Fintech
The intersection of finance and technology
The interconnectedness of finance and technology was on display at the first Financial Institutions and FinTech Research Conference, held April 19 at the University of Delaware’s FinTech Innovation Hub.
The four-session conference, sponsored by UD and the Federal Reserve Bank of Philadelphia, included research presentations and speaker feedback followed by question-and-answer opportunities.
Keynote speaker Manju Puri, professor of finance at Duke University’s JB Fuqua School of Business, shared her engaging research on India’s open banking system and its impact on access to credit.
Open banking systems have been adopted in 49 countries. They allow bank customers to own their data and share their bank accounts with other financial service providers. According to Puri, this system has created financial inclusion by increasing the accessibility of the banking sector.
In 2016, the Indian government required the unbanked population to open accounts. Puri’s research found that this mandate and the well-established Unified Payment Interface (UPI), which allows digital transactions to be quickly sent and authenticated, are two key drivers of why open banking expands access to credit.
“It’s not enough to have a bank account. Get a bank account and leverage it by having a digitally verifiable payment history – that’s the superpower,” Puri said.
He shared data from his research that reflects increased access to credit for new bank account holders who also have access to affordable internet and mobile services. For example, she identifies “roadside kiosks” as Indian small business owners using QR codes to receive payment for their goods and services instead of cash transactions. Thanks to the UPI system, these entrepreneurs are now able to demonstrate to financial institutions that they have a consistent history of demand for their services and goods when applying for a business loan, Puri said.
“Access to the credit market expands thanks to the open payment infrastructure. In particular, there is an increase in credit for marginal and underbanked borrowers,” Puri said.
In her remarks to help open the conference, Provost Laura Carlson shared her enthusiasm and optimism that the meeting would facilitate more of these types of discussions and collaborations.
“These vital discussions will hopefully help inform decisions and shape policies that will promote financial security and health for everyone, not just in Delaware and Pennsylvania, but in every community,” Carlson said.
Some of the research topics presented at the conference included cryptocurrency, non-fungible tokens and artificial intelligence, as well as small business lending and the high-risk mortgage market. All documents can be found at The FinTech website.
FinTech organizers Michael Gelman, assistant professor of finance, Paul Laux, professor of finance, and Vitaly Meursault, machine learning economist at the Federal Reserve Bank of Philadelphia, presented the Best Paper Award to Janet Gao, Hanyi Livia Yi, and David Zhang for their SU work Algorithmic underwriting in high-risk mortgage markets.