Immersion Seminar: Creative Destruction in the Financial Services Industry 

Charles Calomiris, Henry Kaufman Professor of Financial Institutions (emeritus) and Melina Denebeim '12, Co-Director, Program for Financial Studies (Years offered: 2020, 2019, 2018, 2016, 2015)

This one week immersion seminar provides a broad-based understanding of the financial services industry and considers fundamental questions about its future. Although those perspectives are based upon global and historical understanding, we take advantage of our New York City location by focusing on particular aspects of today’s New York financial institutions.

Financial services is an industry in the midst of dynamic change at all levels. Structure and performance are presently being influenced deeply by public policy and regulatory changes. The future is promising significant disruption (creative destruction), especially in the context of new technological applications and demographic shifts that will change the ways that financial services are delivered. Declines in average returns (from over 20% in the early 2000s to single digits today) are applying competitive pressure that will hasten the transformation of the industry. Despite low market valuations and low profits for financial institutions today, a robust financial sector remains at the heart of the U.S. economy, and all other successful developed and developing economies. This course will define today’s influences with an emphasis on the opportunities and perils that lie ahead. The course takes the form of an interactive dialogue, which combines academic analysis with practitioner perspectives about current operation, trends, and changes afoot. Practitioners will visit our class, and we will make site visits to their firms. On average, there will be more than three interactions per day with practitioners. The class is limited to 30 students to facilitate our daily mobility.

Some of the questions we will consider include:

  1. What are the key segments of the industry and how do the firms operating in those segments create value for customers and make money (yesterday, today, and in the future)?
  2. Who are the customers, what do they need and how is this changing?
  3. Which lines of business are synergistic, and what is the appropriate mix of services for different firms to provide to different customers?
  4. How has recent regulation reshaped the industry, and how will it continue to do so?
  5. How is technological change transforming the industry (e.g., FinTech)?
  6. What is New York City’s relevance to the local and global financial services industry?