DIGITAL FINANCE
Instructional goals
The course is aimed at enabling students to understand how technology is transforming the corporate finance landscape through the analysis of digital finance, new financial intermediation models, the innovative role of Blockchain, tokenization and Big Data in the financial sector. At the end of the course students will be able to manage the digital transformation of the FinTech era from different perspectives, also thanks to an international and multidimensional approach.
Presentation of the course by Professor Bonolis:
https://www.youtube.com/watch?v=7s_5tP_iGKE
Please see also the videos below on some of the topics of the course:
Fintech:
https://www.youtube.com/watch?v=i35xfEGAu-I
Blockchain (how it works):
https://www.youtube.com/watch?v=SSo_EIwHSd4&pbjreload=101
Tokenization of assets:
https://www.youtube.com/watch?v=0fmysNB1Wt8
How does tokenization of assets work? Tokens explained. Tokenized Assets explained. - YouTube
Impact of AI & Technology on the Funds sector:
https://media.cmslegal.com/media/embed?unique_key=dc8cfd5d1f1ab35b234ced946b11cf61&width=720&height=405&autoplay=false&autolightsoff=false&loop=false&clean
Intended learning outcomes
Students will be made at ease of current and new trends of the financial market and its evolution and impact on the traditional financial sector. Students will be able to identify and evaluate the expected risks and benefits deriving from the use of digital finance and of the innovative tools characterizing it (e.g., cryptocurrencies, blockchain, tokens, crowdfunding etc.) as implemented at national and international level also in order to allow a practical application of these tools in different types of business.
Course Contents
The course defines the aspects of the world of digital finance with a particular focus on corporate finance, risks and benefits associated to the implementation of digital finance based on current financial and legal systems, both nationally and internationally, as well as future perspectives of digital finance.
The course will focus on the analysis of traditional finance instruments and how digital finance is revolutionising such market, exploring the notions of ICOs, crypto-assets, peer-to-peer lending platforms, blockchain, crowdfunding, assets tokenization and new means of payment, as well as the principles and instruments behind corporate investment and financing decisions to assess their impact on the creation of value for financial and corporate stakeholders. The lessons will also have a practical approach to the phenomenon, through the examination of case studies and scientific analyses.
Particular focus will be made on tokenization of assets, NFTs and their use in the Metaverse and Decentralised Finance in all its forms and DAO.
Reference Books
It is recommended to read the materials indicated in the corresponding single lectures to have the necessary knowledge for a complete understanding of the course contents.
Teaching Methods
Lessons will be based on the following teaching methods: traditional lecture; interaction; guest speaker(s) on specific topics; individual exercises; team works.
Assessment Method
The assessment method will be based on team works performed during the course and a final oral test.
Thesis assignment criteria
The assignment of the thesis will take into account the interest shown by the student in the matter and consistency of the thesis to the topics covered by the course as well as its innovative features.
Week 1
The first week will be dedicated to the analysis of the concept of digital finance and its relevant gradual development and implementation in the current financial sector. Focus will be given to the key players of the FinTech landscape, in particular on startups and different business cases, their innovative reach in the world of financial services, competitive advantages, and threats to traditional business models; the changes taking place in the regulatory markets for the management of the FinTech phenomenon.
- Report of the Expert Group on European financial data space (2022), Report on Digital finance
- Basel Committee on Banking Supervision (2018), Sound Practices Implications of FinTech developments for banks and bank supervisors.
- European Parliament (2019), Fintech (financial technology) and the European Union State of play and outlook.
- Communication from the Commission to the European Parliament, the Council, the European Central Bank, the European Economic and Social Committee and the Committee of the Regions (2018), FinTech Action plan: For a more competitive and innovative European financial sector.
Sennhauser, Pirozzolo (2019), Italy: Lending & Secured Finance
Week 2
The second week will be focused on the traditional corporate finance, with a deep dive in the main financing means for companies and the main economic and legal aspects of such mechanisms.
- Paolo Bonolis et al. (2017), Cash Pooling.
- D. Hillier, s. Ross, r. Westerfield, J. F. Jaffe (2018), Corporate Finance, McGraw-Hill 3rd edition.
