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FinTech Lecture 2 : Overview of FinTech (2)

FinTech Lecture 2 : Overview of FinTech (2)

Slides I used for Lecture 2 of FinTech - Financial Innovation and the Internet 2021 Fall at Graduate School of Business and Finance, Waseda University on October 1, 2021.

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Kenji Saito
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October 01, 2021
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Transcript

  1. Changes in the economy and labor. FinTech — Financial Innovation

    and the Internet 2021 Fall Lecture 2 : Overview of FinTech (2) Kenji Saito, Graduate School of Business and Finance, Waseda University Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.1/39
  2. This class is recorded Camera ON is recommended, but not

    required Zoom names (← NEW!): change your names to whatever you want to be called Please link your Zoon names to your real names in your reports You do need to speak often (we are going to have a lot of dialogue) We will use breakout rooms a lot, but those won’t be recorded unless you do it yourselves (need to be allowed) Keep your Zoom client updated! We might use latest features The recordings could be used for research on online learning Transcribed for use and anonymized Will let you know when the necessity arises Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.2/39
  3. The lecture slides can be found at : https://speakerdeck.com/ks91 Recording

    and chat text will be posted at Moodle and Discord Trial automatic transcription of the lecturer’s part will be posted at Discord Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.3/39
  4. I would like to remind you . . . Please

    call me either “Kenji” or “Saito-san” I’m more used to them Because a scholar thinks of the first graduate school they see as their parent I my case, it was the Department of Computer Science at Cornell, where we called our professors (giants of CS) by their first names Then I went to Keio where Yukichi Fukuzawa, the founder, is the one and only “sensei” Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.4/39
  5. Schedule (provisional) Lecture 1 9/24 Overview of FinTech (1) •

    Lecture 2 10/1 Overview of FinTech (2) • Lecture 3 10/8 Internet Technology and Governance (1) Lecture 4 10/15 Internet Technology and Governance (2) Lecture 5 10/22 The World of Apps (1) Lecture 6 10/29 The World of Apps (2) Lecture 7 11/12 Blockchain (1) Lecture 8 11/19 Blockchain (2) Lecture 9 11/26 Other Ledger Technology and Applications (1) Lecture 10 12/3 Other Ledger Technology and Applications (2) Lecture 11 12/10 Cyber-Physical Society and Future of Finance (1) Lecture 12 12/17 Cyber-Physical Society and Future of Finance (2) Lecture 13 1/7 FinTech Ideathon (1) Lecture 14 1/14 FinTech Ideathon (2) Lecture 15 1/21 Presentations and Conclusions Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.5/39
  6. Last Week, We Did . . . Objectives, overview and

    schedule of the class What’s FinTech? Concepts of “industrial tools” and “media and governance” All the tools that cannot be produced by one person Financial inclusion/democracy, user experience, and architecture as law FinTech is inherently a game-changer Some examples Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.6/39
  7. Before Going into Today’s Topics A question from last week

    by R-san : “Do we cover metaverse in this course which is a really hot topic recently?” ⇒ OK, why is metaverse a hot topic? Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.7/39
  8. Metaverse is OK as a Topic, But I just happened

    to be asked to write an article for a special issue of ele-king, a Japanese music magazine, which featured metaverse — so I wrote one, and here is the executive summary : When avatars talk to each other, there is no proof that the other person is who they say they are This may be a problem that can be solved with digital signatures However, digital signatures have operational drawbacks that make them difficult to use for proof Blockchain can overcome this difficulty, and therefore, technologies like blockchain are meaningful for metaverses By the way, blockchain is considered by many to be a monetary technology, as represented by Bitcoin The much-talked-about NFT (Non-Fungible Token) is also a form of money backed by blockchain The recent frenzy over NFT is similar to the birth of Corporation during the Age of Discovery, and is probably the result of people wanting to make money on wild investments before the rules are established . . . I secretly think it’s not good for people who are serious about art to be interested in NFT If the metaverse continues to develop, the world of money will end anyway Metaverse can be positioned within the Maker Movement in a broad sense The objects of making in this case are the worlds The world of money forces us to be consumers, but when we become makers, we will no longer be consumers, so we will leave the world of money behind Isn’t that the kind of world that society is probably headed towards with digital technology? Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.8/39
  9. Today’s Topics Changes in the Economy and Labor — How?

    Tetrad — A Tool for Analyzing Media (Industrial Tools) Gutenberg Galaxy and Its Reverse Future of Monetary-Financial System? Discussion : Does FinTech Free People? Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.9/39
  10. Changes in the Economy and Labor — How? Forms of

    Credit/Finance and Communications But More Broadly . . . Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.10/39
  11. Forms of Credit/Finance and Communications Information storage and dissemination platforms

    of the era laid the foundation for credit and finance in that era Age of cuneiform and clay tablets (about 3000 BC) Engrave on (casual contracts), bake (firm contracts) or break (social system for contract cancellation) clay tablets (IMHO blockchain developers can learn much from this age) Age of horse carts and telegraphy (mid 19th century) AMEX (was a horse carriage courier) Western Union (was a telegraph company) Age of the Internet (late 20th to early 21st century) ICT companies expand into finance Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.11/39
  12. But More Broadly . . . Security by the State

