ICM314-Digital Banking and Payment Systems

Module Provider: ICMA Centre
Number of credits: 10 [5 ECTS credits]
Level:7
Terms in which taught: Autumn term module
Pre-requisites:
Non-modular pre-requisites: Students must audit relevant parts of ICM 106 (Financial Markets) on banking, but will not be examined nor required to attend seminars
Co-requisites:
Modules excluded:
Current from: 2021/2

Module Convenor: Dr Mininder Sethi
Email: m.sethi@icmacentre.ac.uk

Type of module:

Summary module description:

In this module, you will learn about entrepreneurship, intrapreneurship, how technology makes some business models obsolete and introduces new ones, how banking is transitioning toward digital forms of financial intermediation and how payment systems are evolving with the deployment of new technologies.??We will explore the role of banks, central banks and money in the economy, how technology is reshaping the role of banks. New business models for banking services?and their regulatory implicationsÌýwill be discussed. Examples and case studies will be used to illustrate the key aspects of digital banking.Ìý

Aims:

The module focuses on (1) entrepreneurship, intrapreneurship, change management and business models and??(2) the services??financial intermediation provides (3) types of money and central banking (4) new payment systems (5) peer to peer lending, crowdfunding and other forms of disintermediation (6) Tech platforms and banking services (Tencent, Alibaba, Google, Facebook etc.)??(7) new bank start-ups (8) new banking modelsÌý

Assessable learning outcomes:

By the end of the module it is expected that students willÌýbe able to:Ìý

UnderstandÌýthe purpose and benefits of financial intermediation and the role of different financial firmsÌý

UnderstandÌýthe functions of central banks, the concept of money creation and the new forms of digital money in the economyÌý

UnderstandÌýhow banking servicesÌýareÌýcan beÌýperformed by non-banks and tech start-ups and the trend towards the elimination of intermediaries via, for example, blockchain technology and P2P lendingÌý

Be aware ofÌýÌýCompare and contrastÌýnew digital banking solutions such as BaaS,ÌýBaaPÌýand white label bankingÌýwith traditional banking.Ìý

Be familiar withÌýthe regulatory and ethical challenges posed by the new digital banking environmentÌý

Additional outcomes:

The module will use a number of in-class case studies to illustrate key aspects of digital bankingÌý

Ìý

Outline content:

1. 
   

   Why banks exist and what they do (covered only in summary as students expected to attend IC 106 first 5 weeks):Ìý

   
   

1. 
   

   Financial intermediation and its benefitsÌý

   
   

2. 
   

   Maturity transformation, leverage and the fragility of banks?Ìý

   
   

3. 
   

   Retail and investment banksÌý

   
   

2. 
   

   Central banking, money and digital currencies:?Ìý

   
   

1. 
   

   Monetary policy, lender of last resort, foreign reserves and bank supervision?Ìý

   
   
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2. 
   

   Theory of money, digital money and cryptocurrencies?Ìý

   
   

3. 
   

   Payment system technologies and infrastructures?Ìý

   
   

3. 
   

   Disintermediation:Ìý

   
   

1. 
   

   Peer to peer lending and crowdfunding?Ìý

   
   

2. 
   

   Alternative payment and banking services: Big techs (Amazon-JP Morgan, Alibaba –Ant Financials, Tencent’sÌýWechat, Apple pay, Facebook) and smaller techs (Stripe, Lending Club,ÌýCommonbond, Kabbage, Robinhood,ÌýWealthfront)??Ìý

   
   

4. 
   

   New digital banking solutions and business models.Ìý

   
   

1. 
   

   BaaS - Banking as a Service?Ìý

   
   

2. 
   

   BaaPÌý- Banking as a Platform?Ìý

   
   

3. 
   

   White label banking?Ìý

   
   

Global context:

The module explores global trends. International examples are used to illustrate key aspects of digital banking.ÌýCase studies focus onÌýAsian banks.

Brief description of teaching and learning methods:

The core theory and concepts will be presented during lectures. Problem sets will be solved in workshops.Ìý

Summative assessment- Examinations:

Written assignment including essay (50%)

Summative assessment- Coursework and in-class tests:

Multiple Choice Test (50%)Ìý

Formative assessment methods:

Multiple choice quizzes on lecture material which are then covered in seminar and correct answer explainedÌý

Penalties for late submission:

As per University policy

Assessment requirements for a pass:

50% average over project and MCT

Reassessment arrangements:

Project only

Additional Costs (specified where applicable):

Last updated: 6 January 2022