This course gives an overview of the changing regulatory environment since the 1997 Asian and 2008 global financial crisis. Following these two major crises, governments around the globe enacted a set of far-reaching new financial regulations that are aimed towards safeguarding financial stability. However, banks find it increasingly difficult to be profitable in this new regulatory environment. Technology, at the same time, has taken important leaps forward with the emergence of sophisticated models of artificial intelligence and the invention of the blockchain. These two developments fuel the emergence of fintech companies around the world.
This course discusses fintech regulation in emerging markets using case studies from China and South Africa. The course pays special attention to the socioeconomic environment in emerging markets, as well as to political risk as a major source of uncertainty for fintech entrepreneurs. Peer-to-peer lending and remittances are used as leading examples for fintech innovation in emerging markets.
So you’re interested in the opportunities for fintech? I’ll be taking you back to the key events in the financial crises of the late 1990s and early 2000s in order to understand the growth of fintech in emerging markets. We’ll be looking at the basic mechanisms behind banking and what happened when the financial markets crashed. It’s essential for us to become familiar with the new financial regulations and how they create opportunities and constraints for fintech today. Over the four weeks of the course, you will be invited to think about how new financial regulations have spurred the rise of fintech companies in emerging economies.
We dive into details of financial systems this week - looking at how banks function and are regulated. Using the Great Depression as a starting point, I describe what caused the collapse of banks a century ago, to reflect on the impact of the post-depression financial regulations that followed. These regulations included the establishment of international financial institutions that controlled current monetary policies. Being familiar with the current financial regulatory framework and where it comes from provides the basis for understanding the disruptions from the fintech innovations we will be covering next week.
Fintech regulation in emerging markets
We've now reached the heart of the course - looking at the context of fintech in emerging economies and what makes them different. To begin we will look at Initial Coin Offerings (ICO) which are one of the key mechanisms used fintech companies to finance themselves. We are going to focus particularly on South Africa, China, and Brazil, and I have a number of interviews with people involved in banking, financial regulation and fintech from these countries.
Rise in Fintech Companies
In this last week of the course, we look at applications of fintech in emerging economies. I have selected two widely adopted applications to explore: peer-to-peer lending and remittances. Because of the costs of banking and the exclusion of millions from formal banking systems, entrepreneurs have been exploring innovative mechanisms to finance business by borrowing from peers. Fintech offers a fast and secure mechanism to transfer remittances that are being widely used across the world - and we will look at some examples. I also asked people from the banking sector to describe how large formal financial institutions are considering the impact of blockchain and other new technologies. At the end of this week, you will have a chance to apply what you’ve learnt in a final assignment.