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 number one 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 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 students 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. This course (FinTech Foundations and Overview) is part of the HKUST FinTech specialization, there will be 3 other courses in the specialization including FinTech Security & Regulation (RegTech), FinTech Risk Management, FinTech Innovative Disruption: Implications for Society. The FinTech specialization will be launched in Fall 2018, stay tuned!
3.10: Smartphones & Customer Tech (Part 1)
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From the course by The Hong Kong University of Science and Technology
FinTech Foundations and Overview
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From the lesson
The Tech of FinTech
The Technology enabling and supporting FinTech is important to understand, and this module provides a brief introduction to each of the areas of technology that enable FinTech business changes, including identity and privacy technologies, blockchain and encryption, big data analytics, AI and automation, and consumer tech innovations. This introduction is designed to be at a level appropriate for business managers or students of business, and is not intended to excite or engage tech geeks.
Meet the Instructors
Theodore Henry King CLARKAssociate Professor
Information Systems, Business Statistics and Operations Management Department
Welcome back to a course on FinTech: Foundations and Overview.
In this session, we'll be talking about FinTech technology in
the area of smartphones and other aspects of consumer tech.
Now, we talked a lot about
various different technologies that have enabled many FinTech applications.
One of the most important technologies to enable FinTech in the evolution of FinTech,
the emergence of FinTech and the booming growth of FinTech,
companies and applications is the advent of the smartphone.
The smartphone was introduced by Apple and Samsung at about the same time,
Android and Apple operating system at about the same time,
almost in the same year,
as the financial markets melted down.
So, in 2008, we had a crisis,
a crisis of the banking industry,
a crisis of the finance world across the globe.
It led to a global recession,
a downturn, difficult times,
but that was the beginning of smartphones as well,
and that led to an opportunity, a booming opportunity.
As smartphones proliferated, and people said,
"We love having the power of a supercomputer in our pocket,
the power of a old mainframe computer at our
fingertips," this transform the feeling of users about computing power.
I've heard some young people express this that,
"Our parents didn't have tech."
Well, they had tech.
They just didn't have a smartphone.
But to some young people,
that feels like the same as tech.
So, if you were to say FinTech,
maybe what you should say is a bank on your phone.
So, if you're not catching the power and the capabilities of smartphones,
you're missing a big piece of this revolution.
So smartphones matter.
They're almost ubiquitous today,
very broad across society.
The prevalence of smartphones across the planet is of
the scale and maybe even larger than
the prevalence of bank accounts for people across the planet.
This is very, very broad.
People in villages without banks may well be
using smartphones and in many cases are and are using them as substitutes for banks.
So, smartphones are ubiquitous,
and they're very, very powerful.
This capability brings to life
new capabilities on the fingertips
and the convenience of users that didn't used to exist.
So, ignoring the power and the transformation of smartphones in society is
like ignoring the capabilities of
an ATM to change the relationship between a customer and a bank.
An ATM change the nature of banking in many ways,
made it much more convenient, much more powerful.
It was an enormous transformation and the feeling,
interaction, accessibility and convenience of banking.
Smartphones are enormous, and they're transforming
the power and the feeling of information goods in general.
While banks were busy worrying about surviving,
and worried about new regulations,
and worried about a global meltdown,
many apps providers were having fun developing new games,
new marketing capabilities new different apps of variety of types.
Then they said, "Well, what about finance?
Can't we change finance?"
New apps came out in finance.
A lot of new FinTech apps leverage smartphone capabilities.
Even things you might not have thought of as
smartphone-enabled are enabled in their popularity and convenience.
When you look at the success of a cryptocurrency,
like bitcoin, it couldn't have happened without smartphones.
You could do bitcoin without smartphones, and they did.
That's eminently possible, but it is nowhere near as convenient.
It is impossible to have the popularity, the growth,
the broad acceptance that we have without the ease of using a smartphone.
That's true of many,
many different types of FinTech apps.
We had branchless banking long before there were apps or smartphones.
Ten years before there were smartphones,
we had branchless banking.
Banks had already developed digital payments,
digital checking accounts, online checking accounts.
Not a problem, banks were able to do that and adapt well.
To some extent, I have fallen into this trap.
I teach a course in e-commerce,
and I'm thinking about e-commerce applications,
and I'm working with a group of students coming up with a brilliant idea.
I said, "That's a lot like what this other company is doing.
So you need to differentiate your proposal for
your new business idea from what this other business is doing."
A young student looks at me and says, "Oh, no, no.
That's a website. We're an app."
I thought, "So what?
Website, app, same thing."
But it's not, it's not at all to the end user.
You may look at an app which is easy to use and say, "That's phenomenally different."
That's like saying a branch teller does the same thing that an ATM does.
Well, that's true, but I might 10 times more prefer
to interact with an ATM than I would a person,
particularly if there's a line in front of that person.
My user experience is entirely different.
Both give me cash,
both do the same thing.
But the feeling as a user is quite
different between dealing with a person at a branch window,
which may or may not have a line and an ATM,
which may or may not have a line.
So, but the user experience in general is different.
The convenience is different.
So an app is a different world to many, many users.
It's just not the same thing.
I kind of missed that at first.
I've come to recognize that the feeling of an app,
the convenience of an app,
the value on app is transformative enough to defeat
a similar e-commerce type app that's on
a website if they're not migrating to a new more flexible capability.
So, banks may be doing things with them,
maybe doing things online,
maybe doing things they think are advanced,
but you may be passed by because someone else is doing something easier,
more convenient, more useful,
better linked with something else.
