John Jacobs, executive director of the Center for Financial Markets and Policy at Georgetown University, discusses the fact that technology has always moved faster than policy, and that it is critical for business schools to teach their students how to keep up with the implications of new technologies in order to be prepared to make necessary policy changes.
John Jacobs: [00:17] The actual fintech, the application of technology to financial services, always moves faster than regulation or policy. There are unintended consequences for both of those things. I think that's what schools really need is to train their students to understand those implications.
[00:30] You can build an application, and it can do something, but is doing it what you want it to do? What are the implications of what it's doing? How do you interact with the policy world and the regulatory world, etc.? I do think that fintech has been around for a long time. I think that's not a new story.
[00:44] I think that technology always moves faster than policy. But in this environment where we see how fast it moves and how big the implications are, that's something that we're doing a better job of than ever before. It's a critical role that business schools need to play, is teaching that process and that critical thinking.
[01:02] Business drives society, and technology drives business. It's critical to understand that and have a good overview of it and how it applies to business and their organization and what are the intended and unintended consequences of that.
[01:14] It's a really interesting discussion to think about or question to think about, which are the implications of new technologies and some of the things you've seen in the past the downside of new technology so to speak, or the challenges. If you look at Uber for example, the privacy aspects, the liability aspects, etc. of a ride sharing service.
[01:34] Understand too, that Uber started off not where it is today. It started off as actually an Uber cab they called it. They wanted to be a taxi service with a better system to get taxis to the right people versus where they are today. One thing to understand is most new technologies are going to pivot or change.
[01:51] They're going to end up in different places than they started. But in all the cases the challenges are the still the same. How do we handle privacy? How do we handle security? How do we handle liability? How do we handle unintended consequences?
[02:03] Just because you can do something with technology doesn't mean you should do something. It doesn't mean you don't understand if you do something you may have some implications of that.
[02:13] I see the same challenges with the latest technologies as I did with the early technologies. When you apply them, what does that mean and how does it work? I say privacy, security, and liability are the three big ones.
[02:26] What I see is that the policy makers, the regulators in this environment, are more open and collaborative than I've ever seen them before, which gives me good feelings.
[02:34] Whether it's financial engineering issues like led to the last financial prices with credit default swaps or a new technology, the ability for policy makers and regulators to interact with industry and be smart about what they do, does get us to the right place.
[02:50] They don't want to choke innovation, but at the same time they don't want to allow the unintended consequences that could hurt a fair market.
Filmed at AACSB's Annual Accreditation Conference in Washington, D.C., September 2018.