Financial Technologies - (F) - Q3

Participation Prerequisites

There are no formal prerequisites for participation in this course. However, students are expected to have a solid understanding of basic concepts in finance and economics at the undergraduate (BSc) level. Familiarity with financial institutions, banking, capital markets, and investments will be helpful. As the course explores technology-driven innovations in financial services, students should be willing to engage with topics such as platform businesses, artificial intelligence, blockchain and cryptocurrencies, and financial regulation. Students are also expected to read and discuss academic research papers, case studies, and practitioner-oriented materials, critically evaluate their implications for the financial industry, and actively engage with high-profile guest speakers from industry.

Course Content

The financial industry had until recently a very high degree of concentration.  This situation is rapidly changing as disruptive technologies enable new forms transacting, reduce the barriers to entry and intensify the competition among financial service providers. New and disruptive technologies are leading to major changes in the realms of payments, lending and borrowing, insurance, wealth management, venture capital. To understand these massive changes, we need to have a good understanding of technological innovations as well as of the economics of the financial sector.

FIN610 studies technology-driven innovations in the financial sector; highlighting the potential role and applications of blockchain, cryptocurrencies, and artificial intelligence in various stages of the financial services industry. Such innovations can potentially disrupt existing industry structures, reshape their boundaries, and change the way firms create and deliver products and services. At the same time, they create privacy, regulatory and law-enforcement challenges. We study these issues in a format which combines academic research with case studies and various forms of integrating the perspectives of practitioners.

The framework of the course combines three major building blocks:

(1) Two-sided Markets / Platform Businesses: The rise of FinTechs cannot be solely understood by focusing on advances in technology.  Equally important is the structure of many financial markets.  In the words of Rochet & Tirole (2003)"...many if not most markets with network externalities are two-sided. To succeed, platforms in industries such as software, portals and media, payment systems and the Internet, must “get both sides of the market on board. Accordingly, platforms devote much attention to their business model, that is, to how they court each side while making money overall."

(2) The Role of Technology: We focus broadly on artificial intelligence (AI), blockchain, and related digital technologies, but treat these terms as broad categories within which many finer classifications are useful. These include, but are not limited to, machine learning, deep learning, generative AI, smart contracts, distributed ledger technologies, cloud computing, APIs, digital identity solutions, tokenization, and other internet-based technologies that enable new forms of financial intermediation, information processing, and value exchange. Our objective is not merely to study individual technologies, but to understand how technological innovation reshapes the organization, economics, and competitive dynamics of financial services.

(3) Regulation: The emergence of players that offer digitally enabled financial services poses both opportunities and risks at many levels of analysis.  Changes in regulatory frameworks will shape various outcomes and are therefore a necessary ingredient for a sound understanding of upcoming developments in this area.

Intended Learning Outcomes and Competencies

Upon successful completion of the course, students will be able to:

Knowledge and Understanding

Explain the economic foundations of financial intermediation, platform businesses, network effects, and technology-driven innovation in financial services.

Understand the role of emerging technologies,including artificial intelligence, blockchain, cryptocurrencies, smart contracts, and related internet-based technologies, in reshaping financial markets and institutions.

Describe the opportunities and challenges associated with digital transformation in areas such as payments, lending, investing, wealth management, and capital markets.

Understand the regulatory, legal, ethical, and societal implications of technological innovation in finance and evaluate the trade-offs between innovation, competition, privacy, and financial stability.

Analytical and Problem-Solving Skills

Analyze how technological innovations affect the structure, competitiveness, and business models of financial institutions and FinTech firms.

Apply economic and strategic frameworks to assess the viability, scalability, and potential impact of FinTech business models and digital platforms.

Evaluate the strengths and limitations of blockchain-based systems, cryptocurrencies, artificial intelligence applications, and other digital technologies in financial services.

Assess real-world challenges and opportunities arising from technological disruption and formulate well-reasoned solutions to complex problems in finance.

Research and Critical Thinking Competencies

Read, understand, and critically evaluate academic research, industry reports, and policy documents related to FinTech, digital finance, blockchain, artificial intelligence, and financial regulation.

