The dynamic financial technology (FinTech) ecosystem landscape has seen rapid growth, giving rise to a plethora of innovative financial products and opportunities that go beyond the boundaries of traditional finance.
In this article, David Mangini, professor of practice at Fairfield University and leading fintech expert, shares his insights on the transformative forces shaping the financial services industry. With a wealth of experience spanning payments, digital currency, digital monetary systems, regulatory governance and strategic consulting for central banks, Mangini brings concrete depth to his analysis. Drawing on this rich experience, he shares an overview of the evolution of FinTech, highlighting its influence on traditional banking, the emergence of startups and the indispensable role played by regulatory agencies. It also offers valuable insights into burgeoning career paths in FinTech, accentuating the critical roles of data analytics and artificial intelligence.
Why is FinTech such an innovative and important field?
“FinTech” is changing the way all financial services are offered. Innovations from this technology improve the delivery of many banking and payment services and create new services that bring new value to providers and customers. Innovations range from creating new digitized assets and currencies to defining new business models. FinTech innovations are reshaping the channels that connect these products and services to market.
FinTech, a term frequently heard today, is behind many innovations in financial services and has been growing since the 2008 financial crisis. FinTech is evolving rapidly today because the technology behind it is also evolving rapidly. New methods of developing and launching financial services have allowed innovators to create and launch new services quickly, and the expansion of mobile Internet access has allowed these services to reach anyone with a mobile phone. Key to this development has been the ability to leverage cloud-based infrastructure available “as a service” from multiple sources.
The importance of FinTech lies in the fact that it has the power to reshape the financial services market. New technologies allow new competitors to enter existing markets to offer new combinations of services that can target a wide range of user groups. This increases competition and allows startups to generate new services according to new business models. This fintech ecosystem expands choices for everyone. Most notably, the use of these new technologies extends the reach of financial services to many populations that were beyond the reach of the traditional sector, such as microcredit, which provides small loans to people or businesses who otherwise would not have no access to financial services. them.
Tell us about your background and your beginnings in FinTech.
My journey in FinTech has gone through several phases of my career, quite unexpected. My career in FinTech began with telecommunications engineering when I helped design and implement some of the first cell phone networks in the Northeast United States. My background in network technology and telecommunications led me to join IBM in their global communications business, where we developed solutions for IBM’s telecom clients around the world. This included some of the first mobile payment systems, such as the M-Pesa solution, which was launched in Kenya and was hugely successful. In the early 2000s, Kenyans had limited access to traditional financial institutions for monetary transactions. However, they had cell phones with access to mobile networks. A collaborative effort between public and private organizations created the M-Pesa solution, enabling money transfers via mobile phones. Since its inception, M-Pesa has expanded beyond Kenya and has over 56 million customers.
As payments technology evolved, I remained involved in introducing new projects using blockchain. This was when Bitcoin and other very old cryptocurrencies were being experimented with a lot. Clearly, technology was behind many innovations that had not yet found practical application. Digital currencies are also evolving as a possible form of national currency issued by central banks.
This progression led to my involvement in several early projects at IBM aimed at advancing payment systems, early blockchain projects targeting enterprise applications and mobile payments.
Tell us about one of your roles in FinTech.
Around 2015, I became an advisor to a FinTech startup in Switzerland which had developed a technology platform allowing central banks to issue their sovereign currency in digital form. These are now known as central bank digital currencies. Until now, central banks issued their national currency only in physical form in the form of notes and coins.
My role was to advise this startup in its efforts to educate central banks on the intersection of technology with policies and processes for using central bank money in digital payments. This required a comprehensive understanding of the cooperative nature between technological innovation and regulated institutions. The focus is on how technology is used to promote governments’ policies and social goals within their regulatory framework.
I have traveled the world and met with institutions such as the Bank for International Settlements, the World Bank, the International Monetary Fund and central banks of many countries to educate them on FinTech and how it combines with their currency issuance policies and processes. After several years of working with this startup, we integrated their design concept into one of the first successful pilot deployments of a central bank digital currency with Banco Central del Uruguay in 2017.
During these experiences, I saw how technology is evolving to create new opportunities and capabilities that can reach all segments of society through the established financial system.
What are the three main FinTech career paths?
The financial sector has always offered a range of career opportunities, and this is true with the diversity of emerging FinTech jobs. The top 3 rich career paths in FinTech include:
Start-ups: New companies regularly emerge to develop and offer services to new user groups in new ways. KPMG reports that the amount of venture capital funding for FinTech startups exceeded $115 billion in 2021. This rich area of investment generates FinTech career opportunities for those fueled by startup enthusiasm.
Established institutions: No company in the financial sector is spared from FinTech. Established institutions in the sector recognize that FinTech offers new opportunities for efficiencies, new services and expansion. All major financial institutions have set up significant internal development funds to fuel their own FinTech incubators. In addition to dedicated internal FinTech teams, these same institutions actively work with external startups in numerous collaborative projects.
Regulatory agencies: Policymakers and regulators play a crucial role in the development of FinTech. For any FinTech innovation to be widely adopted, it must be consistent with the objectives of orderly market operation, consumer protection and serving the social good. There has been a strong recent trend where many regulatory authorities are dedicating dedicated resources to working alongside the FinTech industry to help guide and shape development. An important method here is the use of regulatory sandboxes which allow entrepreneurs to create and demonstrate their service in closed, private environments alongside regulators.
What are the upcoming FinTech trends?
FinTech is advancing rapidly on several fronts. The two largest areas are Data analysis And Artificial Intelligence (AI). Data is the fuel through which many new services take shape and add value to existing services. Knowledge of managing and interpreting data and privacy controls is essential to the advancement of FinTech. Insights derived from banking and payments data can be leveraged to improve the value of various other services.
Artificial intelligence will have applications in all institutions involved in FinTech. For financial service providers, AI will provide new insights into the connections between user patterns. AI will be a powerful tool for regulators to identify money laundering and other monitoring and compliance actions.
What advice would you give to someone considering a career in FinTech?
There are several good answers for how to start a career in FinTech. The space is so big and there are so many skills to learn that I can’t think of a bad way to start in this field. Even taking the exciting and somewhat risky step of joining a startup will still bring great personal benefit. You’ll learn valuable skills and increase your market value, whether the startup you join prospers or not. Likewise, established institutions are not sitting idly by and watching FinTech develop around them. Even the most traditional institutions actively engage their internal teams in FinTech projects.
How does Fairfield University prepare graduates for a career in FinTech?
FinTech is continually developing and expanding. This dynamic field offers numerous FinTech job opportunities for students to advance their careers. Adopted by both startups and established institutions, FinTech has opened up a very wide range of career paths.
THE Master’s Program in FinTech focuses on the impact of FinTech on changing the market structure of banking, payments, digital assets and currencies. Technology has brought an explosion of creativity in new ways to disrupt the market and deliver services to more people in new ways. Data analytics training is an integral part of the program and provides skills on the critical role of data as a vital element of new services.
The program emphasizes the role of FinTech in bringing new financial and banking capabilities within the regulatory structure, ensuring that the benefits of FinTech can be adopted across society. The ethical adoption of technology across the financial sector will continue to serve society and be a driver of vibrant FinTech careers.