Essays on FinTech

FinTech typically describes the application of novel technologies in the financial services sector. These technological innovations aim to compete with traditional financial technologies and improve user experience on a broad range of financial applications. Examples range from peer-to-peer investing services and new settlement procedures to the use of smartphones for mobile banking. Each chapter of this dissertation deals with one of these examples with the goal to draw conclusions for broader economic questions. In the first chapter, Crowdfunding and Demand Uncertainty, I analyze the potential of reward-based crowdfunding to elicit demand information and improve the screening of viable projects vis-à-vis traditional external financing. Crowdfunding allows entrepreneurs to sell claims on future products directly to consumers to finance their investments. At the same time, this peer-to-peer sale of claims generates demand information that benefits the screening process for viable projects. I provide a characterization of the profit-maximizing crowdfunding mechanism when an entrepreneur knows neither the number of consumers who positively value the product nor their reservation prices. Using mechanism design theory, I show that the entrepreneur can finance all viable projects by committing to prices that decrease as the number of pledgers increases. This pricing strategy grants ex-post information rents to consumers with high reservation prices. However, if these information rents are large, then the entrepreneur prefers fixed high prices that lead to underinvestment since consumers with low valuations never participate. The second chapter, Building Trust Takes Time: Limits to Arbitrage in Blockchain-Based Markets, is a joint project with Nikolaus Hautsch and Stefan Voigt. We analyze the potential implications of distributed ledger technologies, such as blockchain, for cross-market trading. Distributed ledgers replace trusted clearing counterparties and security depositories with time-consuming consensus protocols to record the transfer of ownership. We argue that this settlement latency exposes cross-market arbitrageurs to price risk and theoretically derive arbitrage bounds that increase with expected latency, latency uncertainty, volatility in the underlying asset, and arbitrageurs' risk aversion. We then use Bitcoin order book and network data to estimate arbitrage bounds of, on average, 121 basis points, which in fact explain 91% of the observed cross-market price differences in our sample period. Consistent with our theoretical framework, we also find that periods of high latency-implied price risk exhibit large price differences, while asset flows across exchanges chase arbitrage opportunities. Our main conclusion is that blockchain-based settlement introduces a non-trivial friction that impedes arbitrageurs' activity. The third chapter, Perceived Precautionary Savings Motives: Evidence from FinTech, is coauthored with Francesco D'Acunto, Thomas Rauter, and Michael Weber. We use data from a European FinTech banking app provider to study the consumption response to the introduction of a mobile overdraft facility. In addition, we use the banking app to elicit consumers' preferences, beliefs, and motives. We find that users increase their spending permanently, lower their savings rate, and reallocate spending from non-discretionary to discretionary goods. Interestingly, users with a lot of deposits relative to their income react more than others but do not tap into negative deposits. We demonstrate that these results are not fully consistent with conventional models of financial constraints, buffer stock models, or present-bias preferences. We hence label this channel perceived precautionary savings motives: users with a lot of liquidity behave as if they had strong precautionary savings motives even though no observables, including the elicited preferences and beliefs, suggest they should

Proceedings of the First Karlsruhe Service Summit Workshop - Advances in Service Research, Karlsruhe, Germany, February 2015 (KIT Scientific Reports ; 7692)

Since April 2008 KSRI fosters interdisciplinary research in order to support and advance the progress in the service domain. KSRI brings together academia and industry while serving as a European research hub with respect to service science. For KSS2015 Research Workshop, we invited submissions of theoretical and empirical research dealing with the relevant topics in the context of services including energy, mobility, health care, social collaboration, and web technologies

Can Upward Brand Extensions be an Opportunity for Marketing Managers During the Covid-19 Pandemic and Beyond?