Interpret empirical evidence and case-study findings and assess their implications for financial institutions, investors, consumers, and policymakers.

Compare competing perspectives on the future evolution of financial services and develop evidence-based arguments regarding the impact of technological innovation.

Communication and Professional Competencies

Present and defend analytical arguments clearly and persuasively in both oral and written form.

Engage constructively in discussions of contemporary developments in digital finance by integrating theoretical insights, empirical evidence, practitioner perspectives, and regulatory considerations.

Interact professionally with guest speakers and industry practitioners, critically reflecting on the practical challenges and opportunities associated with technological innovation in financial services.

Evaluate the strategic implications of FinTech developments for incumbent financial institutions, entrepreneurial ventures, regulators, investors, and society more broadly.

Instruction Type

Presence

Form of Examination

Literature

* Indicates a strongly recommended reading, while other listed materials are intended to enhance and deepen understanding of the topic.

In addition to the articles listed with each lecture topic below, I use the following sources as background material:

Antonopoulos, Andreas M., 2014, Mastering Bitcoin; Unlocking Digital Currencies (2nd Edition), O’Reilly.

Mougayar, William, 2016, The Business Blockchain: Promise, Practice, and Application of the Next Internet Technology, Wiley.

Narayanan, Arvind and Sayash Kapoor, 2024, AI Snake Oil: What Artificial Intelligence Can Do, What It Can't, and How to Tell the Difference, Princeton University Press.

Narayanan, Arvind, Joseph Bonneau, Edward Felten, Andrew Miller, Steven Goldfeder, 2016, Bitcoin and Cryptocurrency Technologies, Princeton University Press.

The following items are popular contributions on the background of digitization in finance (Warning: this material is not academic but still fun and to some extent informative, caveat emptor!)

Digital Economy: The digitisation of finance (The Economist Intelligence Unit: Digital Economy, Nov 21, 2018·31 min)

Banking on Bitcoin, 2016, directed by Christopher Cannucciari, available on Netflix.

Vigna, Paul and Michael J. Casey, 2016, The Age of Cryptocurrency: How Bitcoin and the Blockchain Are Challenging the Global Economic Order, Picador Paperbacks.

And, here is a video showing Milton Friedman predicting Bitcoin in 1999: https://www.youtube.com/watch?v=C_Ny-UPve-8.

1. Introduction: Why Fintech?

*Das, Sanjiv R., 2019, The Future of Fintech, Financial Management 48 (4): 981-1007.

*Dhar, Vasant and Stein, Roger, 2017, FinTech Platforms and Strategy, Communications of the ACM 60(10): 32-35.

*Philippon, Thomas, 2016, The Fintech Opportunity. (Working paper). Manhattan, NY: New York University.

*Petralia, Kathryn, Thomas Philippon, Tara Rice and Nicolas Véron, 2019, Banking Disrupted? Financial Intermediation in an Era of Transformational Technology, Geneva Reports on the World Economy 22.

Bollaert, Helen, Florencio Lopez-de-Silanes, Armin Schwienbacher, 2021, Fintech and Access to Finance, Journal of Corporate Finance 68 (C):10.1016/j.jcorpfin.2021.101941.

Caillaud, Bernard and Bruno Jullien, 2003, Chicken & Egg: Competition among Intermediation Service Providers, The RAND Journal of Economics 34 (2): 309-328.

Ferri de Camargo Paes, Felipe and Suresh, Krishnamurthy and K. Salman, Dana and Mutinda, Stanley and Xie, Zhifu and Zhang, Bryan Zheng and Propson, Drew, The Future of Global Fintech: Towards Resilient and Inclusive Growth (January 04, 2024). Available at SSRN.

Rochet, Jean-Charles and Jean Tirole, 2003, Platform Competition in Two-Sided Markets, Journal of the European Economic Association 1(4): 990–1029.

2. Introduction: Financial Systems, Money, and Blockchain

*Böhme, Rainer, Nicolas Christin, Benjamin Edelman and Tyler Moore, 2015, Bitcoin: Economics, Technology, and Governance, Journal of Economic Perspectives 29(2): 213-238.

