With the $4.5 billion fundraising round for Ant Financial in April 2016, financial technology—or “FinTech”—took center stage. The investment was the world’s largest private fundraising round to date, and valued the Alibaba affiliate at a whopping $60 billion.
Global venture investment in FinTech grew by 11 percent to $17.4 billion in 2016, according to data from PitchBook. And, not surprisingly, business schools have tuned in to the trend, launching either classes or even specializations in FinTech as part of their MBA curriculum.
“The first important FinTech innovations drew attention as early as 2007 to 2008, but the financial crisis and the changing regulatory landscape created more urgency for change,” says Antoinette Schoar, professor of entrepreneurship and finance at MIT Sloan School of Management.
FinTech covers technology-related innovations in the financial sector; these innovations have the ability to disrupt long-standing financial structures and change the way we use financial instruments. (Some examples include blockchain—an open, distributed ledger system that records transactions—and cryptocurrencies, artificial intelligence and machine learning, and mobile payment systems.) But they also raise significant concerns around privacy and regulation.
To help MBA students understand this space, New York University’s Stern School of Business launched a FinTech specialization in Fall 2016, while University of Southern California’s Marshall School of Business started a FinTech course in early 2016. UC Berkeley’s Haas School of Business and MIT Sloan have been offering FinTech classes as part of their MBA programs since 2015.
Meanwhile, a handful of schools have launched their own student FinTech groups, all of which offer guest speakers, community events, and innovation opportunities. Wharton, MIT, Georgetown, Stanford, and Columbia are some of the universities with established student-led FinTech organizations.
“We’ve got a lot more people than average that are interested in FinTech over traditional finance; they see it as more exciting, fast-moving, and an opportunity to really make an impact in the financial sector,” says Ashley Lannquist, co-founder of Berkeley Haas’ FinTech club.
“It’s also usually more socially beneficial because you’re building products that can deliver financial services more cheaply, transparently, and directly to the broad population or even the under- or unbanked. It’s also useful in a lot of emerging market countries, and that interests a lot of Haas students.”
MBA classes in FinTech
MIT Sloan already had a FinTech club and conference more than six years ago, but the school launched its actual Fintech Ventures class three years ago; one year later it initiated a class on big data for finance, and it now also has a class on consumer finance. Enrolled students can develop business plans for their own FinTech ideas that are eligible to compete in the new MIT FinTech Competition.
“The real push came from our students and alumni,” says Schoar. “I had started teaching classes on FinTech in my entrepreneurial finance class for many years. But several of our students were starting very interesting ventures, and they were eager to have a class to help them deepen their knowledge. We literally created the class over one summer with the help of our alumni and students.”
At NYU Stern, students doing an MBA in general management can select up to three specializations—or choose not to specialize at all. As of fall 2016, Stern’s full-time and part-time MBA students can also choose FinTech as a specialization, a first among top business schools, and take electives from eight new courses.
“We have twice the enrollment expected in our inaugural Foundations of FinTech course, being taught for the first time this fall to undergraduates and in the spring to MBAs,” says Kathleen DeRose, FinTech Executive-in-Residence at NYU Stern. “We're even expanding beyond the MBA program in our course offerings as the popularity of the newly created foundational course has been way above expectations.”
Challenges of teaching FinTech
But with such rapid changes in technology, how does one even go about teaching a course in the sector?
DeRose says that one of the biggest challenges is to integrate previously independent disciplines in a way that actually translates into leadership.
“We overcome this challenge by having both data science and finance faculty teach our FinTech courses, and by providing students with both a grounding in the data, tools, and methods using in FinTech but also with up-to-the-minute case studies of FinTech businesses to provide real-world experience,” says DeRose.
For Schoar, the material does change rapidly, but the fundamentals of financial models and risk management hold, no matter what platform is used.
“It’s fun to make students see that the underlying financial concepts apply the same way, even if the physical form of the services change—e.g. instead of dollar bills we use our phone or bitcoins, or instead of going to a bank we get a loan through an online platform,” she says.
Post-MBA jobs in FinTech
There are myriad paths for FinTech-focused graduates. Schoar notes that many of MIT’s graduates go on to start their own ventures, or join start up firms.
“But at the same time we’ve seen that established firms and financial institutions are extremely interested in hiring people with FinTech and data analytics skills—so there’s a wide array of firms and positions that our graduate take up.”
For Ashley Lannquist, who already works as a FinTech consultant, there are a few paths she considers taking when she graduates in 2018.
“I can see myself going to three places: startups, company innovation centers, or institutions like the World Bank who have blockchain labs where they're developing blockchain use cases,” she says. “And when I spent time in Berlin this summer, I met a few very exciting blockchain startups, so I could also see myself going to Berlin and working for some of them.”
With the pace of growth in the space, there will undoubtedly be employment opportunities for FinTech-focused MBAs. As Kathleen DeRose says, “FinTech is not going away.”
Photo: CC BY 2.0/Cropped/Andre Gunawan, Tech in Asia