    Money Market (division of labor) Specialization of Expertise support support support DX finance issue taxes "Individual Perspective" and "Individual Construction" "Individual Perspective" and "Individual Construction" "Individual Perspective" and "Individual Construction" Automation, efficiency, inclusion and democratization To Unspecialization! Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.12/39
  13. Tetrad : A Tool for Analyzing Media Where media nearly

    equal industrial tools What haven’t you noticed lately? Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.13/39
  14. Tetrad (group of four) 4 questions about a medium (=

    any technology or artifact) ENHANCES . . . What does the medium enhance? OBSOLESCES . . . What does the medium make obsolete? RETRIEVES . . . What does the medium retrieve that had been made obsolete earlier? REVERSES . . . What does the medium reverse or flip into when pushed to extremes? – McLuhan, “Laws of Media” Questions that can be asked of any media What are the side effects of the media on people and society? Especially, when a new medium (M1) appears, it would obsolesces some existing medium (M2) that has obsolesced some other medium (M3), so that M3 would be retrieved by M1, as M2 is now becoming obsolete Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.14/39
  15. Example : Tetrad of Automobiles Movement (faster and farther) Geographical

    distribution Congestion and accidents EV and self-driving cars ENH REV RET OBS Freedom to move (once lost by horses) Personal space horses, carriages (related industries) Urban living and compact city New medium “retrieves” what was previously made “obsolete” Compact city may be OK, but there is no way horses and carriages can be retrieved by EV or self-driving cars . . . ? Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.15/39
  16. Honda UNI-CUB (the tetrad of the previous page is correct)

    Generally, personal mobility fits a person’s body (saddle: return to design starting from the human body) Autonomous driving is also like horse-riding in the sense that human and non-human intellectuals work together to get to their destination Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.16/39
  17. The Gutenberg Galaxy : The Making of Typographic Human Further

    reading : McLuhan, “The Gutenberg Galaxy” And how it is being reversed with digital technology Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.17/39
  18. Tetrad of Printing Replication (homogeneous and many) Fixed point of

    view (of the authors) Censorship and out-of-print Digital media ENH REV RET OBS Renaissance Handwritten copies (mosaic media) Books as participatory media New medium “retrieves” what was previously made “obsolete” Digital media “retrieves” mosaic media like handwritten copies . . . really? Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.18/39
  19. Gutenberg Galaxy (typography) Birth of the concept of “authors” (meaningless

    concept unless texts are copied word for word without difference) Scientific methodology (publish papers and have results tested) Nationalism (one standard language, one country) Prepared “movies” (series of photos from one viewpoint) Clear distinction between finished and unfinished “products” (printed copies are the products, handwritten manuscripts are not) Individualism (can carry knowledge personally) Unification of popular culture (massive copies) . . . ⇒ Prepared the industrial society Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.19/39
  20. Reversed Gutenberg Galaxy (digital media) Destruction of the concept of

    “authors” (social media time lines are like mosaic media) Overturned scientific methodology (automated hypothesis-testing loops for discoveries) Global perspective (connected across borders) Everyone becomes a moviemaker (YouTubers, TikTokers) Obscured finished and unfinished products ⇒ open design Promotion of collaboration (sharing by default) Diversification of cultural events (long tail) . . . ⇒ Preparing for the next society Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.20/39
  21. Future of Monetary-Financial System? Lecture 2 : Overview of FinTech

    (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.21/39
  22. Tetrad of Monetary-Financial System ENH REV RET OBS New medium

    “retrieves” what was previously made “obsolete” Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.22/39
  23. Iceberg Model of Trust o$SFEJU.POFZp 8BUFS4VSGBDF 5SVTU 8FBLFS 4USPOHFS .POFZ

    4USBOHFST %FFQFO 3FMBUJPOTIJQ 4IBMMPX 3FMBUJPOTIJQ $IFDLT CJMMT FUD $BTI CJUDPJO FUD "DRVBJOUBODFTPG BDRVBJOUBODFT FUD "DRVBJOUBODFT 'SJFOETBOE DPMMFBHVFT 'BNJMZ 5SVTU4ZTUFN -PDBM$VSSFODJFT FUD .POFZJT6OOFDFTTBSZ (JWJOH 1BTU 5SFOET 'VUVSF 5SFOET Even in capitalistic society, inside of organization is more communistic Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.23/39
  24. By the way, What is a historic company? Here, historic

    means memorable in human history What are some examples of historic companies that will continue to appear in human history textbooks, like forever? Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.24/39
  25. Historic Companies Today and Tomorrow Example : British East India

