FinTech — Financial Innovation and the Internet 2019 Fall Kenji Saito Professor, Graduate School of Business and Finance, Waseda University [email protected] Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2019 Fall — 2019-10-04 – p.1/37
“Kenji” or “Saito-san” I’m more used to them Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2019 Fall — 2019-10-04 – p.3/37
Lecture 2 10/4 Overview of FinTech (2) • Lecture 3 10/11 Internet Technology and Governance (1) Lecture 4 10/18 Internet Technology and Governance (2) Lecture 5 10/25 The World of Apps (1) Lecture 6 11/8 The World of Apps (2) Lecture 7 11/15 Blockchain (1) Lecture 8 11/22 Blockchain (2) Lecture 9 11/29 Other Ledger Technology and Applications (1) Lecture 10 12/6 Other Ledger Technology and Applications (2) Lecture 11 12/13 Cyber-Physical Society and Future of Finance (1) Lecture 12 12/20 Cyber-Physical Society and Future of Finance (2) Lecture 13 1/10 FinTech Ideathon (1) Lecture 14 1/17 FinTech Ideathon (2) Lecture 15 1/24 Presentations and Conclusions Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2019 Fall — 2019-10-04 – p.4/37
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 Alibaba Group and Yahoo! JAPAN Group as examples Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2019 Fall — 2019-10-04 – p.5/37
for Analyzing Media Gutenberg Galaxy Future of Monetary-Financial System? Discussion : Does FinTech Free People? Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2019 Fall — 2019-10-04 – p.6/37
did information revolution happen? Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2019 Fall — 2019-10-04 – p.7/37
(drives small number of people) Birth of humankind (approx. 50,000∼70,000 years ago?) ↔ hunter-gatherer society Civilization that lives in nature 2. Engraving and handwritten letters (drives large number of people) Ancient Mesopotamia (about 5,500 years ago) ↔ agricultural society Civilization that bypasses and directly uses the flow of energy from the sun 3. Mechanical movable type printing (drives machines) Invention by Gutenberg (about 570 years ago) → industrial society Civilization that uses fossil fuels 4. Digital technology (drives computer software; very low cost) Age of microprocessors (about 50 years ago) → ??? society (in transition) Civilization that uses renewable energy? (cf. The Internet Civilization, The Internet Battery Society) Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2019 Fall — 2019-10-04 – p.8/37
forms the basis for credit and finance Age of cuneiform and clay tablets Engrave on, burn or break (social system for contract cancellation) clay tablets (IMHO blockchain developers can learn much from this age) Age of horse carts and telegraphy AMEX (horse carriage courier) Western Union (telegraph company) Age of the Internet ICT companies expand into finance Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2019 Fall — 2019-10-04 – p.9/37
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? Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2019 Fall — 2019-10-04 – p.11/37
and accidents EV and self-driving cars ENH REV RET OBS Freedom to move Personal space horses, carriages (related industries) Urban living and compact city New medium “retrieves” what was previously made “obsolete” But if compact city is OK, there’s 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 2019 Fall — 2019-10-04 – p.12/37
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 2019 Fall — 2019-10-04 – p.13/37
it is reversed with digital technology Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2019 Fall — 2019-10-04 – p.14/37
view Digital media ENH REV RET OBS Renaissance Handwritten copies (mosaic media) Books as auditory media New medium “retrieves” what was previously made “obsolete” Digital media “retrieves” mosaic media like handwritten copies Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2019 Fall — 2019-10-04 – p.15/37
“movies” Clear distinction between finished and unfinished “products” Individualism Unification of popular culture . . . ⇒ Prepared the industrial society Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2019 Fall — 2019-10-04 – p.16/37
methodology Global perspective Everyone becomes a filmmaker Obscured finished and unfinished products ⇒ open design Promotion of collaboration Diversification of cultural events . . . ⇒ Preparing for the next society Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2019 Fall — 2019-10-04 – p.17/37
“retrieves” what was previously made “obsolete” Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2019 Fall — 2019-10-04 – p.19/37
Specialization, agricultural/industrial society Inequality, exploitation and bankruptcy 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 2019 Fall — 2019-10-04 – p.20/37
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 capitalist society, inside of organization is more communistic Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2019 Fall — 2019-10-04 – p.21/37
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 2019 Fall — 2019-10-04 – p.22/37
Company (1600) One of the first joint-stock companies Historic company today was the starting point of the current corporates Next company in human history? It brings an end to modern joint-stock companies Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2019 Fall — 2019-10-04 – p.23/37
automated Example : Bitcoin If you think of users as shareholders, coins as shares, and miners 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 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 2019 Fall — 2019-10-04 – p.24/37
of interest among various powers and groups What if the platform could retrieve the stolen coins? If it can enforce the law, it is like Judiciary Who decides which action is a crime, who corrects it, who punishes whom? If “Code is Law” then Legislation Program code determines the order between people 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 . . . We are now living at the turning point of society Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2019 Fall — 2019-10-04 – p.25/37
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 2019 Fall — 2019-10-04 – p.26/37
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 2019 Fall — 2019-10-04 – p.27/37
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) 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 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 2019 Fall — 2019-10-04 – p.28/37
investment Specialization, agricultural/industrial society Inequality, exploitation and bankruptcy 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 2019 Fall — 2019-10-04 – p.29/37
consumption” stagnates → Sharing economy emerges (which is ultimate form of FinTech) 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 2019 Fall — 2019-10-04 – p.30/37
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 2019 Fall — 2019-10-04 – p.31/37
and prepare tools, challenge, take, share × PDCA cycle (agricultural and industrial people’s style) ⃝ OODA loop (hunter-gatherer’s style) 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 2019 Fall — 2019-10-04 – p.32/37
freed? Are we not free already? 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 2019 Fall — 2019-10-04 – p.34/37
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 Deadline and how to submit October 9, 2019 at 17:59 JST From Course N@vi Lecture 2 : Overview of FinTech (2) — FinTech — Financial Innovation and the Internet 2019 Fall — 2019-10-04 – p.36/37