The dynamic landscape of the Financial Technology (FinTech) ecosystem has undergone rapid growth, giving rise to a plethora of innovative financial products and opportunities that extend beyond the confines of traditional finance.
In this article, Fairfield University’s Professor of Practice, David Mangini, a distinguished expert in financial technology, shares his insights into the transformative forces shaping the financial services industry. With a rich background encompassing payments, digital currency, digital monetary systems, regulatory governance, and strategic consulting for Central Banks, Mangini brings real-world depth to his analysis. Drawing from this wealth of experience, he shares insights into FinTech’s evolution, shedding light on its influence on traditional banking, the emergence of startups, and the indispensable role played by regulatory agencies. He also offers valuable insights into burgeoning FinTech career paths, accentuating the pivotal 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. The innovations from this technology improve the delivery of many banking and payment services and create newservices that bring new value to providers and customers. The innovations range from the creation of new digitized assets and currencies to defining new business models. FinTech innovations reshape the channels that connect these products and services to the market.
FinTech, a term frequently heard today, has been the basis for numerous innovations in Financial Services and has been growing since the 2008 financial crisis. FinTech is fast-moving right now because the technology driving it is also fast-moving. New ways for developing and launching financial services have meant that innovators can create and launch new services quickly, and the expansion of mobile internet access has meant that these services can reach anyone with a mobile phone. Key to this development has been the opportunity to leverage cloud-based infrastructure available “as a service” from multiple sources.
The importance of FinTech is that it has the power to reshape the marketplace for Financial Services. 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 enables startups to generate new services according to new business models. This financial technology ecosystem expands the choices for everyone. Most notably, the use of these new technologies extends the reach of Financial Services to many populations that have been out of reach of the traditional industry such, as micro-lending, which grants small loans to people or businesses that might not otherwise have access to them.
Tell us about your background and how you got started in FinTech.
My journey into FinTech crossed several phases of my career, which were quite unexpected. My FinTech career began with telecom engineering when I was involved in designing and implementing some of the early cell phone networks in the Northeast of the US. My background in network technology and telecommunications led me to join IBM in their global Communications Sector, where we were developing solutions for IBM’s telecom clients around the world. This included some of the early 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 created the M-Pesa solution, enabling money transfers through mobile phones. Since its inception, M-Pesa has expanded beyond Kenya and has more than 56 million customers.
As the technology for payments evolved, I remained involved as new projects using blockchain were being introduced. This was when Bitcoin and other very early cryptocurrencies were the focus of many experiments. Clearly, technology was driving many new innovations that had yet to find practical application. Digital currencies were also evolving as a possible form of the national currencies that central banks issue.
This progression led to my involvement in several early projects at IBM to advance payment systems, early blockchain projects targeting enterprise applications, and mobile payments.
Tell us about one of your positions in FinTech.
Around 2015, I became an Advisor to a FinTech startup in Switzerland that had developed a technology platform for central banks to issue their sovereign currency in digital form. These are now known as Central Bank Digital Currencies. Up until this point, central banks issued their national money solely in physical form as banknotes and coins.
My role was to advise this startup in its efforts to educate central banks on the intersection of technology with the policies and processes of using central bank money in digital payments. This required a comprehensive understanding of the cooperative nature between technology innovation and regulated institutions. The focus is on how technology is used to further the policies and social goals of the governments within their regulatory framework.
I traveled around the world, meeting with institutions such as the Bank for International Settlements, World Bank, International Monetary Fund, and the central banks of many countries to educate them on FinTech and how it combines with their policies and processes for issuing money. Through several years of working with this startup, we took their design concept into one of the first successful pilot deployments of a Central Bank Digital Currency with the Banco Central del Uruguay in 2017.
Over these experiences, I have seen how technology evolves to create new opportunities and capabilities that can reach all segments of society through the established financial system.
What are the three top FinTech career paths?
The Finance industry has always offered a range of career opportunities, and this holds true with the diverse range of emerging FinTech jobs. The top 3 career paths that are rich in FinTech include:
Startups: New businesses have been steadily emerging to develop and offer services to new user groups in new ways. KPMG reports the amount of Venture Capital funding for FinTech startups has exceeded $115 Billion in 2021. This rich investment area is driving FinTech career opportunities for those fueled by the excitement of startups.
Established Institutions: No company in the financial industry is untouched by FinTech. The established institutions across the industry recognize that FinTech offers new opportunities for efficiencies, new services, and expansion. Every major financial institution has established large internal development funding to fuel their own FinTech incubators. In addition to dedicated FinTech teams internally, these same institutions actively work with outside startups in many collaboration projects.
Regulatory Agencies: Policy makers and Regulators play a crucial role in the development of FinTech. For any FinTech innovation to reach widespread adoption, it must conform to the goals of orderly market operation, the protection of consumers, and to serve the social good. There has been a recent and powerful trend for many regulatory authorities to devote dedicated resources to work alongside the FinTech industry to help guide and shape development. An important method here is the use of Regulatory Sandboxes that allow entrepreneurs to build and demonstrate their service in closed, private environments alongside regulators.
What are the up-and-coming FinTech trends?
FinTech is advancing rapidly along several fronts. The two largest areas are Data Analytics and Artificial Intelligence (AI). Data is the fuel through which many new services take shape and add value to existing services. Knowledge of the management and interpretation of data and privacy controls are central to the advancement of FinTech. Insights derived from banking and payment operations data can be leveraged to enhance the value of various other services.
Artificial Intelligence will have applications across every institution that is involved in FinTech. For the providers of financial services, AI will drive new insights into the connections between user patterns. AI will be a powerful tool for regulators to identify money laundering and other supervision and compliance actions.
What is (one) piece of advice you would give someone considering a career in FinTech?
There is more than one right answer for how to start a career in FinTech. The space is so broad, and there are so many skills to learn that I can’t think of a wrong way to get started in this field. Even taking the exciting and somewhat risky step to join a startup will still be of great personal benefit. You will gain valuable skills and increase your marketability whether the particular startup you join flourishes or not. Similarly, established institutions are not sitting idle watching FinTech go on around them. Even the most traditional of institutions actively engage their internal teams with FinTech projects.
How does Fairfield University prepare graduates for a career in FinTech?
FinTech is continuously developing and expanding. This dynamic field offers many FinTech job opportunities for students to advance their careers. Embraced by both startups and established institutions, FinTech has opened a very wide range of career paths.
The Master in FinTech program focuses on the impact that FinTech has in changing the market structure for Banking, Payments, Digital Assets, and Currencies. The technology has brought an explosion of creativity into new ways to disrupt the market and bring services to more people in new ways. Training in data analytics is integral to the program and provides skills in the critical role of data as the lifeblood of new services.
The program emphasizes FinTech’s role in bringing new capabilities to finance and banking within the regulatory structure, ensuring that the benefits from FinTech can be adopted across society. The ethical adoption of technology across the financial industry will continue to serve society and be a driver for dynamic FinTech careers.
