The Financial Ecosystem

Long term asset owners and managers, while seeking high risk-adjusted returns and efficiently allocating scarce financial capital to the highest value economic activities, have the essential and formidable role of ensuring the sustainability of return. But generally accepted financial accounting methods are ill-equipped to provide clear signals of the risks and opportunities created by scarce natural and human capital. Hence many investment managers in global financial markets, while performing due diligence on portfolio companies, examine metrics of non-financial performance, especially environmental, social and governance (ESG) indicators. Broken into three sections, this book outlines the rationale for and methods used in six areas where financial acumen has been harnessed to the goal of combining monetary return with long run sustainability. The first section offers an introduction to the role of finance in achieving sustainability, and includes an overview of the six areas—sustainable investing, impact investing, decentralized finance, conservation finance, and cleantech finance. The methods section of the book illustrates analytical tools and specialized data sources essential to those interested in increasing the level of social responsibility embedded in economic activity. The applications section describes and differentiates each of the six areas and their roles in advancing specific measures of sustainability.

This book analyses and discusses current issues and trends in finance with a special focus on technological developments and innovations. The book presents an overview of the classical and traditional approaches of financial management in companies and discusses its key strategic role in corporate performance. Furthermore, the volume illustrates how the emerging technological innovations will shape the theory and practice of financial management, focusing especially on the decentralized financial ecosystems that blockchain and its related technologies allow.

The Capital Markets: evolution of the financial ecosystem is the new standard providing practical text book style coverage of this dynamic market and its products. Written by the former President of BNY Mellon Capital Markets, LLC for both financial professionals and novices, The Capital Markets provides a comprehensive macro view of the marketplace and how its products operate. The subject matter offers an authoritative discussion of the fundamentals of both, the fixed income and equity markets, underwriting, securitizations, derivatives, currency among other products through the lens of leading industry practitioners. Key Learning Concepts Understand the impact of both global and domestic regulatory changes Learn about the products that holistically make up the capital markets Explore the components of the infrastructure that underpins these markets Examine the tools used for trading and managing risk Review new product innovations

The Capital Markets: evolution of the financial ecosystem is the new standard providing practical text book style coverage of this dynamic market and its products. Written by the former President of BNY Mellon Capital Markets, LLC for both financial professionals and novices, The Capital Markets provides a comprehensive macro view of the marketplace and how its products operate. The subject matter offers an authoritative discussion of the fundamentals of both, the fixed income and equity markets, underwriting, securitizations, derivatives, currency among other products through the lens of leading industry practitioners. Key Learning Concepts Understand the impact of both global and domestic regulatory changes Learn about the products that holistically make up the capital markets Explore the components of the infrastructure that underpins these markets Examine the tools used for trading and managing risk Review new product innovations

This book is a practical guide to the evolving landscape of finance, highlighting how it’s changing our relationship with money and how financial technology, together with macroeconomic and societal change, is rewriting the story of how business is done in developing economies. Financial services companies are trying to become more customer focused, but struggling to help huge customer segments, particularly in developing economies. Alternative financial models and tools are emerging, which are being embraced by consumers and incumbents. In large parts of the developing world, alternative services are leapfrogging traditional finance, meaning more and more people have access to finance without ever needing a bank. Meanwhile, the barriers around financial services companies are crumbling, as they become more reliant on integration with new providers and alternative types of service. Financial products can no longer be viewed in isolation, but as part of a service landscape that supports how people do life. This means rethinking how our businesses are designed, motivated and organised, and letting go of the old ways of thinking about supply and demand. With practical steps businesses and, in particular, financial services organisations need to take to participate in a global service ecosystem, this book will be of interest to financial professionals who work in banking, financial technology, and development finance.