    Company (1600) One of the first joint-stock companies Historic company today was the starting point of the current corporates Next company memorable in human history? It brings an end to modern joint-stock companies, perhaps? Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.25/39
  26. DAO (common noun) Distributed/Decentralized Autonomous Organization Organization whose management is

    automated Example : Bitcoin If you think of users as shareholders, coins as shares, and miners (validators of transactions) as employees . . . Its program code can be thought of as describing how the organization operates in the business of transferring shares DeFi (Decentralized Finance) movement (← although the word has been invaded by speculators ;)) Open-source autonomous financial toolkit If we generalize, the idea of “law” will change That’s the power of software to begin with Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.26/39
  27. Technology Changes Politics What’s politics? Coordination and organization of conflicts

    of interest among various powers and groups Can a digital currency platform retrieve the stolen digital coins? If yes and it can enforce the law, it is like Judiciary Who decides which action is a crime, who corrects it, who punishes whom? If no and “Code is Law” (stealing was allowed by somewhat buggy code), then Legislation Program code determines the order among people In any case, admins take the role of, well, Administration Order can even be automated with individuals acting according to the rules of an App After the time when the nation separated the legislative, administrative and judicial powers (to avoid large concentrations of authority) . . . We are now living at the turning point of society Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.27/39
  28. Earth-Scale OS (2007) We don’t think of computer OS as

    centric but despotic design is possible (e.g.‘TRON’ (Movie), iOS App Review) Try automating what used to be called the “center” Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.28/39
  29. Amazon Go Shoppers are not conscious of the existence of

    money → Money will soon disappear from our view Different kinds of money, coupons, and point systems can operate behind the scenes Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.29/39
  30. Various Digital Currencies Are Going to be Used Global currencies

    like Bitcoin Digitization of the national currencies (“digital JPY” in Japan) MUFG Coin, J-Coin Pay, S Coin, Ginko Pay (OEM) Attempts by communities (e.g. Zen) Attempts by central banks (CBDC : Central Bank Digital Currency) Local currencies, “Cause-Oriented Economy” Beginning of world where a variety of digital currencies are used (◦◦Pay, . . . ) The complexity is not going to be in our minds; we only clarify our policies If we would like to keep Amazon-Go-style experiences Then we don’t even know if it is money that is moving behind the scenes The sharing economy comes in there ⇒ Decline of the monetary economy! Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.30/39
  31. Tetrad of Monetary-Financial System (reprise) Exchange and consumption Savings and

    investment Specialization, agricultural/industrial society Inequality, exploitation and bankruptcy Bullshit jobs Digital currencies, FinTech and beyond ENH REV RET OBS Control and obedience, hierarchy Maximization of profits Moneyless credit system Gift economy Generailzation (of skills), hunter-gatherer society New medium “retrieves” what was previously made “obsolete” Will “gift economy”, “generalization (of skills)” and “hunter-gatherer society” really be retrieved? Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.31/39
  32. What Goes On As money and finance sharpen, “exchange/consumption” stagnates

    (by the gap between rich and poor) → Sharing economy emerges (which is ultimate form of FinTech) (why?) Lifestyle that operates without specialization (thanks in part to AI and DigiFab) → The degeneracy of economic activities to be taxed Changes in the way the public is served ← Opportunity for us → At that point, money is already declining (disturbance for PO/GO and expansion of NPO/NGO concepts) By advancing the principle of the monetary economy, conversely, accommodation solutions that do not require money are selected, and money rather disappears from the front view → The ideas of “employment” and “separation of buying and selling” collapse “Rulers” do not exist any longer; “consumers” do not exist any longer Specifically, what kind of society is it? → Consider with SciFi prototyping Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.32/39
  33. Amazon Go (reprise) Go where there is food, grab it

    and just take it home (and share it with family members) It’s similar to something we know Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.33/39
  34. Toward a New “Hunter-Gatherer Society” Observe, grasp, set a goal

    and prepare tools, challenge, take, share × PDCA cycle (agricultural and industrial people’s style) PDCA : Plan, Do, Check, Action OODA loop (hunter-gatherer’s style) OODA : Observe, Orient, Decide, Act Money doesn’t fit in there The key is how technology can create an “abundant resources” situation “Accommodation” is becoming increasingly important in our society Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.34/39
  35. Do you have any questions so far? Actually, it should

    have been mainly Q & A sessions so far today But before going into a deeper discussion session, any questions? Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.35/39
  36. Discussion : Does FinTech Free People? Why should people be

    freed? Are we not free already? “But specialization is in fact only a fancy form of slavery wherein the “expert” is fooled into accepting his slavery by making him feel that in return he is in a socially and culturally preferred, ergo, highly secure, lifelong position” — Fuller, “Operating Manual for Spaceship Earth” What does he mean? Is there a FinTech example that takes away people’s freedom? Is the opposite possible? Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.36/39
  37. Assignment Lecture 2 : Overview of FinTech (2) — FinTech

    — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.37/39
  38. Assignment 1. “Tetrad of the Internet” (1) Draw a tetrad

    of the Internet Write a bulleted list of what the Internet “enhances”, makes “obsolete”, “retrieves” and what it “reverses” into (2) Based on the tetrad you drew, briefly describe how the Internet affects finance Please be concise Deadline and how to submit October 5, 2021 at 17:59 JST From Moodle (mandatory) Optionally, you can also post to #assignments channel at Discord So that your classmates can read your report, refer to it, and comment on it Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.38/39
  39. See You Next Week! Have a nice weekend! Lecture 2

    : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2021 Fall — 2021-10-01 – p.39/39