Chat with the Professor: Dr Douglas Streeter Rolph, Nanyang Business School
Chat with the Professor: Dr Douglas Streeter Rolph, Senior Lecturer, Banking & Finance, Nanyang Business School
Dr Rolph specialises in financial risk management and equity valuation courses for postgraduate classes. One of his pet topics is about fintech ecosystems, financial inclusion and role of innovation in financial institutions. He is a frequent guest speaker at numerous events and contributor to several publications.
We have the luxury of inviting him to speak at the ACTS & SFA TECHINSG event on 27 July 2018. And before that, we are privileged to speak to him about a couple of issues and learn more about his views on the new economy of tech in finance.
TFA Geeks: Thank you for accepting the invitation to speak at the ACTS/SFA TECHINSG event in July and granting us some time to learn more about your interests and views on the recent wave of adoption of Tech in the Financial industry.
You have worked at the Federal Reserve Bank, advised at funds, and is now teaching in universities.
Can you share with us what attracted you to teach instead of joining a firm on the Wall Street or a fund in London?
Dr Rolph: I enjoy teaching and research far too much to think of anything else as a career. Watching how people evolve over time, and contributing to that evolution is incredibly rewarding and satisfying. And understanding how to use the tools of finance to get better insight into what opportunities exist in financial markets and how we can seize these opportunities is rewarding, both intellectually and financially.
TFA Geeks: Your interests are in financial risk management, equity valuation, investments and fintech ecosystems, financial inclusion and innovation in financial institutions. The range is very interesting and to some it might be rather peculiar.
What got you interested in fintechs and why in particular innovation in financial institutions? Is tech a pet topic for you?
Dr Rolph: What draws me to fintech in Singapore is the real shift in the financial services landscape which has opened a lot of growth opportunities. The start-ups are quick, nimble and engaged with new ideas of how to develop the market.
Of course, financial institutions are aware that excelling while in the middle of this earthquake requires adaptation when integrating new tech into existing systems. Also, my sense is that senior management are aware of the need for a shift in corporate culture towards a growth mindset. So the innovation part of my interest lies in understanding how banks are dealing with and adapting to the radical, fundamental changes in the market.
TFA Geeks: Lately, we have seen a rise in machines, i.e AI, Blockchain, Cryptos, that sparked many to comment on the potential redundancy of human beings.
What are you views on that? Do you think AI will ever replace us, perhaps even your role as a lecturer in schools? 🙂
Dr Rolph: I see AI enhancing the type of work we do, not replacing it. If you look at the types of tasks most suitable for AI, the highest value propositions usually involve sorting, classifying and predicting data.
To take advantage of what has been sorted, classified and predicted requires judgement (our judgement, as people). Business insight requires our abilities to think about what the analysis means.
I do not foresee an AI bot that will do better than us at creating insight and a vision of the way forward in a business challenge, especially when we have to adapt in environment with little information and quick sudden changes.
My role as a lecturer is to help people learn how to use finance tools to generate insights and opportunities for seeing a path forward. Given the state of development for AI tech, I think it is too early to foresee human lecturers being made “redundant”.
TFA Geeks: Fintechs are the rage these days, do you think they have the solutions for current range of issues in the Financial space? Will they be able to replace the Banks? Or will the Banks ultimately absorb them?
Dr Rolph: There is a reason why banks exist. Let’s say I want to borrow money, and you have money to lend. If we just randomly ask other people “do you know someone what wants to lend” and “wants to borrow”, we could spend a lot of time and energy before we connect. And once we connect, how can you, “as a lender”, understand what type of credit risk I pose?
P2P lending solves the first problem, because now you and I can meet on a fintech platform.
However, P2P lending doesn’t solve the problem of understanding what type of credit risk the borrower poses, whether processes are in place to weed out the “bad apples,” those borrowers who have no intention of paying back the loan.
In addition, providing financial services is a “trust game”, and financial institutions spend money and time building their reputation so that people trust them with their money. For example, when was the last time you worried about not being able to take money from an ATM because the bank had collapsed? For most of us, never. This is because banks invest in systems to insure cash is available when depositors what to make a withdrawal.
Fintech start-ups, with little “brand equity”, have found it very hard to overcome the “trust deficit” relative to established financial institutions.
So fintechs have the ability (and hunger) to seek out opportunities and collaborate with financial institutions offer better value to customers, or more efficiently run the bank operations.
And financial institutions have the expertise and “trusted platform” from which to offer new products.
The relationship is symbiotic, and will likely remain so.
TFA Geeks: How should a current practitioner in the Banks and Financial Institution react and prepare him/herself for the onslaught of the machines and tech?
Dr Rolph: Two things come to my mind.
1. Learn to code. In something, anything. Ideally in a language used in finance (Python and “R” come to mind). But learning the “thought process” underlying any coding language will deliver real benefits in terms of understanding what you can and can’t do with technology. I am not saying “become an expert”. Instead, become a “user” of computer code, and you will see opportunities that exist and are real, and cannot be seen otherwise.
2. Learn to think critically. Data without insight is just, at best, a series of patterns without meaning. Learn how to better discern what is real and important, and what is a “spurious correlation”, a pattern without a meaning. Learn how to ask better questions, and join others in a journey to get insights out of the questions, and better separate the “big direction” of a business opportunity from the fads and fancies that are so easy to find, and yield so little in terms of profits or lasting potential.
TFA Geeks: Which is more stressful – being a CFO (Chief Financial Officer) or a CTO (Chief Technology Officer) in a large organisation that is seeking innovation?
Dr Rolph: The CTO has more stress, especially if the CTO lacks the full support of the Board. A lot of talk about “digital transformation” at the board level is vague and ambiguous, and seems more driven by wanting to “do something” about perceived threats than by growth oriented action for the future.
I view one of the CTO’s roles is to “gain clarity” about how to strategically optimize the technology deployed. Their ability to execute depends on access to resources, so without Board (and the CFO’s) support, they can find themselves set up for real failure.