Financial technologies are understood as ICT-based financial innovations and business entities based on these innovations (Lai & Samers, 2021; Langley & Leyshon, 2021; Wójcik, 2021b). Like other technological innovations, Fintech not only influences technical parameters of products and services, but also transforms the economic organization of firms and industries (Baldwin, 2020; Sanchez & Mahoney, 2013). ICT solutions in the financial sector complement the existing services (e.g., payment platforms), substitute human work and tangible assets (e.g., robo-advisers), and generate new solutions (e.g., mobile wallets). Furthermore, Fintech transcends borders and geographical frontiers, as exemplified by crowdfunding in financial centers accessible to start-ups and growth firms from peripheral locations (Bonini & Capizzi, 2019; Spigel, 2022). However, the ongoing digital transformation of financial services has a strong spatial and multiscalar dimension and takes various forms and outcomes, depending on the socioeconomic and institutional specifics (Leyshon, 2020; Baranauskas, 2021; Coe, 2021). The financial sector has recently been conceptualized as a financial ecosystem to reflect its exposition to dynamics and occasional disruptive change (Leyshon, 2020). Within a broadly defined financial ecosystem, two interrelated structures can be identified according to spatial characteristics (Gancarczyk, Łasak, & Gancarczyk, 2022; Lai, 2020). The first comprises global networks of financial centers and large investment banks, that is, global financial networks (GFNs), largely spanning over the borders of countries and regions (Coe, Lai, & Wójcik, 2014; Coe, 2021). The other forms are financial ecologies as segments of the financial ecosystem that are delimited by particular territories (Lai, 2016; Leyshon et al., 2004; Leyshon et al., 2006; Langley & Leyshon, 2020). Being subunits of the financial ecosystem, FEs represent interrelated financial intermediaries and other economic agents, focused on the provision and access to financial services in particular territories (Beaverstock et al., 2013; DawnBurton, 2020; Lai, 2016; Leyshon et al., 2004; Leyshon, 2020). In this vein, FEs can be considered as governance modes comprising private and public entities, such as banks, Fintech, BigTech, public agencies, enterprises, and customers, and relationships among these entities. The actors and relationships are delimited by a given location, such as a region or city (Langley, 2016; DawnBurton, 2020; Chen & Hassink, 2021; Appleyard, 2020). The relevance of the FE concept is based on the disproportionate outcomes that small ecologies may raise for comprehensive systems, as evidenced by the subprime market failure in the USA, affecting the subsequent financial and economic crisis of 2007-2009 (Leyshon, 2020), with relevant effects on many economies such as the European economy (Rodil-Marzábal & Menezes-Ferreira-Junior, 2016). Therefore, investigating small but critical points within the larger financial ecosystem is crucial for policy. It is also theoretically justified since the financial ecosystem has been predominantly studied as a general abstraction of the financial sector. Subsystems remain less explored, especially in the granularity of the spatial context. Since FEs are context-specific and undergo co-evolutionary dynamics with this context, they also transform as a phenomenon and a concept (Lai, 2020; Wójcik, 2021a). One of the main influences comes from the recent technological developments raised by Fintech. The growing empirical evidence in this area calls for understanding consequences for the FE construct (Welch, Rumyantseva, & Hewerdine, 2016) and adequate policy responses. Resonating with the said research gaps and an early stage of the development of the FE idea, this article aims to identify how Fintech frames FEs and propose the related conceptual and policy implications. To frame the FE concept, we use the methodological lens of construct clarity principles (Suddaby, 2010; Simsek et al., 2017) and concept reconstruction (Welch et al., 2016). The method includes a systematic literature review, which represents a unique approach, since the existing theorizing of FEs has been either in the form of conceptual papers or narrative reviews (Lund et al., 2016). Our findings raise conceptual and policy-related contributions. First, the article conceptually reframes the understanding of FE as financial services governance enhanced by technological advancements and focused on territorial projects and communities. Second, the concept of FE was clarified according to its main elements and its relationships with other adjacent ideas of spatial networking for socioeconomic development. Third, research propositions and areas for further investigation were proposed. In the following, we present the literature review to justify our aim and research questions. The methodology section presents the conceptual lens for our discussion of the FE as a construct shaped by Fintech; it also specifies the method of a systematic literature review. Results, discussion, and conclusion proceed in the next sections. CONCEPTUAL FOUNDATIONS Financial ecosystems were institutionally introduced to the policy framework and gained widespread recognition in research since the Federal Reserve Bank of New York conference in 2006 (Leyshon, 2020). FEs have become a new theoretical abstraction of the financial services sector as an alternative to the neoclassical equilibrium-based doctrine (Leyshon, 2020). The main difference was in acknowledging radical dynamics within the sector treated as an ecosystem with a diverse and flexible set of financial intermediaries, institutional investors and supporting entities, such as exchanges, data providers, and regulators (Bose, Dong, & Simpson, 2019). The abstraction of complex adaptive systems has often been recalled as a broad framework to understand the functioning and change in the financial sector. Consequently, theoretical perspectives of evolution and coevolution, and in particular, the network governance concept to cope with complex coordination issues, demonstrate explanatory power in studying FEs (Chen & Hassink, 2021; Ponte & Sturgeon, 2014; Chen & Hassink, 2021, 2020; Coe & Yeung, 2019). The lens of the financial ecosystem was intended to provide concepts and methods that would address environmental and regulatory shocks and prepare for future breakthrough changes to the financial system (Leyshon, 2020; Fasnacht, 2018). Furthermore, within this idea, the classical goals set for the financial sector, such as optimizing capital allocation, matching savers and investors, and signaling scarcity and abundance, were expanded by sustainability and social responsibility goals that go beyond purely economizing (Bose et al., 