- Corporate Finance, Loan Covenant.
- Sennhauser, Pirozzolo (2019), Italy: Lending & Secured Finance.
Week 3
During the third week, it will be analyzed how digital finance has innovated the world of banking, financing, asset management, insurance, payment services and regulation. Students will analyze alternative investment methods to traditional ones. Lessons will focus on the different types of crowdfunding and peer to peer lending conducting a deep analysis of the phenomena with specific examples and business cases.
- European Union (2021), Regulation (EU) 2020/1503 of the European Parliament and of the Council of 7 October 2020 on European crowdfunding service providers for business, and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937 (Text with EEA relevance).
- EY (2021), European crowdfunding, new harmonized rules.
- Deidre Ahern (2018), The EU’s Opt-in Regulatory Framework for Crowdlending: Expediency at the Expense of FinTech Investor Protection?
- P2P Marketdata (2019), Common EU Rules for Crowdfunding: Regulation on European P2P Platforms Explained.
- EY (2019), Real Estate Crowdfunding: Introduction to an alternative way of investing.
- EBA, Payment services and electronic money.
- Yves Mersch (2019), Lending and payment systems in upheaval: the fintech challenge.
Week 4
The fourth week will be focused on both national and international legal framework and the current position of the main competent authorities, including the current Italian position, also in the light of the last years’ events (e.g., Coronavirus effects). This lesson will also explore the role of sustainable finance and ESG/DSG indicators. In this regard, we will analyze the case of Maghreb region.
- Bank of Italy (2021), Regulatory Sandbox
- EBA (2019), Report on Regulatory perimeter, regulatory status and authorization approaches in relation to FinTech activities.
- EBA (2019), FinTech: Regulatory sandboxes and innovation hubs.
- Bank for International Settlement (2020), Regulatory sandboxes and fintech funding: evidence from the UK
- Deloitte (2020), Beyond COVID-19: New opportunities for fintech companies.
- Isabel Woodford (2020), 18 fintechs that investors think will thrive post-lockdown.
Isabel Woodford (2020), 18 fintechs that investors think will thrive post-lockdown.
- Consob (2018), Sustainable Finance Action Plan
- EU Commission (2018), Renewed sustainable finance and implementation of the action plan of financing sustainable growth
Week 5
Students will learn more about the elements that lead a startup to succeed, and a teamwork will take place to enable students developing specific skills to analyze financial sector, to identify business opportunities and to set up a FinTech startup.
- McKinsey & Company (2023), Fintechs: A new paradigm of growth.
- KPMG (2023), Pulse of Fintech. Biannual analysis of global fintech funding.
- EBA (2019), Report on the impact of FinTech on payment institutions' (PIs) and electronic money institutions' (EMIs) business models.
Week 6
During this week lessons will be specifically focused on: the notion of blockchain and its implementation in the financial sector; the possible uses of DLTs in specific fields; technical and regulatory aspects of the so called “smart contracts”; the concept of “Decentralized Finance”; practical cases relating to the use of DLT in banking and finance; cryptocurrencies and their possible multiple utilization and their impact on existing legal and financial system.
EU Blockchain Observatory and Forum (2022), “Smart Contracts”.
- Nascimento S. (ed), Pólvora A. (ed), Anderberg A., Andonova E., Bellia M., Calès L., Inamorato dos Santos A., Kounelis I., Nai Fovino I., Petracco Giudici M., Papanagiotou E., Sobolewski M., Rossetti F., Spirito L. (2019), Blockchain Now And Tomorrow: Assessing Multidimensional Impacts of Distributed Ledger Technologies.
- European Union Blockchain Observatory and Forum (2019), Legal and Regulatory Framework of Blockchains & Smart Contracts.
Paolo Bonolis; Gianfabio Florio (2021) Bitcoin and crypto assets: investor protection regulation
IOSCO (2020), Issues, Risks and Regulatory Considerations Relating to Crypto-Asset Trading Platforms
Week 7
The seventh week will be focused on ICOs, IPOs, tokens including NFTs and the so-called tokenization, as well as the so-called Security Token Offerings (“STOs”). The lessons will be aimed at conducting a deep analysis of the phenomena and their relevant regulatory frameworks with specific examples, business cases and students’ interaction on the topics.
