Financial services firms play a critically important role in the global economy. They finance investment, facilitate payments, and help firms and households save and manage risk. These financial services are provided in an array of organizations – from fintech startups to multi-trillion-dollar global banks – in an industry that is always under the threat of disruption.

In Managing and Innovating in Financial Services, we examine the challenges and opportunities faced in financial services as incumbent firms and startups try to navigate and shape an environment in which competition, technology and regulation are constantly changing.

We will look at a variety of financial institutions and financial service providers including banks, insurance companies, and fintechs. We will examine decisions through the lens of these firms with government policy and regulation as an important factor that often shapes their decisions. For some of the course we will look at issue through the government’s public policy lens, particularly as it relates to policies intended to enhance financial stability.

The course is divided into five modules. In the first module, we’ll study the basic business of banking. I believe you can’t really understand innovation and tech disruption without understanding the basics of banking. Critically, unlike most firms, banks actually make money on both sides of their balance sheet, and we’ll study why and how.

Of course, banks face many challenges, and in the second module we’ll study financial crises, the interventions policymakers take to stabilize the financial system, and the regulations that emerge from crises in an attempt to make the system more stable. We will see how these regulatory reforms then shape the decisions of financial services firms, the structure of the industry, and may give rise to new problems. In the space of fifteen years, the U.S. financial system has experienced three financial crises, so understanding their impact is an important part of managing and innovating in financial services.

In the third module, we study the use of financial technology is consumer and business lending. With many firms trying to succeed in this space and a number of different business models from a variety of types of firms, we will discuss which models are most likely to succeed.

In the fourth module, we will look at the payments system and the innovations taking place in that sector. The main portion of this module will focus on innovations traditional payment systems for consumer, business, and international payments. We will also analyze the role that central bank digital currencies and stablecoins could play in facilitating real world payments.

The fifth module will cover insurance – from traditional insurance to tech enabled insurance providers (“insuretech’). Insurance accounts for about 1/3 of the financial sector, and there are many opportunities to innovate in this sector.

We will have case protagonists visiting many of our sessions.

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