Experiments that began with small, disruptive companies have spread throughout the financial services industry, with startups, traditional banks and others exploring mobile payments, blockchain technology and cryptocurrency.
“Competition is really intense in this market,” says Sarit Markovich, a clinical professor of strategy whose FinTech Strategy course teaches students to evaluate business opportunities in financial innovation. Venture capital money continues to flow into the space, but many startups won’t pan out. Markovich explains how to differentiate, as she puts it, “the potential gold from the glitter.”
When she began teaching a version of the course 12 years ago, Fin-Tech was a nascent industry. Since then, the possibilities — and business models — have exploded.
Drawing on her background in economics and computer science, Markovich structures the class to follow her own process of discovery. In the first few weeks, she builds students’ excitement about the breadth and novelty of financial innovation. Students research FinTech companies and present short analyses of their strategies.
Markovich’s case studies on startups in countries such as Kenya, Mexico, Israel and China help students understand that FinTech companies have more appeal in places where customers don’t trust the banking system and where financial markets are not efficient. One of her favorite moments in class is when students watch a video about the company M-Pesa in Kenya. “It shows how people in some areas may live with no electricity or running water, but they have a cell phone and can use it for mobile payments,” she says. “You can see that it’s mind-blowing.”
Once students grasp the emerging technologies and new approaches, Markovich shows that traditional financial services companies are increasingly investing in innovation. Students explore how established financial institutions might capitalize on FinTechs by entering short-term partnerships. “It is still the case that the startups are more agile,” she says. But particularly in the United States, “the banks are the ones that have the strong relationships.”
In the final weeks, Markovich dives into decentralized finance, including cryptocurrency and blockchain, where she sees potential for clearing payments faster while keeping them secure. “I don’t believe it’s going to replace traditional financial markets, especially in the U.S.,” she says. “But there are markets where crypto may be very valuable. For nonbelievers, I’m not here to change your mind. I’m here to make sure you form an educated opinion.”
Rapid adoption
- 1.4B unbanked people globally who lack access to financial resources (Source: World Economic Forum, “Why financial inclusion is the key to a thriving digital economy,” July 2024)
- 659M crypto users worldwide in December 2024, representing 8% of the world’s population
- 68% proportion of the global population with at least one mobile subscription
- Top 5 countries for crypto usage: India, Nigeria, Indonesia, United States and Vietnam