- Deloitte (2020), Security token offerings: The next phase of financial market evolution
- Sabrina T. Howell, Marina Niessner e David Yermack (2018), Initial Coin Offerings: Financing Growth with Cryptocurrency Token Sales.
- CONSOB (2019), Initial Coin Offerings and Crypto-Assets Exchanges.
- Carlo Gola e Andrea Caponera (2019), Policy issues on crypto-assets.
- OECD (2019), Initial Coin Offerings (ICOs) for SME Financing.
- ESMA (2019), Initial Coin Offerings and Crypto-Assets.
- Paolo Bonolis e Italo De Feo (2019), CMS Expert Guide to Security Token Offerings in Italy.
- CONSOB (2020), Initial Coin Offerings and Crypto-Assets Exchanges.
- IOSCO (2020), Issues, Risks and Regulatory Considerations Relating to Crypto-Asset Trading Platforms.
- Giuseppe G. Santorsola (2021), NFT, Non-fungible Token: nuova alternativa di investimento de-correlato.
-Paolo Bonolis; Gianfabio Florio (2021) Cryptoassets. The state of the art and expectations for new regulations at National and European Level.
-Paolo Bonolis; Gianfabio Florio (2021) From stickers to fan tokens: the future of fans as an industry.
- Socios (2022), Written evidence submitted by Socios to the British Parliament.
Week 8
During this week it will be analyzed the use and the current implementation of artificial intelligence and robo-advisors in financial services, as well as the relevant possible regulatory solutions.
- EU Commission (2020), Report on the safety and liability implications of Artificial Intelligence, the Internet of Things and robotics
- AI ACT Final Draft (2024)
- EU Parliament (2021), Robo-advisors. How do they fit in the existing EU regulatory framework, in particular with regard to investor protection?
- Financial Stability Board (2017), Artificial intelligence and machine learning in financial services.
- PwC (2019), The role of risk and trust in the adoption of robo-advisory in Italy.
- Lukas Ryll, Mary Emma Barton, Bryan Zheng Zhang e Jesse McWaters (2020), Transforming Paradigms A Global AI in Financial Services Survey.
- IOSCO (2020), The use of artificial intelligence and machine learning by market intermediaries and asset managers.
- European Commission (2020), White Paper on Artificial Intelligence: a European approach to excellence and trust.
Week 9
Lessons will focus on the concept of Big Data, with attention to its critical aspects and the relevant regulatory solutions also in connection with GDPR requirements. Recent examples of possible abuses of Big Data will be discussed with students.
- EU Commission (2022), Big data. Shaping Europe’s Digital future.
- ESAs (2018), Joint Committee Final Report on Big Data.
- CONSOB (2019), Financial Data Aggregation e Account Information Services.
- EBA (2020), Report on Big Data and Advanced Analytics.
Week 10
During this week also with the contribution of external speakers students will go through practical experiences of fintech start up and the functioning of incubators and regulatory sandboxes.
Also we will analyze the wide concept of Metaverse, and we will try to understand what developments there could be in the next future.
- Harvard Business School (2023), Startup incubator vs. accelerator: which is right for you?
- Deloitte (2024), Considerations for regulating the metaverse: New models for content, commerce, and data.
-P. Bonolis; G. Florio (2021) Regulatory Sandbox: the first timeslot for the experimentation of FinTech project is about to start
Week 11
The concept of cybersecurity will be analyzed: definition, the European strategy, the applicable European and national legal framework, and the relation between FinTech and cybersecurity.
- European Commission (2024), New rules to boost cybersecurity of the EU institutions enter into force.
- European Commission (2020), Europe's moment: Repair and prepare for the next generation.
Week 12
At the end of the course, students will learn how to put in practice the information and knowledge assimilated during the course also through a teamwork on negotiation of a FinTech deal.
- Harvard Business Review (2014), How to Negotiate with Someone More Powerful than You.
- Masterclass (2020), How to Negotiate: 5 Tips for Negotiating Better.
- Harvard Business Review (2020), How to Negotiate Virtually.