer oriented, they're not small business oriented, but
they are going to enable
Fundamental changes in our society and
fundamental changes in how we deliver financial services into the future
So that's it
We've looked at these applications and in our next module, we're going to look
at the underlying technologies that make all of this FinTech innovation possible
Thank you
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