1.2: FinTech For Dinosaurs (Part 1)

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From the course by The Hong Kong University of Science and Technology

FinTech Foundations and Overview

81 ratings

The Hong Kong University of Science and Technology

FinTech Foundations and Overview

81 ratings

Course 1 of 4 in the Specialization FinTech: Finance Industry Transformation and Regulation

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 insight 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.

From the lesson

Introduction to FinTech

In this module (week one), students will gain a multi-dimensional perspective on what FinTech means from the perspective of large firms (and older participants in the industry - e.g. dinosaurs), entrepreneurs, investors, and consumers. Examining what FinTech is, or is not, provides a foundations upon which students can build for better understanding of opportunities and changes.

1.2: FinTech For Dinosaurs (Part 1)8:09

1.3: FinTech For Dinosaurs (Part 2)6:45

1.4: FinTech For Entrepreneurs (Part 1)11:05

1.5: FinTech For Entrepreneurs (Part 2)8:49

1.6: FinTech For Entrepreneurs (Part 3)6:15

1.7: FinTech For Investors (Part 1)7:37

1.8: FinTech For Investors (Part 2)10:04

1.9: FinTech For Consumers10:49

Meet the Instructors

Theodore Henry King CLARK
Associate Professor
Information Systems, Business Statistics and Operations Management Department

Welcome back to our course on FinTech Foundations and Overview

In this session, we're going to be talking about FinTech for dinosaurs

And I'd like to introduce a guest speaker

and a person that I'll be talking to about this topic

who is Veronique, who is a professor here at UST

She's been here more than ten years teaching finance at HKUST

Hong Kong University of Science & Technology, and

has been working in the finance and banking industry since the early 1980s

She gave a presentation here at our university on FinTech for dinosaurs

And I found it an interesting point of view, and opportunity for

thinking, or setting a foundation of what is FinTech?

And why does it matter?

And how should banks or big firms think about it?

So with that, let me turn the time over to Veronique to share some of your

thoughts on this topic of FinTech for dinosaurs

>> Hello everybody

So I'm going to talk about FinTech from the point of view of a dinosaur

because I've been in the industry for over three decades, and

I've seen a lot of changes

And to me, what we now call FinTech is really nothing new

because financial firms have been using technology to improve services as

far back as the industry has been around, which is quite a few centuries, actually

And if you think about it, Paul Volcker

who was a former chairman of the Fed, he was discussing technology

And he said, well, as far as I'm concerned, the most important financial

innovation is actually the ATM, and ATM is a very powerful innovation

I've seen the birth of it

Because it gives you access to financial services whenever the banks are closed

So from this point of view, it's an amazing transformation

that has had a big impact on consumers around the world

Now, when I started working, which was back in the early 1980s and at a bank

and at the time, was the largest bank in the world in terms of assets

What did I have to work with?

We had a big mainframe computer

It used up the space of a huge room, but

it had less computing power than what you have currently in your phone

I had a telephone

Now, this is not a mobile phone

This was a fixed-line phone with a rotary dial, and you picked up

and you dialed, and hopefully there was somebody at the end of the line

One of the most important things that we use was the Telex

Telex machine, think of it as a typewriter with a big roll of paper

And it combined the technology of typewriter and the wire

Telex was used up until early 2000 to

confirm international transactions between banks

We obviously used typewriters, and we were very modern

because we used electric typewriters

And of course, the post office

the post office was used to send documents from one party to another

So this is what I had to do, what this is, what we had to do within the industry

Now, did that make the industry inefficient?

No, we did multibillion dollar transactions just like we did today

So what has happened over all my 20 odd years in banking?

Well, I have witnessed a lot of changes, and

the impact of those technological innovation was multidimensional

One of the important impacts was how technology made things more efficient

To take one example, we started off with typewriters, so

those secretaries would take that dictation, and then type the memos, or

the letters on a machine together with carbon copies

Now, we adapted the Wang machine technology

which was one of the very first word processor, and

it was a big change for all the secretaries

because all of a sudden, it was very easy to make changes to a memo

Which meant that the people dictating were taking less care

and were more prone to do changes

Think about also what the impact is in terms of the jobs

because now you can actually type your memo yourself

You don't actually need to dictate it to a secretary who would then type it

on the typewriter

The second and most spectacular impact of technology is how

technology changed how fast transactions are processed

So when I started, we were using the post office to send documents

And then one day, we had a fax machine

So the fax machine transformed the speed of transactions, because you can then send

information across the world almost instantly

So think about the transaction you do

Let's say I was in Paris doing a deal somewhere in Indonesia, and

I had to send the contract to the lawyers in Indonesia

Well, we had to put it in the envelopes and through the post office

When it got to Indonesia, the lawyer would open the envelope during office hours

then mark up the contract, send it back

Think multiple month

Fax machine?

You put the thing in the machine, it comes out on the other side, and

you have an almost instant response

Think how fast we have moved

But of course today, we're talking even faster

because we are talking about systems like high frequency trading

Algo trading, where the speed is incomparable

In seconds, we do things that would take a year to do

The volume of transaction that we can handle, and the speed at which they

are processed exceeds everything that we have seen so far

The third aspect is information

Now, when I was very young, I had to find the information

Our regulators struggled to find information

If I didn't have the book in the library, where was I going to find the information?

Today, my students google everything

They have access to all the information they need

but they have way too much information

And the source of that information is not carefully vetted

So we have an overload of information

we don't know how to process it, and the perspective is quite different

And think about what it means in terms of regulation

Our regulators, for most of them, come from a generation like mine or

even a generation younger

which is still in this mind frame of I need access to more information

The reality is that they get tons of information

and the challenge is to find which information is relevant

which information can be trusted, and what to do with this information

So what's going on right now?

So we talk a lot about the rise of FinTech, but

a lot of people also talk about TechFin

So what's the difference?

FinTech is basically financial institutions using technology to improve

their processes, TechFin is technology institutions providing financial services

Think Alibaba, Alipay, Tencent, etc.

And of course, when we think of FinTech today

even though technology has been used by financial institutions for centuries

we associate it mainly with the big giants from

China that have totally revolutionized the financial markets in China

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