Finance professor Laurent Fresard is the first lecturer at the Swiss Finance Institute's new «Master Classes». In an interview with finews.com, Fresard talks about the topic of his lecture and about who he wants to reach out to.
Laurent Fresard, what is the topic of your contribution to the first «Master Class»?
The broad topic is «data and technology» in the financial sector. The class is based on an economic analysis of the importance of data and analytics tools for tasks and workflows in finance.
The objective of the class is to provide easy-to-grasp information and concepts about current changes, with the modest goal of speeding up considerations about potential usage and adoption among finance professionals.
Why did you choose this topic?
Because we are at the beginning of a new technological era, in which new technologies (e.g. artificial intelligence) are going to greatly disrupt and improve existing business practices, and shake up the industry. For an economist like me, the fundamentals of what we currently observe are not new and economic research has many insights to offer.
«High-level practitioners will participate, present, and discuss real use cases»
In particular, academic research studying the determinants and consequences of the adoption of new technologies over the last centuries clearly indicates that fear, human and organization resistance, and misinformation (or buzz) acts as the main barriers to adoption, hindering economic growth and performance in the medium and long run.
Which is your target audience?
Anyone who feels that something is about to dramatically change in their workplace and who wants an easy and intuitive understanding of what some of these technical changes are really about and what they concretely mean.
What insights may attendants expect?
The class provides a blend of academic thoughts and practical implementations. High-level practitioners will participate, present, and discuss real use cases. The overall structure is articulated around simple economic concepts.
«The combination of new data and technology acts as a shock to the information production chain»
In particular, we will navigate and understand the implications of recent technological changes through the lens of a drop in the cost of making predictions. Thinking in terms of a drop in the cost of prediction will enable attendants to think critically about the importance of tasks requiring predictions. Attendants will also be exposed to various applications, alternative data, and recent tools (e.g. software).
What are the game changers in today's financial industry when it comes to data and technology?
I think the real game changers are (and will be) people’s and institutions’ awareness about the potential of the data they possess (and generate) and the value that can be unleashed from it at a decreasing cost.
The real value of diverse financial services truly comes from exploiting information and reducing its asymmetry among various actors. The combination of new data and technology acts as a shock to the information production chain.
Do you see a lot of hype in today's fintech environment?
Yes, and for a large part, I view this as being very positive. A majority of fintech business models are rooted in a more efficient use of technologies (e.g. in payment and security systems) and/or a more efficient use of available data (e.g. borrower information).
«These forces could create strong competitive advantages with potentially unexpected winners and losers»
The proliferation of these new ventures and ideas has the potential to lower significantly the overall cost of financial intermediation, which will generate interesting industry dynamics (with potentially unexpected winners and losers) for the years to come.
Where would you position the fintech competitiveness of Switzerland's financial center compared to other financial hubs?
Switzerland is overall well positioned on this front, mainly due to the combination of excellent research institutions creating highly skilled tech professionals and a long tradition of expert financial services. Given the country’s geographical concentration and liberal spirit, these forces could create strong competitive advantages.
«These dynamics indicate a clear interest from big tech»
Some factors could hold us back, however. In particular, the lack of startup growth capital and the passivity of large incumbents could considerably limit our nation’s ambitions on this front.
When do you expect that big tech companies will seriously challenge traditional banks?
It is maybe too early to provide a definite answer to this question. The current dynamics indicate a clear interest from big tech. They have important data and skills to challenge banks.
I expect, however, that future regulatory changes will play a major role in shaping the financial landscape of tomorrow. While this occurs, customers will surely benefit.
Laurent Fresard earned a Ph.D. in Finance from the University of Neuchâtel in 2009. He was an assistant professor of finance at HEC Paris between 2008 and 2011, and an assistant and then a tenured associate professor of finance at the Robert H. Smith School of Business at the University of Maryland between 2011 and 2017. He is a professor of finance at Università della Svizerra italiana (USI), where he holds a senior Swiss Finance Institute (SFI) chair. His research focuses on corporate finance, and specifically on the interactions between firms, financial markets, and the real economy.