So, better more convenient features and
capabilities tied to a smartphone or a wallet or two other applications.
So, we see, for example,
linking your smartphone together with your social media,
together with your network of friends,
leads to WeChat becoming WeBank
becoming a major payments system across the nation of China.
Becoming a very powerful and viable and sustainable alternative to Bank of China.
Bank of China can't now say, ''Oh,
we're going to take our ATMs and put them online,
and make it an app and get those customers back.'' They're coming back.
It would be extremely difficult to get them back from
hourly pay and we bank from where they are today.
That's become a very sustainable and difficult to undo
FinTech transformation of payments and currencies across the nation of China.
Today there is more payment in currency, in society,
in digital financial payment systems than there is in physical cash.
That's phenomenal, and a transformation over
a period of about five years from going from dominance of
cash or debit cards to dominance of electronic smartphone enabled payments applications.
This is not although,
this world is more than just smartphones,
and that's 10 years old.
What's coming? What's the new tech?
Well, the new tech isn't nearly as powerful as
smartphones in transformation and implications for FinTech today.
But it might matter for the future.
And so if you're looking at new apps,
you're looking at new ideas, new startups,
new businesses, you might want to look and say,
''What is enabled by new technologies?
What kind of new technologies?
Well some of the wearable technologies like a Fitbit,
can track your steps.
If you track your steps you may be able to tie it to your insurance.
And say if you walk 10,000 steps a day,
we'll give you a cheaper price on your life insurance,
we'll give you a cheaper price on
your health insurance because you're more likely to be healthy and live longer.
We also might assume that if you exercise
every day and do certain things and live a certain lifestyle,
you might be a better risk for a loan, for credit card,
for other things because people that exercise everyday may
and data mining turn out to be people who don't default as much on debt.
They're more responsible citizens of their community and more trustworthy in some way.
And so wearables may matter.
Apple Watch becomes part of your daily life,
may replace Fitbit or be an alternative to it and may do much much more
in affecting your life and enabling new applications, new capabilities.
Some of these technologies may be things like Wireless Prepaid Cards or other services.
In Hong Kong society where I live today,
there's a card called the Octopus Card.
The Octopus Card is a wireless contactless payments system that has a stored value card.
Now that may say boring and whatever,
we thought stored value cards for a long time.
And this is not new tech.
So, this is like a smartphone.
It's more than 10 years old tech.
But, it has changed society in many ways,
because of its very high convenience factor.
Is you can take your Octopus Card,
keep it in your wallet,
keep it in your purse,
walk onto the subway,
not have to take it out or just wave it over a scanner.
It's a wireless contactless card, store's value.
You can then go to a vending machine,
get yourself a coke then go to a restaurant,
pay your bill with that then take the bus home.
And then go pay for your groceries at the grocery store all using your Octopus Card.
When it runs out of money it can be tied
to your bank account so it can automatically replenish,
although you don't have to do that.
You can stay anonymous,
or you can be identified, it's your choice.
And so it's a powerful contactless convenient transaction system,
not for big transactions,
but beautiful for small cash-like transactions to the point where
society in Hong Kong has more than 99% penetration of the Octopus Card.
It is the dominant payment system in society.
And, many people don't need to carry cash anymore.
You just use Octopus for everything.
If you don't use Octopus,
you probably would use a credit card or a debit card.
But Octopus is probably your first choice for a payment system.
There's other capabilities that also may come to play,
and these are a little more speculative.
But, you may tie into global positioning wanting to know people's location,
use it in different ways to consider risk or data mining or profiling of behavior,
people's attitudes, people's risk in society.
Internet of Things may tell you about what people buy,
how they do transactions,
what their interactions are to things like you would do with a Fitbit,
but with many devices and many things about behavior.
Your car may report on how often do you bypass the SmartCar,
how often do you drive iraadically,
how often do you do things that seem risky and bother
the car and then they're reporting back to their service provider and saying,
''This guy is a high risk,
you better raise his insurance rates."
So your car may be an informant on you,
as it becomes smarter and says,
'' We don't like this human taking over that car that should be driving itself.''
You may have VR and AR,
Virtual Reality and Augmented Reality,
or Smart Contacts being able to provide information or Smart Devices within your body,
being able to keep your health good or monitor everything about your health,
being able to inject insulin when needed, other things.
This may keep your medical costs lower which is
a big deal in financial markets for insurance companies and others.
This may help you to also be a more trusted, reliable employee.
You're less likely to die,
you're less likely to get sick.
And so, this may in some way improve your life.
Virtual Reality and Augmented Reality are primarily
known as gaming capabilities or technologies.
But it might move more into entertainment over time.
It may move into other areas over time.
And as it does so,
you may find that the way people
interact in the two may information about where your eyes go,
how you react, how you physically react may tell a lot about a person.
We may be able to do data mining or analytics
about your interactions in a VR or Augmented Reality space.
And say, ''Because of your speed of interactions,
because of the way you drive this virtual car,
we'll give you lower priced insurance.''
We think you would be an excellent driver.
We think you would be an excellent employee or
we think you will lower cost risk for a loan,
because of something about the way you interact in a VR or Augmented Reality space.
So, there may be more things that we can do in FinTech with advanced technology.
Thus far the big wind is smartphone and convenience.
That's opening up new opportunities for FinTech.
And it's really hard to talk about FinTech and not
recognize the power of the smartphone. Thank you.
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