There’s a revolution going on in finance, and it goes by the name of “FinTech.”
Old-school ways of managing money are under siege by new technologies. Blockchain, cryptocurrencies, crowdfunding, robo-advising, and Big Data all fall under the FinTech — financial technology — umbrella. The Wharton School of the University of Pennsylvania is aggressively adding alumni-funded departments where these new technologies can be mastered.
On Thursday, Wharton announced it had received a major gift from 1991 alumnus Ross Stevens, CEO of Stone Ridge Holdings, a New York City-based hedge fund that specializes in high-risk investments. A Wharton spokesperson wouldn’t say the actual value of the gift.
The Stevens Center will see its official launch on April 3.
The Stevens donation follows last month’s $10 million gift from fellow Wharton alumnus Josh Harris, best known as a co-owner of the 76ers. Harris is the billionaire co-founder of Apollo Global Management, one of the world’s largest alternative investment firms. The Harris donation will fund the Joshua J. Harris Alternative Investments Program. Both programs will be housed in the yet-unbuilt Tangen Hall at 40th and Sansom Streets, which is currently a Penn parking lot.
David Musto, the Ronald O. Perelman professor of finance, will serve as the faculty director of the Stevens Center.
“We hope to hit the ground running as soon as feasible,” Musto said from Wharton’s San Francisco campus. “I need to staff up and advertise some job postings so we can ramp up.”
The mission of the Stevens Center is to understand the new financial tools. FinTech is more of “a process,” he said, and “not an asset class.” Musto calls some of the new tools “promising.” Others he refers to as “very unnerving.”
“With cryptocurrencies, there’s a question of what speed they’ll gain wider acceptance, and in which contexts," Musto said. "Crowdfunding started with great fanfare, and now you can go to websites and as a small retail investor put money into a startup, but are people getting ripped off, or is this the future of funding startups?”
Robo-advising is gaining ground, he said. “The economy is making more and more people become responsible for their own finances and retirement savings,” Musto said. “Robo-advisors are similar to phone apps that help you allocate your savings. They do the things a financial adviser would do, but it’s customized.”
“And then there’s Big Data, and all the ways you can use it,” he said. “Calculating a credit score off someone’s Facebook page could be very unnerving. But those kinds of things will happen whether you like it or not.”
The Stevens Center will draw on faculty from other departments at Wharton and other schools, he said, and also hire new staff. In addition, Musto plans to have executives-in-residence who can work directly with students on site.
“At Wharton, we want to be the destination for anyone who is interested in FinTech — whether they’re undergrads or MBAs — anyone who wants to participate in this revolution in finance,” he said.