Finance has always attracted the rocket scientists, drawn by the promise of wealth and riches. The technological revolution brought with it many breakthroughs in financial theory, allowing market participants to slice and dice, as well as leverage and diversify, financial risk. Now, as the world is migrating towards a distributed internet architecture, a new revolution is upon us. Fintech has blended finance and technology together and is changing the way companies and consumers interact. Not only will the way we conduct transactions change, but so too will the way we educate finance professionals in the future.
Fintech is a much-used buzzword, but essentially it boils down to using programming code to effect efficient transmission of financial assets cheaply and securely over the internet. Financial transactions and history can be stored in an immutable way on distributed ledgers, moving from double-to-triple entry book-keeping. The next generation of accountants and auditors will have to embrace this added level of complexity, and the way they are trained will change.
The core technologies behind fintech include blockchain or distributed ledgers. Essentially, a blockchain is a network of blocks of programming code joined together by a secure unique key. This allows transmission of financial assets from one party to another whilst avoiding the double spending problem. The latter is best understood if you imagine being able to copy and paste financial assets into a shared document.
Essentially, your money can be duplicated by anyone with a personal computer or tablet, unless it is secured cryptographically. Blockchain is secure and as such gets over this problem, facilitating the sending and storage of financial assets all over the internet. Armed with a wallet, on either a PC or mobile device, it is possible with such technology to disintermediate the banks and other financial institutions.
The University of Strathclyde Business School, recognising how the fintech revolution will change finance, launched the first Masters degree in fintech in the United Kingdom. Ranked first in the UK for accounting and finance by the Complete University Guide Subject League Table, the decision was made to future-proof its graduates. In a multidisciplinary approach, the new course combines expertise in finance, computing and management science. The resultant programme is a truly practical course encompassing, programming, big data, analytics, finance theory, distributed ledgers and regulation.
Professor David Hillier, the executive dean of Strathclyde Business School, endorses the idea that finance teaching is fundamentally changing. He observes that “the degree is not only an exciting first but we are pleased to be at the cutting edge of financial market development. It reinforces our core vision to be a place of ‘useful learning’ focused on innovation.”
The curriculum creation was based on fundamental pillars that combine front-office theory with middle and back-office practice in the fields of operations, clearing and settlement. It was designed to provide students
with an understanding of finance and analytical methods. The aim is to integrate programming and big data techniques. In this way, it extends the students’ core finance skills and enhances their understanding of rapidly evolving financial markets.
The MSc in fintech received letters of support from Scottish Investment Operations (SIO) and Skills Development Scotland (SDS), as well as a number of leading financial institutions who recognised that programming skills need to be taught to finance graduates.
Other educational institutions are also leading the educational charge into fintech. Tatja Karkkainen, for example, is the first person in the UK to undertake a PhD in Fintech. Her research is supervised by Glasgow University’s Adam Smith Business School and co-mentored by Strathclyde and Stirling Universities. Most of the educational initiatives at this stage are, however, on the research front. Professor Julian Williams at Durham University Business School, a case in point, is undertaking pioneering research into financial blockchain.
Karkkainen points out: “One has to be one step ahead in finance. The amount of data that financial markets generate requires processing by computers and advanced techniques. A degree in pure finance is no longer sufficient.” Karkkainen further observes that she is “thrilled to be part of an initiative that contributes to efficiency, cost-cutting and the introduction of new financial services that improve the quality of life.” Future-proofing financial education is essential in a world of big data and evolving business models. Teaching the new method of financial analysis and modus operandi are key to the career success of the next generation of graduates. The success of our banks and financial institutions depends on them.