*Benigno, Pierpaolo, 2023, Monetary Policy in a World of Cryptocurrencies, Journal of the European Economic Association 21(4): 1363–1396.

*Carnell, Richard Scott and Macey, Jonathan R. and Miller, Geoffrey P., 2016, Banks: Fundamental Concepts. Carnell, Macey & Miller: The Law of Banking and Financial Institutions (Wolters Kluwer 2017; NYU Law and Economics Research Paper No. 16-37. Available at SSRN: https://ssrn.com/abstract=2847297.

Chiu, Jonathan, Seyed Mohammadreza Davoodalhosseini, 2023, Central Bank Digital Currency and Banking: Macroeconomic Benefits of a Cash-Like Design. Management Science 69(11):6708-6730.

Friedman, Milton and Anna J. Schwartz, 1986, Has Government any Role in Money? Journal of Monetary Economics 17(1): 37-62.

Hayek, Friedrich, 1976, Denationalisation of Money, London: Institute of Economic Affairs.

McLeay, Michael, Amar Radia, and Ryland Thomas, 2014, Money Creation in the Modern Economy, Bank of England Quarterly Bulletin Q1: 14–27.

Radford, R. A., 1945, The Economic Organisation of a P.O.W. Camp, Economica 12(48): 189-201

The Economist, 2017, Disrupting the Trust Business (Jul 6th 2017 edition).

Varian, Hal, 2004, Why Is That Dollar Bill in Your Pocket Worth Anything? New York Times (January 15, 2004).

3. Emergence of Blockchains and Cryptocurrencies

*Nakamoto, Satoshi, 2008, Bitcoin: A Peer-to-Peer Electronic Cash System (https://bitcoin.org/bitcoin.pdf).

*Narayanan et al, Preface, 3-22.

Haber, Stuart W. and Scott Stornetta, 1991, How to Time-Stamp a Digital Document, Journal of Cryptology 3(2): 99–111.

Harvey, Campbell R., 2016, Cryptofinance, Available at SSRN: https://ssrn.com/abstract=2438299.

Lamport, Leslie, Robert Shostak, and Marshall Pease, 1982, The Byzantine Generals Problem, ACM Transactions on Programming Languages and Systems 4(3): 382-401.

*4. How do Blockchains Work? (This section is technical.  The contents are delegated to an appendix that will be partially presented in class)

Antonopoulos, Selected parts of Chapter 7 and 8.

Gur Huberman, Jacob D Leshno, Ciamac Moallemi, Monopoly without a Monopolist: An Economic Analysis of the Bitcoin Payment System, 2021, The Review of Economic Studies, 88(6): 3011–3040.

Buterin, Vitalik, 2014, Ethereum: A Next-generation Smart Contract and Decentralized Application Platform, <https://github.com/ethereum/wiki/wiki/White-Paper>

Narayanan et al, Selected parts of Chapter 1, 2, and 3.

Szabo, Nick, 1997, Formalizing and Securing Relationships on Public Networks, First Monday, [S.l.], Sep. 1997. ISSN 13960466. Available at: <http://firstmonday.org/ojs/index.php/fm/article/view/548/469>

Szabo, Nick, 1998, Secure Property Titles with Owner Authority, Available online at <http://nakamotoinstitute.org/literature/secure-property-titles/>.

Turing, Alan Mathison, 1937, On Computable Numbers, with an Application to the Entscheidungsproblem, Proceedings of the London Mathematical Society 2: 230–265.

5. Blockchains, Capital Markets, and FinTechs

*Yermack, David, 2017, Corporate Governance and Blockchains, Review of Finance 21(1): pp. 7–31.

Chiu, J. and Thorsten V Koeppl, 2019, Blockchain-Based Settlement for Asset Trading, The Review of Financial Studies 32(5): 1716–1753.

Cong, Lin William and Zhiguo He, 2019, Blockchain Disruption and Smart Contracts, The Review of Financial Studies 32(5): 1754–1797.

Foley, Sean and Karlsen, Jonathan R. and Putnins, Talis J., 2019, Sex, Drugs, and Bitcoin: How Much Illegal Activity Is Financed Through Cryptocurrencies? The Review of Financial Studies 32(5): 1798–1853.

