Plenary Session: Emerging Geographies of FinTech–Regional Studies Association Sponsored
Organizer: David Bassens (Cosmopolis: Centre for Urban Research, Vrije Universiteit Brussels)
The post-crisis conjuncture has seen the rapid rise of digital and online technologies in the realm of financial services – a trend captured by the notion of FinTech. A key question for geographers is the degree to which FinTech disrupts existing financial geographies and engenders new forms of intermediation. The panel broaches this question by discussing how FinTech enables platform business models that allow constructing markets in both mature and emerging economies. New dependencies on geographically rooted pools of knowledge, people, and capital thereby move into focus. Ultimately, FinTech also opens up new relations between finance and the state, most prominently in the realm of regulation.
Blockchain-inspired Business Models and Value Creation Logics in China
Xiuping Hua, Professor of Finance, Nottingham University Business School China
Blockchain, despite its origin as the underlying infrastructure for value transfer in the era of cryptocurrency, has been touted as the main driver for disruption in modern businesses. The blockchain technology is embedded with the capacity to chronologically capture and store virtually tamper-proof transactional records in a standardized format that is transparent to all stakeholders involved in the transaction. This in turn has prompted many companies to rethink pre-existing business practices, thereby yielding a myriad of fascinating business models anchored on the blockchain technology. We advance contemporary knowledge of business applications of blockchain by drawing on the theoretical lens of digital business model and value configuration to decipher how pioneers in this space are leveraging the blockchain to create and capture value. Via a comparative, multiple case study approach, we analyzed five companies in mainland China that have rolled out blockchain initiatives. From our case analysis, we derived a typology of five blockchain-inspired business models, each of which embodies distinctive logics for market differentiation. For each business model, we proffered insights into its value creation logic, its value capturing mechanism, and the challenges that could threaten its longer-term viability.
The Rise of the FinTech Economy: Platforms, Places, Populations
Andrew Leyshon, Professor of Economic Geography, School of Geography, University of Nottingham
This paper will address the merger of two powerful forces within the contemporary global economy: financial services and digital platforms. Mobilizing digital technologies and data analytics, the FinTech economy is a form of platform finance, accessed by users through mobile telecommunication networks and smartphone applications linked to cloud computing. The paper will interrogate three distinctive features of the FinTech economy that help to explain its rise to a position of significance within the global financial system. First, the intermediary role of the platform as a unique digital economy business model that is backed by venture capitalists and other investors. Second, the centralized and variegated geography of FinTech, which has seen it emerge in certain urban agglomerations through distinctive combinations of capital, knowledge and regulation. Third, and finally, its ability to target and enrol segmented populations of users which have enabled it to capture market in mature retail financial markets while at the same time forming novel markets for previously excluded or unserved individuals and households. The paper concludes by considering the potential systemic risks of the rise of platform finance and the FinTech economy.
Capturing Currency: Blockchains and the Ideology of Algorithms
Matthew Zook, University Research Professor, Department of Geography, University of Kentucky
Fintech actively contributes to a world of changing scales and connections, seemingly only lightly touching material places. Cross-border arrangements once limited to TNCs or state actors are now commonplace and currencies can accrue value via their online communities and technology rather than gold reserves or GDP growth. In particular, the technology of blockchain – a cryptographically-secured, algorithmically-regulated, distributed-ledger – has emerged as a disruptive force particularly within practices of valuation and financing for tech-based firms. However, rather than occupying an algorithmic place apart, blockchain contains multiple and conflicting agencies and is messily embedded in the code/space of materiality. Although the most famous instantiation of blockchain, Bitcoin, largely failed as an alternative currency, it has succeeded in supporting new entrepreneurial practices based in specific ideology of algorithmic governance. There is a powerful enthusiasm among the blockchain community for diminishing the role of the state and using “objective” algorithms to reshape exchange and banking to make it “fairer”. For example, many of the proposed uses for blockchain, such as verification, identification and tracking, duplicate existing centralized systems, certification, regulation, trusted brokers. In 2017 and 2018 when early Bitcoin adopters found themselves with increasingly valuable assets they used this new wealth to back ideas – via Initial Coin Offerings (ICOs) – that pushed forward the overall blockchain project. A world where currency is downscaled from the state level and the ability to expand monetary supply or create inflation is now possible at the firm or even individual level.