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: Prof Brian Scott-Quinn
Email: b.scott-quinn@reading.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 will be discussed. Examples and case studies will be used to illustrate the key aspects of digital banking. 


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) and new banking models. 


Assessable learning outcomes:

By the end of the module it is expected that students will be able to:




  • Explain the purpose and benefits of financial intermediation and the role of different financial firms

  • Discuss the functions of central banks, the concept of money creation and the new forms of digital money in the economy

  • Explain how banking services can be performed by non-banks and tech start-ups and the trend towards the elimination of intermediaries via, for example, blockchain technology and P2P lending

  • Compare and contrast new digital banking solutions such as BaaS, BaaP and white label banking with traditional banking.

  • Discuss the regulatory and et hical challenges posed by the new digital banking environment


Additional outcomes:

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



 


Outline content:


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




  • Financial intermediation and its benefits

  • Maturity transformation, leverage and the fragility of banks 

  • Retail and investment banks




  1. Central banking, money and digital currencies: 




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

  • Theory of money, digital money and cryptocurrencies 

  • Payment system technologies and infrastructures 




  1. Disintermediation:




  • Peer to peer lending and crowdfunding 

  • Alternative payment and banking services: Big techs (Amazon-JP Morgan, Alibaba &nda sh;Ant Financials, Tencent’s Wechat, Apple pay, Facebook) and smaller techs (Stripe, Lending Club, Commonbond, Kabbage, Robinhood, Wealthfront)  




  1. New digital banking solutions and business models.




  • BaaS - Banking as a Service

  • BaaP - Banking as a Platform 

  • White label banking 


Global context:

The module explores global trends. International examples are used to illustrate key aspects of digital banking. In particular, we focus on case studies focus of Asian banks and in particular DBS bank which has been a global leader in digitalisation.  We also analyse innovations from companies in the United States such as Stripe and from Europe, at Klarna which has thrived on Point of Sale credit.


Brief description of teaching and learning methods:

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


Contact hours:
  Autumn Spring Summer
Lectures 10
Seminars 4
Guided independent study:      
    Wider reading (independent) 30
    Wider reading (directed) 11
    Preparation for seminars 10
    Essay preparation 25
    Reflection 10
       
Total hours by term 100 0 0
       
Total hours for module 100

Summative Assessment Methods:
Method Percentage
Written assignment including essay 50
Class test administered by School 50

Summative assessment- Examinations:

Summative assessment- Coursework and in-class tests:

Written assignment including essay (50%) to be completed and submitted in January (date to be announced) following the Autumn term teaching. The maximum word count is 2,500.  

Multiple Choice Test (50%) Also to be be completed in January (date to be announced). This will be 50 questions to be answered in one hour. 


Formative assessment methods:

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


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: 8 April 2021

THE INFORMATION CONTAINED IN THIS MODULE DESCRIPTION DOES NOT FORM ANY PART OF A STUDENT'S CONTRACT.

Things to do now