Early COVID-19 research has guided current managerial practice by introducing more products across different product categories as consumers tried to avoid perceived health risks from food shortages, i.e. horizontal brand extensions. For example, Leon, a fast-food restaurant in the UK, introduced a new range of ready meal products. However, when the food supply stabilised, availability may no longer be a concern for consumers. Instead, job losses could be a driver of higher perceived financial risks. Meanwhile, it remains unknown whether the perceived health or financial risks play a more significant role on consumers’ consumptions. Our preliminary survey shows perceived health risks outperform perceived financial risks to positively influence purchase intention during COVID-19. We suggest such a result indicates an opportunity for marketers to consider introducing premium priced products, i.e. upward brand extensions. The risk-as�feelings and signalling theories were used to explain consumer choice under risk may adopt affective heuristic processing, using minimal cognitive efforts to evaluate products. Based on this, consumers are likely to be affected by the salient high-quality and reliable product cue of upward extension signalled by its premium price level, which may attract consumers to purchase when they have high perceived health risks associated with COVID-19. Addressing this, a series of experimental studies confirm that upward brand extensions (versus normal new product introductions) can positively moderate the positive effect between perceived health risks associated with COVID-19 and purchase intention. Such an effect can be mediated by affective heuristic information processing. The results contribute to emergent COVID-19 literature and managerial practice during the pandemic but could also inform post-pandemic thinking around vertical brand extensions

A Mobile financial management system for investment groups

A Dissertation submitted in partial fulfillment of the requirements for the Degree of Master of Science in Mobile Telecommunications and Innovation (MSc. MTI)Investment groups have become a sure path to financial freedom not only because of their simplistic nature, but also due to the substantial gains that members of such groups accrue. They have been recognized as the driving force of the non-formal economy helping members to invest in various industries like real estate and transport. However, many of them fizzle out without making any substantial gains due to poor financial management practices and lack of financial management tools. Majority of investment groups are unable to accurately document, manage and track their financial transactions leading to lack of transparency and accountability. The study establishes that majority of investment groups are not able to effectively manage their finances due to various factors like limited financial resources to take up credible tools for financial management and limited access to information on financial management. To fill this gap, the study came up with a mobile financial management system. The system comprised of an Android mobile phone, an Android application and a back-end web application for authentication, transactions monitoring and generation of reports. The application was implemented using a combination of mobile money technologies to allow group members to contribute directly to a group’s bank account. The application allowed group members to view financial statements for the group e.g. group balance sheets and trial balances hence enhancing transparency. The functionality and usability of the system was tested to establish whether the system and user needs were adequately realized. Results of the tests established the system is efficient, fast and user friendly, hence, a conclusion was made that the system can therefore be used in Investment Groups to accurately document, manage and track financial transactions in real time. Additionally, supporting MFIs can now accurately monitor these groups due to improved financial reporting brought about by the solution

Representing Crowd Knowledge: Guidelines for Conceptual Modeling of User-generated Content

Organizations’ increasing reliance on externally produced information, such as online user-generated content (UGC) and crowdsourcing, challenges common assumptions about conceptual modeling in information systems (IS) development. We demonstrate UGC’s societal importance, analyze its distinguishing characteristics, identify specific conceptual modeling challenges in this setting, evaluate traditional and recently proposed approaches to modeling UGC, propose a set of conceptual modeling guidelines for developing IS that harness structured UGC, and demonstrate how to implement and evaluate the proposed guidelines using a case of development of a real crowdsourcing (citizen science) IS. We conclude by considering implications for conceptual modeling research and practice

Multikonferenz Wirtschaftsinformatik (MKWI) 2016: Technische Universität Ilmenau, 09. - 11. März 2016; Band I

Übersicht der Teilkonferenzen Band I: • 11. Konferenz Mobilität und Digitalisierung (MMS 2016) • Automated Process und Service Management • Business Intelligence, Analytics und Big Data • Computational Mobility, Transportation and Logistics • CSCW & Social Computing • Cyber-Physische Systeme und digitale Wertschöpfungsnetzwerke • Digitalisierung und Privacy • e-Commerce und e-Business • E-Government – Informations- und Kommunikationstechnologien im öffentlichen Sektor • E-Learning und Lern-Service-Engineering – Entwicklung, Einsatz und Evaluation technikgestützter Lehr-/Lernprozess

Banking and Finance

The banking and finance industry plays a significant role in the economy of a nation. As such, continuous research and up-to-date feeds are necessary for it to stay competitive and resilient. Due to its revolving and dynamic nature as well as its significance and interlinkages with other industries, a well-functioning banking and finance system is vital in safeguarding the interest of all stakeholders. Banking and Finance covers a wide range of essential topics highlighting major issues related to banking and finance. The book is rich with empirical evidence, scientific researches, best practices, and recommendations, making it a compact yet handy reference for readers, especially those who are in the field of banking and finance