The dynamic landscape of the financial technology (FinTech) ecosystem has grown rapidly, giving rise to a plethora of innovative financial products and opportunities that extend beyond the boundaries of traditional finance.
In this article, David Mangini, Professor of Practice at Fairfield University and a leading expert in financial technology, shares his thoughts 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 advice for central banks, David Mangini brings real-world depth to his analysis. Drawing on this wealth of experience, he shares his thoughts on the evolution of FinTech, highlighting its influence on traditional banking, the emergence of startups, and the indispensable role of regulators. He also offers valuable insights into the burgeoning career paths in FinTech, with a focus on the central role of data analytics and artificial intelligence.
Why is FinTech such an innovative and important field?
FinTech is transforming the way all financial services are delivered. FinTech innovations are improving the delivery of many banking and payment services and creating new services that add new value to providers and customers. These innovations range from the creation of new digital assets and currencies to the definition of new business models. FinTech innovations are reshaping the channels that connect these products and services to the market.
FinTech, a term that is commonly used today, has driven many innovations in the financial services industry and has been growing steadily since the financial crisis of 2008. FinTech is evolving rapidly today because the technology behind it is also evolving rapidly. New ways of developing and launching financial services have enabled innovators to quickly create and launch new services, and the expansion of mobile internet access has enabled 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 its 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 under new business models. This fintech ecosystem expands choices for all. In particular, the use of these new technologies extends the reach of financial services to many populations that were previously out of reach of the traditional sector, such as microcredit, which provides small loans to individuals or businesses that may not otherwise have access to them.
Tell us about your background and how you got started in FinTech.
My journey in FinTech has spanned several phases in my career, which were quite unexpected. My career in FinTech began with telecommunications engineering when I helped design and implement some of the first mobile 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 that started in Kenya and was a huge success. In the early 2000s, Kenyans had limited access to traditional financial institutions for monetary transactions. However, they had mobile phones with access to mobile networks. A collaborative effort between public and private organizations resulted in the M-Pesa solution, enabling money transfers via mobile phones. Since its inception, M-Pesa has expanded beyond Kenya to more than 56 million customers.
As payments technology evolved, I remained involved in introducing new projects using blockchain. This was at a time when Bitcoin and other very old cryptocurrencies were at the center of much experimentation. Clearly, the technology was behind many innovations that had not yet found practical application. Digital currencies were also evolving as a possible form of national currencies issued by central banks.
This progression led me to get involved in several early projects at IBM to advance payment systems, early blockchain projects targeting enterprise applications and mobile payments.
Program Director David Mangini
Tell us about one of your positions in FinTech.
In 2015, I became an advisor to a FinTech startup in Switzerland that had developed a technology platform that allowed central banks to issue their sovereign currencies in digital form. These currencies are now known as central bank digital currencies. Until now, central banks issued their national currencies only in physical form, in the form of banknotes and coins.
My role was to advise this start-up in its efforts to educate central banks on the intersection between technology and the 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 advance the policies and social objectives of governments within their regulatory framework.
I traveled around the world, meeting with institutions such as the Bank for International Settlements, the World Bank, the International Monetary Fund, and central banks in many countries to educate them about FinTech and how it fits into their currency issuance policies and processes. After several years of working with this startup, we translated 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 have seen 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 career paths in FinTech?
The financial sector has always offered a range of career opportunities, and this is still true with the diversity of jobs emerging in the FinTech space. The three main career paths rich in FinTech are:
Start-ups: New companies are gradually emerging to expand and offer services to new groups of users in new ways. KPMG reports that the amount of venture capital funding for FinTech startups exceeded $115 billion in 2021. This rich investment field offers career opportunities in FinTech for those motivated by the excitement of startups.
Established institutions: No company in the financial sector is immune to FinTech. Established institutions in the sector recognize that FinTech offers new opportunities for efficiency, new services and expansion. Every major financial institution has set up significant internal development funding to fuel its own FinTech incubators. In addition to dedicated internal FinTech teams, these same institutions are actively working with external startups in numerous collaborative projects.
Regulatory bodies: Policymakers and regulators play a crucial role in the development of FinTech. For a FinTech innovation to be widely adopted, it must align with the objectives of market functioning, consumer protection, and serving the social good. There has recently been a strong trend among many regulators to dedicate dedicated resources to working with the FinTech industry to help guide and shape development. One important method is the use of regulatory sandboxes, which allow entrepreneurs to build 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 most important areas are Data analysis And Artificial Intelligence (AI)Data is the fuel that enables many new services to take shape and add value to existing services. Knowledge of data management and interpretation and privacy controls is essential to the advancement of FinTech. Insights from banking and payment transaction data can be leveraged to enhance the value of various other services.
Artificial intelligence will find applications in all institutions involved in FinTech. For financial service providers, AI will bring new insights into the connections between user habits. AI will be a powerful tool for regulators to identify money laundering and other supervisory and compliance measures.
What advice would you give to someone considering a career in FinTech?
There are many good answers to starting a career in FinTech. The field is so vast and there are so many skills to learn that I don’t see a wrong way to get started. Even taking the exciting and somewhat risky step of joining a startup will still bring you great personal benefit. You will gain valuable skills and increase your market value, whether the startup you join succeeds or not. Similarly, established institutions are not sitting idly by and watching FinTech grow around them. Even the most traditional institutions are actively engaging their internal teams in FinTech projects.
How does Fairfield University prepare its graduates for a career in FinTech?
FinTech is constantly evolving and expanding. This dynamic sector offers many job opportunities for students looking 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 The program 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 bring services to more people in innovative ways. Data analytics training is an integral part of the program, providing skills on the critical role of data as the lifeblood of new services.
The program focuses on the role of FinTech in bringing new capabilities to the financial and banking sectors within the regulatory framework, 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 careers in FinTech.