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.
The fintech programs are offered by a growing number of the world’s leading business schools, including the MSc in Finance Technology at Hong Kong’s HKUST Business School; the University of Edinburgh Business School’s MSc in Finance, Technology & Policy; plus a Master of Science Banking, Finance and FinTech, offered by France’s EM Normandie Business School, among others.
Additionally, the UK’s Henley Business School offers an MSc Finance and Financial Technology course, through the school’s ICMA Center, which provides education tailored to capital markets.
The course gives students an in-depth understanding of recent trends and products that are reshaping the finance industry. This includes blockchain, used to securely verify payments and transactions; big data analytics and AI, which are crunching large volumes of data to spot opportunities for banks to sell products or services to consumers; and quantitative finance, or using algorithms to spot patterns in data sets to make potentially lucrative trades.
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.
Daniel Broby, director of the MSc in Financial Technology at the UK’s University of Strathclyde says: “It [the course] was launched [in 2017] in order to address an identified skills gap.”
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.
Broby says that the biggest demand is for those with “artificial intelligence and machine learning training”, while the best-paid graduates entering finance are those with computer programming skills, such as Python.
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.
“The demand among the finance employers [stems from their] desire to automate many financial activities, reduce operational costs, increase productivity, and [create] new products with new technology, such as blockchain,” says Pun Chi Seng, director of the MSc in Fintech program at Nanyang Technological University in Singapore.
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.
“Being IT proficient is a must, regardless of the role applied for,” says Dr Simone Varotto, co-director of the MSc Finance and Financial Technology course at the ICMA Center.
“Employers have indicated that knowledge of programming and how to exploit new, large data sources to improve financial products and services would set a candidate apart from other job applicants.”
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?
“There is a fair degree of redundancy in teaching material due to the changing nature of financial technology,” says Strathclyde’s Broby. As such, some business schools review the content of their fintech program each year and the involvement of industry practitioners is essential to that.
“Industry collaboration ensures a constant exchange of ideas, and the early detection of new trends that could become teaching material,” says the ICMA Center’s Varotto.
“We have strong connections with the fintech industry, running weekly ‘Industry Insights’ seminars led by practitioners.”
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.
It is also essential for fintech students to have a cross-disciplinary perspective of the industry, according to Strathclyde’s Broby. “Traditional taught finance should be supplemented by computer programming, data analytics, internet payment protocols, regtech [regulation technology], and an entrepreneurial understanding of disruptive business models,” he says.
“This requires a multi-disciplinary teaching capacity, between accounting and finance, management science and computing [departments].”
Strathclyde’s 12-month, full-time fintech course includes practical elements that develop knowledge and skills that could make students more attractive to financial services employers. Students use the business school’s Bloomberg Trading Simulation Laboratory, for example, and can complete a client-based consultancy project.
For students considering fintech masters degree programs, location will be an important factor because schools that are close to financial and technology hubs, such as London, will have an easier time accessing corporations for training and recruitment. Indeed, the London-based Imperial College Business School has recently launched an MSc in Financial Technology.
“The fintech ecosystem in Singapore is healthy and robust with [more than] 400 fintech startups and [more than] 30 innovations labs” that nurture fintech innovation, says Seng at NUS.
Singapore’s fintech ecosystem could prove beneficial for students seeking to work in or create a startup. The city-state has a “regulatory sandbox” to guide people who are experimenting with fintech, for instance.
Seng says NUS will liaise with the Monetary Authority of Singapore to see how the school’s students could contribute to such fintech projects in future.
The big question for business schools is: is it wise to offer standalone masters programs focused on what could be considered a volatile industry?
“It’s unwise not to offer one,” says Strathclyde’s Broby. “We want to future proof our graduates.”
At the ICMA Center, Varotto adds: “The fintech sector may be volatile, but it is here to stay. The potential for innovation and the creation of new jobs is great and should be nurtured with suitable training.”