07 Jun Discussing the future of fintech with Prof. David Yermack
This past month, Professor David Yermack, the Albert Fingerhut Professor of Finance and Business Transformation at NYU Stern School of Business, was in Amsterdam to give an Executive Masterclass on Fintech & Blockchain at the Amsterdam Business School. Holland FinTech was fortunate enough to sit down with Prof. Yermack at the Erasmus University in Rotterdam for an insightful talk on what the future holds for the world of fintech.
At the end of May 2017, Professor David Yermack, a respected Professor of Finance from NYU’s Stern School of Business was in Amsterdam to give a two-day executive masterclass on the topic of Fintech & Blockchain at the Amsterdam Business School of the University of Amsterdam. Despite his busy schedule, Prof. Yermack was kind enough to sit down with one of our Holland FinTech colleagues at the Erasmus University in Rotterdam for an insightful discussion about the exciting and transformative future of financial technology. The full interview (around 25 minutes in length) is embedded below, and can also be seen on the Holland FinTech YouTube Channel; but for the readers among us, here’s a quick summary:
In addition to his title as the Albert Fingerhut Professor of Finance and Business Transformation at New York University Stern School of Business, Prof. Yermack currently serves as Chairman of the Finance Department and Director of the NYU Pollack Center for Law and Business, and teaches joint MBA-Law School courses on the topics of Restructuring Firms & Industries and Bitcoin & Cryptocurrencies, as well as PhD research courses in corporate governance, executive compensation, and distress and restructuring.
It almost goes without saying that Prof. Yermack is an expert within the world of financial technology, especially when it comes to the subjects of cryptocurrency and the blockchain. To date, he has published more than two dozen articles in leading academic journals for the areas of Finance, Accounting, Economics, and Law, including the notable 2015 piece featured in The Handbook of Digital Currency – an Elsevier publication – entitled, ‘Is Bitcoin a Real Currency?’ With this long history of accomplishments, Professor David Yermack is well positioned to offer a few predictions about what the future holds for the disruptive world of fintech, and he is particularly optimistic about the potential of the distributed ledger technology that facilitates bitcoin trading – the blockchain.
In our recent interview, Prof. Yermack reflected on a favourite book from his adolescence –The Crying of Lot 49, a novella featuring a plot line rife with libertarian impulse, which he says shows parallels to the emergence of bitcoin. When bitcoin first came about, he was immediately interested and excited about the potential of the new cryptocurrency controlled only by market forces. In simple terms, blockchain refers to the record-keeping technology that underlies bitcoin transactions. ‘Distributed ledger technology’ was originally developed in the 1990’s by a company that was looking for a new means of tracking the ownership of intellectual property.
Today, blockchain can essentially be used for the trading of any type of asset. Point-in-case – leading innovators have lately been making almost daily announcements about new partnerships and Proofs-of-Concept on the blockchain. One such instance came earlier this spring from industry giant IBM, which, following multiple successful blockchain-based transactions that facilitated the trade of crude oil, unveiled plans to launch a blockchain platform for oil trade finance in collaboration with commodities trading group, Trafigura and French corporate & investment bank, Natixis.
Blockchain: a major breakthrough
Prof. Yermack views the blockchain as an incredibly important breakthrough and innovation with the potential to replace long-standing double-entry bookkeeping practices, and which offers an ideal alternative for tracking financial data. The Economist recently dubbed blockchain the ‘trust machine’, and Prof. Yermack is inclined to agree with this description. He predicts that blockchain will be the de facto method for tracking data related to financial transactions in about a decade. Despite its promising future, the migration is just beginning, and he says the road ahead is likely to be chaotic and, as it is often called within the tech world – disruptive. Moreover, he asserts that those firms that haven’t already started adapting for the future are at an increasing risk of failure, and would be wise to pay attention to the innovations that are taking place within the financial world.
Prof. Yermack on the future of fintech
In our recent interview, Professor Yermack discusses the topics of fintech, bitcoin, blockchain, and more in much greater detail, offering expert insights about what the future holds for such transformative technological advancements. Here is the full interview (approx. 26 minutes in length):
Unable to see the embedded video above? You’ll probably have better luck viewing the interview on YouTube. To do so, click here.