The emergence of fintech challenges and cryptocurrencies is reshaping the sector as tech disrupts everything from equities trading to global payments

Firms are also using their financial firepower to tackle inequality and promote economic prosperity in the developing world. And the rise of quant funds – investments that use algorithms to beat the market and passive investing through Exchange-Traded Funds (ETFs), which are marketable securities that track an index and are traded like a common stock, is forcing active money managers to take a hard look at their business models.

These themes and more will be explored at the third annual conference, The Future of Finance, at Imperial College Business School in London on 19 April 2018. The industry’s leading thinkers will debate the opportunities and challenges in the financial sector and their impact on policy and practice.

Dr. Andrei Kirilenko, Director of the Global Fintech Centre at the Imperial College Business School, will chair a panel on fintech, cryptocurrencies and cybersecurity.

He said: “Both fintech solutions and cybersecurity threats are global developments. National regulators have been trying to figure out how to promote fintech and digital innovation, but also protect their financial systems from cybersecurity risks. The panel will discuss how fintech and cyber go hand-in-hand and what the future might hold.”

Cryptocurrencies

Dr. Kirilenko will be joined by Daniel Masters, Director at Global Advisors PLC, who bought bitcoin in 2012 when it was worth $100 (today: $9,000) and established the world’s first regulated crypto-fund, he said. Global Advisors is a professional money manager specialising in digital assets such as bitcoin.

Mr Masters said: “The digital asset universe is becoming self-sustaining. It’s gone from a billion to a trillion dollars in the last two years. We have this emerging and rapidly expanding universe which is [escaping] from the legacy world.

“And yet the tractor beam has been turned to full power by the Mark Carney’s of the world, who have legitimate concerns about investor protection. And players like Jamie Dimon have all concluded the only use of cryptocurrency is for [facilitating] crime.

“But technology like blockchain is in fact democratising the sharing of the transfer of value and there are many other benefits to the crypto market.”

Later, Alberto Gallo, Partner and Head of Global Macro Strategies at fund manager Algebris Investment, will join a panel exploring the future of the asset management industry. His track record includes foreseeing the financial crisis of 2008 as well as the European crisis of 2010, the subsequent central bank driven recovery, and the following rise in inequality and global populism.

Mr Gallo said that the cost associated with active money managers has driven the rise of passive investing. But in a market of less contrarian investors and diversity of participants, he warned that the financial system is more exposed to shocks.

“That’s the danger we have in developing a large amount of passive strategies, many of which are correlated,” Mr Gallo said. “There are pitfalls that may lie in creating an automated environment where everything is an ETF and moves in a singular direction. Too often, investors confuse low cost with low risk. Some ETFs were low cost, but their value still fell to zero.”

Another keynote speaker is Ralph De Haas, the Director of Research at the European Bank for Reconstruction and Development. He is also a part-time Associate Professor of Finance at Tilburg University and a Fellow at the European Banking Center.

Mr De Haas will join panel of distinguished financiers who will speak about how finance can address inequality and promote economic development. Academic research shows that the growth of the financial sector can have a positive effect on a country’s long-term economic development, while at the same time reducing inequality.

But there are many pitfalls on the way and this process is far from automatic. Mr De Haas said: “Finance will only have a beneficial effect if it is channeled to the right people in the right form, those with good business ideas that push the technological frontier in a country.”

He added that the private financial sector also has a huge role to play in environmental sustainability. “Most of the global transition to a low-carbon economy will need to be funded by private sources of finance, if international climate objectives are to be met on time,” Mr De Haas said.

“Special, public-sector-driven ‘green finance’ initiatives to fund low-carbon infrastructure and similar climate solutions are very important. But these initiatives will need to crowd in private funding (bank credit, bond funding as well as private and public equity) to achieve sufficient scale.”

The Future of Finance conference at Imperial College Business School will explore the future global challenges and opportunities in the financial sector.

It will bring together business leaders, policy makers and leading academics, who will share the latest insights and thinking, and network together.

The conference will also give attendees knowledge and inspiration that they can use to make immediate improvements to their organisations.

This article was drafted by Seb Murray.