The European Microfinance Research Award to a team of the School of Management

The award for a study on the positive social impact of fintech.

 

A team of the Department of Management, Economics and Industrial Engineering at the Politecnico di Milano won the European Microfinance Research Award 2022 with paper “FinTech for Good: unveiling social value creation in the fintech sector”. The award was given by European Microfinance Network (EMN), a not-for-profit organisation which promotes microfinance as a tool to fight social and financial exclusion in Europe through self-employment and the creation of microenterprises.

The study carried out by Federico Bartolomucci, PhD candidate, Veronica Chiodo, professor of Social Entrepreneurship, and Andrea Petrolati, Junior Project Manager at Fintech District, investigates the FinTech world, aiming to understand if and how technological innovation generates impact in the financial sector and which is the role played by technology in the value creation process. Results show that FinTechs, operating in underserved markets and combining technological innovation with the intentionality to generate positive social impact, can generate social value both in developed and emerging economies. Results challenge traditional financial players, institutions and social economy actors to re-imagine their relation with them.

 

BlackRock Hackathon: a green experience!

Milano Digital Week (MDW) is a social initiative hosted every year by the City Council of Milan to inform the public about challenges and issues in the digital environment. Among keynotes, roundtables and workshops, the organizational committee launches initiatives aimed at engaging companies and citizens in shaping the future of digital. The BlackRock Hackathon is an example of such public involvement.

At the beginning of 2020, Larry Fink, BlackRock’s CEO, announced that environmental sustainability would be at the core of the company’s investment strategy. This was a bold decision made by a global leader in the industry. Following the news, the company decided to launch a challenge aligned with UN SDG (United Nations Sustainable Development Goal) #13: Climate action. The goal of BlackRock’s Hackathon was to create a tool, leveraging big data and analytics, to support investment professionals in taking environmentally informed decisions for their clients.

Hackathons are generally demanding, as participants are asked to develop a thorough, innovative solution in an incredibly short amount of time. Personally, I found this one even more challenging for two reasons.
I signed up to the event as an individual. I was reluctant, at first. Building something with people you have never met before in just 36 hours is not an easy task: you need to create a common ground of communication style and understand how to push your ideas, among other things. Then I remembered something I had learnt some years ago: if you wish to grow and achieve great things, you need to exit your comfort zone ̶ so that is what I did. Luckily, I got along quite well from the start with Mattia and Stefano, my teammates, and, since the team is the key, everything was downhill from then on. And, despite the struggles and the little sleep, we managed to have fun and achieve our goal: winning the hackathon.

Furthermore, the contest addressed a quite complex issue. Despite improved willingness from companies to disclose their environmental impact, the greatest obstacle remains data availability. Whichever solution you want to design, you need to take this into account. Another crucial element was the type of product to present. How are users going to benefit? Which channels to use?

Throughout the competition, teams were supported by BlackRock professionals: in our case, the mentoring was extremely useful. Mentors helped us reason better with regard to the choices we were making by questioning them constantly. In the end, when we prepared the pitch for the jury, Mattia, Stefano and I had motivated our choices so many times that we were confident about the idea, and it only took us a few minutes to find the right words to describe it.

After an initial, long brainstorming session, where ideas seemed to pop up from everywhere, we decided to focus our attention on something that could easily be implemented by an incumbent and whose usage could possibly be sold: an algorithm optimizing the environmental performance of investment portfolios. The name? (re)Balance!

Our starting point was the Paris agreement and its stated goal to contain any increase in global temperatures within 2°C by 2030. Upon that, we built a mechanism that allocates money by picking the most environmentally virtuous emitters and securities from among a predefined set of categories (best-in-class approach). Moreover, as a team, we wanted something visual that could communicate to investors how much they are contributing to the goal: something socially valuable; a thermometer, showing how much investors’ portfolios are helping limit global warming.

I am a student of the International Master in Fintech. One could say the competition was basically my bread and butter, as it addressed innovation in the financial industry. Looking at the specificity of the challenge, especially, one could equally add that mastering financial and technological concepts was pivotal to performing well. This is not completely true. First, because the environmental component was relevant. Second, because innovation does not result just from knowing things. You need to analyse, understand and take decisions in an unexplored environment. In other words, you need to exercise critical thinking ̶ and I believe that’s where the Master was a game-changer for me: it taught me to think about what I know and use it in unconventional ways.

 

About the author
Lorenzo D’Auria 
I am 24 and grew up in Cagliari, Italy. I am a student of the International Master in Fintech at MIP and I hold a BSc in Economics and Management from the University of Trento. My professional interests revolve around the investment management industry and the impact new technologies have on it.

The frontiers of Fintech

You can’t do without Fintech. The figures make it clear: in 2018, M&A (merger and acquisition) transactions tied to this sector at a global level generated a value of nine billion dollars, up 25% on the year earlier.  Affirming this is an analysis carried out by the Mind the Bridge startup school. In other words, Fintech startups attract an increasing amount of capital and investments. And the trend is growing, because a rising number of users choose to manage their finances online.