Khapko, Mariana and Zoican, Marius, 2020, How Fast should Trades Settle?, Management Science 66 (10), 4573–4593.

Kogan, Shimon, Igor Makarov, Marina Niessner, Antoinette Schoar, 2024, Are Cryptos different? Evidence from Retail Trading, Journal of Financial Economics, Volume 159, 103897.

Lehar, Alfred and Christine Parlour, 2025. Decentralized Exchange: The Uniswap Automated Market Maker, Journal of Finance 80(1): 321-374.

Pagnotta, Emiliano S.  2022, Decentralizing Money: Bitcoin Prices and Blockchain Security, The Review of Financial Studies 35(2):  866–907.

6. Artificial Intelligence and its Applications in the Finance Industry

*Aldasoro, Iñaki, Leonardo Gambacorta, Anton Korinek, Vatsala Shreeti and Merlin Stein, 2024, Intelligent Financial System: How AI is Transforming Finance, BIS Working Papers No 1194, Monetary and Economic Department.

*Foucault, Thierry, Leonardo Gambacorta, Wei Jiang and Xavier Vives, 2025, Artificial Intelligence in Finance, CEPR Press

*Korinek, Anton. 2023. Generative AI for Economic Research: Use Cases and Implications for Economists. Journal of Economic Literature, 61 (4): 1281-1317.

Cao, L., 2022, AI in Finance: Challenges, Techniques, and Opportunities, ACM Computing Surveys (CSUR): 55 (3), 1–38.

Korinek, Anton. 2025. AI Agents for Economic Research: Mid-2025 Update to ‘Generative AI for Economic Research: Use Cases and Implications for Economists,’ published in the Journal of Economic Literature 61(4).”

Sunstein, Cass R., 2024, The AI Calculation Debate, Available at SSRN: https://ssrn.com/abstract=5054402.

Pearl, Judea and Dana MacKenzie, 2018, Chapter 10 Big Data, Artificial Intelligence, and the Big Questions, in The Book of Why – The New Science of Cause and Effect, pp. 349-370.

Pearl, Judea, 2018, Theoretical Impediments to Machine Learning with Seven Sparks from the Causal Revolution, arXiv preprint arXiv:1801.04016 (https://arxiv.org/abs/1801.04016).

Reher, Michael, Stanislav Sokolinski, 2024, Robo Advisors and Access to Wealth Management, Journal of Financial Economics, Volume 155, 103829.

Rossi, Alberto G. and Stephen Utkus, 2024, The Diversification and Welfare Effects of Robo-advising, Journal of Financial Economics, Volume 157, 103869.

7. Regulation

*Carstens, Agustín and Claessens, Stijn and Restoy, Fernando and Shin, Hyun Song, 2021, Regulating Big Techs in Finance, Available at SSRN: https://ssrn.com/abstract=3901736.

*European Parliament and Council of the European Union, 2022, Regulation (EU) 2022/1925 (Digital Markets Act), Official Journal of the European Union, L 265.

*European Parliament and Council of the European Union, 2024, Regulation (EU) 2024/1689 (Artificial Intelligence Act), Official Journal of the European Union, L 1689.  See a high level summary of the Act here: “Future of Life Institute | Available online: artificialintelligenceact.eu/high-level-summary”

*Fletcher, Amelia, Jacques Crémer, Paul Heidhues, Gene Kimmelman, Giorgio Monti, Rupprecht Podszun, Monika Schnitzer, Fiona Scott Morton, and Alexandre de Streel, 2024, The Effective Use of Economics in the EU Digital Markets Act, Journal of Competition Law & Economics 20(1–2): 1–19.

Hacker, Philipp and Cordes, Johann and Rochon, Janina, 2024, Regulating Gatekeeper AI and Data: Transparency, Access, and Fairness under the DMA, the GDPR, and Beyond, European Journal of Risk Regulation 15(1): 49 – 86.

Jiang, Wei , Yuehua Tang, Rachel J. Xiao, Vincent Yao, 2025, Surviving the Fintech Disruption, Journal of Financial Economics 171, 104071.