Finance’s Technological Frontier: Panel Highlights from Emerging Researchers
In an afternoon session on the future of technology in the finance sector, speakers from impak Finance, Yuser, and Royal Bank of Canada (RBC) shared their views.
Mayur Joshi and Andrew Sarta, PhD candidates at Ivey Business School, summarize this important conversation and offer their analysis.
FinTech takes many forms
Financial technology (FinTech) is a diverse set of digital tools that aim to improve finance activities and sometimes drive the financial activities. Session panelists showed the breadth of financial technologies and of the companies that deploy them.
- RBC is a banking and financial behemoth offering products that help consumers achieve their financial goals. Within 5 years, all RBC’s financial transactions will likely be influenced by artificial intelligence, said speaker Martin Wildberger (Executive Vice President of Innovation and Technology, RBC.)
- impak Finance is a social enterprise that’s using crypocurrency to encourage consumers to purchase from companies whose products create positive impact on society, according to speaker Boris Couteaux (Head of Business Development, impak Finance).
- Yuser is a new social media platform, built on blockchain technology, which enables professionals in the creative industry to own their intellectual property and earn money from it. Eunika Sot (Chief Operations Officer, Yuser) shared her company’s experience.
Despite the diversity of the fintech ecosystem, panelists agreed on two points: Collaboration is critical, and each technology has both promise and responsibility.
In addition, as session observers, we noticed that while conversation focused on the FinTech trajectory, the idea of a long-term destination seemed to be missing, particularly in how technology will evolve. Ultimately, how will financial technology create positive impact for society in the decades to come?
Collaboration — within and across firms — is critical
Tech development and deployment is an interdisciplinary endeavour, said Wildberger, Sot, and Couteaux. Yuser, for example, employs staff with skills in finance, math, technology, media, marketing, and other fields, and requires these individuals to work closely with one another. In fact, Sot herself does not have a blockchain background, despite being Chief Operations Officer for a company dependent on the technology. Her background is in the arts, but she says that her curiosity and ability to work with technical colleagues has enabled her to learn what she needs.
Start ups and large companies also have complementary roles in bringing new technologies to market, the panelist agreed. Start ups are agile, capable of developing and testing new technologies quickly. Large organizations, such as RBC, can provide financial support to start ups. They also have the benefit of scale – they can leverage their brand to build trust in new technologies and deploy them to existing customers.
As observers, we believe that there exists an opportunity for business schools to provide a platform for developing a collaborative ecosystem. Such an ecosystem would ensure that both start ups and large corporations engage in coopetition and develop sought-after capabilities from one another. Forums whereby start-ups and large corporations could debate and develop ideas appeared to be lacking when listening to the speakers. Business schools often have relationships with both start-ups and large corporations (through alumni or recruiting efforts) and can thus bring parties together to co-develop financial technologies for positively impacting society. This conference is a model for such engagement, which can also occur through guest speaking arrangements in the classroom or speaking engagements that bring alumni from both networks together. Industry-academia partnerships are common in other technology sectors (e.g., artificial intelligence (AI), biotechnology, etc.) and appropriate with pervasive penetration of technology in business sectors.
Promise comes with responsibility
Every tool can be used for good and evil, said Wildberger. Financial technologies promise positive social impact. But those who implement them also have an obligation to ensure technologies are used responsibly.
Here’s how two companies are navigating this balance:
impak Finance's promise is to connect customers with businesses that create positive social impact. For each purchase made at an impak business using their custom cryptocurrency (impak Coin), customers get a reward and the business doesn’t have to pay transaction fees.
Couteaux says that to uphold its social responsibilities, impak Finance is building a governance structure that will prevent mission drift and ensure the company’s data and infrastructure is always used for good. impak Coin is also Canada’s first legal initial coin offering and Couteaux says the company has worked closely with regulators to ensure social obligations are fulfilled.
RBC’s promise is to enable clients to fulfill major financial milestones, such as buying a house and getting an education. Wildberger sees technology improving RBC’s ability to support client goals. For example, AI synthesizes huge amounts of investment data to help financial advisors make better decisions.
Wildberger emphasized RBC’s responsibility to provide transparency and cyber security. Transparency requires being clear about which data are collected and how they are used and the models that govern artificial intelligence. Cyber security protects clients’ money and data. Wildberger believes cyber security is best achieved through technology. Given the computing power available to today’s hackers, he doesn’t believe humans can detect and respond to these threats without leveraging technologies.
Is Fintech missing a long-term destination?
As session observers, we noticed that the idea of a destination was missing from the conversation. There was no talk of a clear, long-term vision for how financial technologies will be harnessed for the public good. Panelist said that human-beings tend to be biased toward the short-term and they suggested that thinking long-term was a losing battle.
Perhaps the tension between the short-term and long-term doesn’t have to be so pronounced. And perhaps business schools could help to bridge these time frames by not speaking about short-term versus long-term but by speaking about the short-term needed to get to the long-term. The path is what becomes important. Every destination has multiple routes. At least thinking through the routes ensures that every step taken in the short-term leads to something in the long-term.
About the authors
Andrew Sarta is a PhD Candidate in Strategy at Ivey Business School. His research focuses on the implications of behavioural decision-making for organizations situated within industries undergoing technological change. More specifically, he focuses on the role of timing and speed in strategic decisions as firms adapt in the midst technological uncertainty. His research context focuses on the emergence of financial technology (FinTech) broadly within the financial services industry with a particular emphasis on the emergence of digital advice (e.g. Robo-Advisors) in the wealth management sector.
Mayur Joshi is a PhD Candidate of Information Systems at Ivey Business School. His research focuses on the implications of digitization on various aspects of organizing, business and economy. Specifically, he examines the role of institutions in digitization of economy, incumbent firms’ responses to digital disruptions market, and impact of digital channels on environmental scanning function of organizations. His research context includes FinTech as well as other High-Tech industries.