Tech-driven and disruptive, the future of finance is changing everything from how you manage your money — like making mobile payments to your friends and e-loans you take out to pay for big purchases — to how entire ones work Industry sectors.
Take for example BioPhy, a healthcare fintech company just founded by three Wharton School MBAs. This startup’s mission is to fight cancer with funding by using an algorithm to identify the most promising clinical cancer candidates and then redirecting capital into those therapeutics to accelerate their research, development, and ultimately approval and launch. Steve Truong, BioPhy’s co-founder, president and CFO, recently told Wharton, “By marrying technology that predicts clinical trial outcomes with our disciplined investment process, we have built an AI-enabled biotechnology wealth manager designed to: set to fundamentally change the way biotechnology investments are done.”
Introducing the Genesis cohort
What else is new on the financial innovation front? We grabbed our virtual wallets and took a tour of the Wharton campus to learn more about the future of finance (the sidebar at the end of the story explains the language of financial innovation). Here’s what we found:
Whartons Stevens Center for Innovation in Finance is full of blockchain and cryptocurrency. In recent weeks, the center’s Cypher Accelerator, an organization that supports start-up companies focused on decentralized finance (so-called because transactions take place without a central authority like a bank), launched its first cohort of companies .
The so-called Genesis cohort comprises 10 startups operating in various industries such as artificial intelligence, digital identity, insurance, gaming and NFTs or non-fungible tokens. During the three-month program, Cypher helps these companies develop their products, nurture key relationships, build their go-to-market strategies, showcase their brands, and prepare to present to investors.
Under Cypher’s opening class: VO2, a platform that builds fan-athlete communities. The platform, which began as a passion project for Wharton’s sophomore year Arham Habib, uses a technology known as athlete tokens, branded and customizable ERC-1155 tokens that serve as tickets to exclusive athlete communities. Wharton Global Youth will speak to some of the founders in Cypher’s first cohort to learn about the latest and coolest technology-driven financial innovations.
“Government often encourages and facilitates innovation because it creates these guard rails for trust.” – Kevin Werbach, Wharton School professor
The downside of the innovative crypto coin is regulation. The global market for cryptocurrency and digital assets tops $3 million – and growing (Cypher!). And yet it’s a bit like a virtual wild, wild west when laws and regulations catch up with innovation.
Kevin Werbach, professor of law and business ethics at Wharton, stopped by Wharton Business Daily on SiriusXM to discuss US President Joe Biden’s executive order to develop a national cryptocurrency policy. Werbach leads the Wharton Blockchain and Digital Asset Project. President Biden’s executive order, issued in early March 2022, requires government agencies to coordinate six key priorities: protecting consumers and investors, safeguarding financial stability, mitigating risks from illicit digital assets, promoting American competitiveness, ensuring financial inclusion, and guiding responsible innovation .
While his radio visit, Werbach said he believes digital currencies are the “future of the financial system” and therefore welcomes more regulation from the US government. And while the global nature of digital finance poses a challenge to enforcing national laws in an international system, it is not insurmountable (the internet posed similar problems). “The government doesn’t necessarily stop innovation,” said Werbach. “Government often encourages and facilitates innovation because it creates these guardrails for people to have the confidence to embrace these things.”
Digital assets, digital worlds
Let’s round off our financial innovation tour by visiting an entirely new realm: the Metaverse. This user experience merges virtual reality, extended reality, augmented reality and mixed reality. Sarah Hammer, executive director of the Stevens Center for Innovation in Finance, describes the Metaverse as “a unified and interoperable virtual space where users can interact with each other and with the 3D digital environment through technology.” Instead of a two-dimensional experience on a flat screen, the Metaverse is three-dimensional and multi-sensory, making it more immersive.
What is the connection to finance? Think back to decentralized finance and all the innovations coming out of the Cypher Accelerator. While the metaverse need not be built on blockchain technology, the two digital worlds may well intersect through innovation.
Hammer recently told Penn today: “The functions and transactions performed in the Metaverse require a high level of security and speed, which can best be achieved through blockchain. A metaverse can integrate blockchain into its technology and crypto assets, for example using non-fungible tokens (NFTs) to authenticate proof of ownership for digital assets in both the virtual and physical worlds.” Some video games allow it, for example already allowing users to port digital assets between games. User-generated NFTs can be purchased and integrated into a digital world.
Stay tuned for more information on financial innovations emerging from the Cypher NFT Incubator Supporting global non-fungible token projects as digital assets lead us into the future of finance.
Give three examples of financial innovations from the article. How are they changing the way we handle money?
Wharton’s Keven Werbach says, “Governments often encourage and facilitate innovation because they create these guardrails of trust.” What does he mean by that? Is it also assumed that state regulation stifles innovation? How come?
How do you deal with financial innovations in your life? What do you see for the future of finance? Share your story in the comments section of this article.