Whether its mobile payments, InsurTech or Robo Advisors, financial transactions are increasingly managed online, bypassing the traditional intermediation, until recently indispensable, of banks and insurance companies. Confirming this is Professor Emilio Barucci, director of Politecnico di Milano’s International Master in FinTech, Finance and Digital Innovation. «Disintermediation is a key factor. It allows us to carry out numerous operations much more quickly with the tools made available via new technologies. We no longer go to the bank once a month like we used to».

Banks themselves aren’t standing by and watching: «Right now they are moving in two directions. On one hand they’re trying to appropriate the ways of operating typical of Fintech companies, increasingly developing home banking and fast payment channels. On the other they’re trying to cope with the growth of non-traditional channels, that are eroding a large part of their market.  The startups that launched Robo Advisors, for example, provide the user with personalised financial advice, cutting out banks, fund managers and financial advisers», explains Professor Barucci.

The convenience and opportunities offered by Fintech are particularly attractive, even in a market a little bit less receptive to digital transactions like the Italian one. The issue of cybersecurity remains crucial: «The risks for those who use digital tools today are not bigger than those we already faced years ago, like the classic “theft” of credit card data – stresses Professor Barucci –. But it’s also true that the issue of security is perhaps the one on which the actors involved concentrate most and invest more. A single crack is enough to destroy the credibility of a service, and as a result sink the business».

The advantages of FinTech aren’t only for private users, but also for companies. According to Professor Barucci, «they will materialise in important cost reductions. Furthermore, there will be the possibility to interact with more subjects and the non-banking channel will grow». Some technologies, to the contrary, will remain confined to a more restricted area of use, far from the general public. That’s the case, for example, of Blockchain: «Personally I’m not convinced that Bitcoin is the currency of the future – says Barucci –. But it must be recognized that cryptocurrencies based on blockchain have led to extensive studies on this technology, generating a great legacy in terms of knowledge: it won’t be the solution for all problems, but in some areas it will represent an interesting solution». Something similar can be said about Artificial Intelligence: «Machines won’t substitute man, let alone in the financial world. But thanks to AI and to big data we’ll have the possibility to better understand the dynamics of some financial phenomena».

In short, cutting-edge technologies can’t do without the mastery of underlying digital phenomena. The International Master in Fintech, Finance and Digital Innovation of Politecnico di Milano’s School of Management has the objective of training professionals with these skills: «The process of change triggered by Fintech is irreversible – concludes Barucci –. Our master’s provides suitable skills, focusing on a complete education: no other university offers the same combination of method, technology and business».

 

 

 

 

 

Master Financial Technology with an MSc Fintech Degree

Business schools are racing to offer masters degree programs in financial technology (fintech), as employer demand skyrockets for professionals who can use tools like artificial intelligence to boost financial institutions’ efficiency, generate new products or services for them, and help the big firms avoid being disrupted by nimbler startups.

And despite knowing that it is risky to offer a course on volatile and controversial markets such as cryptocurrencies (for example), as they could disappear as quickly as they emerged, schools are enhancing their brands with the fintech offerings, as students and employers demand them.

“I think a course in fintech was a must,” says Emilio Barucci, director of the International Master in Fintech, Finance and Digital Innovation at MIP Politecnico di Milano in Italy, in order to maintain MIP’s status as a leading technology university.

[…]

An increased demand for fintech skills

Business schools say the catalyst for the introduction of fintech courses has been high and growing demand among finance employers for trained professionals, who can use digital technologies, such as data science techniques.

[…]

Across the world, financial services firms are struggling to attract talent with a mixture of business smarts and technical acumen. In a recent employer survey by Hays Financial Markets, a recruitment firm, 61 percent said they faced moderate to extreme skills shortages, with technology among the most sought-after skills.

[…]

The demand is global. According to a 2018 report by the Monetary Authority of Singapore (MAS), 7,800 jobs were added to the fintech and financial services sectors in 2016-2017 in the city-state, with fintech alone contributing close to 2,000 net jobs, far exceeding a target set by the MAS.

[…]

However, financial institutions’ automation of some activities, has raised concerns that jobs could disappear as a result. A Citigroup report forecasted that fintech could cost almost 2m bank employees their jobs over the next decade.

So far, displacement has mostly affected staff in banks’ brick-and-mortar retail branches, as banks do more online and cut branches, and staff in “back office” functions, such as those working in settlements, who make sure that payments are processed.

Technology could free up “front office” workers, such as investment bankers, to do more interesting jobs. For example, several investment banks use AI to help determine the best way to execute big trades by reading market conditions. The AI comes up with the trading optimization strategy, but it’s validated by humans. In one case, the method achieved annualized returns that outperformed a benchmark index.

[…]

How MSc Fintech courses are keeping pace with the industry’s rapid change

But what exactly should be taught in fintech masters programs and who should teach it? With the field evolving so quickly, how are academics keeping pace with market developments?

[..]

MIP uses case studies in its fintech masters program that were developed by companies such as Aviva, Deloitte and IBM. “The companies help us in updating the course according to the evolution of the industry,” says Barucci.