2019; Fasnacht, 2018). The focus on the financial ecosystem as a model or abstraction of the financial sector predominated over what is the core of ecosystems, the interrelated actors embedded in particular socio-economic and institutional environments (Strumeyer & Swammy, 2017; Bose et al., 2019; Lai, 2020; Wojcik, 2021). Although the legal frameworks of financial ecosystems are intensely studied, the remaining context, such as socioeconomic environment and informal institutions, remain much less explored (Gancarczyk et al., 2022). These contextual factors are specific to individual territories within the financial ecosystem (Ponte & Sturgeon, 2014; Chen & Hassink, 2021, 2020; Coe & Yeung, 2019). Since the systemic approach assumes interrelations and mutual influences among its parts, changes or weaknesses in a subsystem affect the whole. A painful recognition for this gap happened just after the indicated 2006 turn to the financial sector as an ecosystem, with the shock of the 2007-2009 crisis. The latter originated in the smaller subunit of the ecosystem of the US subprime market. The following pandemic and political breakthroughs, as well as technological developments, raised new challenges, adaptations, and structural changes to the financial ecosystem (Leyshon, 2020). However, they were implemented differently in different spatial contexts, which stimulated a more granular approach of the financial ecosystem as a collection of place-based subsystems, that is, financial ecologies (Lai, 2016). Another justification for the more place-based perspective is that localized supply chains might require localized financial systems or ecologies (Sarawut & Sangkaew, 2022). Wójcik and Iannou (2020) argue that local and regional financial centers are expected to lose their position, and that the territories outside the core regions and financial centers will have to rely on retail banking and the public sector to fund investment and sustainable development. These smaller ecologies will coexist with global financial networks, which are worldwide networks of financial centers and investment banks (Lai, 2020). The concept of FE originated in the field of economic geography to reflect the spatial specifics and uneven distribution of financial ecosystems, and to address the crucial issues in financing for the particular territorial populations, such as inclusion, financialization, surveillance, and over-indebtedness (DawnBurton, 2020). Consequently, the FE concept recasts the financial system as a coalition of smaller constitutive ecologies, such that distinctive groups of financial knowledge and practices emerge in different places with uneven connectivity and material outcomes (Lai, 2016). The relevance of the FE phenomenon and concept consists of a more fine-grained approach to understanding uneven access to financial services and uneven connectedness to the financial system (DawnBurton, 2020; Leyshon, 2020). Furthermore, research on FEs signals weak and strong points in subsystems that can affect the efficiency of the entire financial system. FEs represent interrelated financial intermediaries and other economic agents focused on the provision of and access to financial services in particular territories (Leyshon, 2020). As systemic phenomena, they comprise both actors and their relationships, in which actors form various configurations of private and public entities, such as banks, public agencies, enterprises, and customers. The actors and relationships are delimited by a given location that forms a spatial context, that is, a set socioeconomic conditions of a territory, be it a region, city, or a country, and acknowledging multiscalar contexts (Langley, 2016; DawnBurton, 2020; Chen & Hassink, 2021; Appleyard, 2020). The context of a particular ecology should also be considered in a wider, multiscalar perspective. Multiscalarity of the context is an idea that advocates a multilevel analysis of a spatial unit (Chen & Hassink, 2021). The example of this approach is a regional financial ecology that should be analyzed in the context of the region, country, and relevant international environments. Due to the multiscalar perspective, spatially focused FEs do not lose a broader framework of the financial system in larger units and globally (Chen & Hassink, 2020). Taking into account the nature of the FE presented above, the main elements of this construct include actors, relationships among actors, outcomes, and contexts. While the scope of actors and contexts has been outlined above, the systemic relationships and outcomes of the FE require further explanation. The FE relationships are often captured as governance, whereby governance represents the sets of institutions (rules, norms) that affect the functioning of a particular socioeconomic system and its efficiency (Colombo, Dagnino, Lehmann, & Salmador, 2019; Ostrom, 1986; Williamson, 2000). In this vein, governance can be described according to the rules of collaboration and competition, and power relations (Lai, 2018). Types of governance range from the firm to hybrids, such as networks, and to markets (Gereffi, Humphrey, & Sturgeon, 2005; Williamson, 2000). The outcomes of FE represent the terms of and access to financing, with a more general effect on financial inclusion or exclusion and on the overall territorial development. With the wider financial systems, FEs share such constitutive elements as actors and their relationships centered around financial services supply and demand (Bose et al., 2019; Fasnacht, 2018; Lai, 2020). Moreover, they similarly focus on the coordination of the system through the lens of governance (DawnBurton, 2020; Langley & Leyshon, 2021). However, FEs also demonstrate some unique characteristics in relation to wider financial ecosystems, such as clear delimitation of a territorial space, be it a city, region, or country, and acknowledgment of an associated socioeconomic and institutional context (DawnBurton, 2020; Leyshon et al., 2004). The focus on a particular territory does not ignore the systemic nature of economic relationships in the globalized world, since FEs are considered in a multiscalar context (Chen & Hassink, 2020; Leyshon, 2020). Connectivity of given populations to a broader financial system becomes one of the major issues to ensure the infusion of external sources (Coe et al., 2014). The focus on relationships between commercial banks and retail customers, as well as underserved and unbanked individuals or enterprises, differentiates FEs from GFNs (Beaverstock et al., 2013; Coe et al., 2014; DawnBurton, 2020). The latter consider global networks of investment banks and financial centers liaising over peripheral and noncore territories (Coe et al., 2014; DawnBurton, 2020; Lai, 2018). This global perspective is also related to the governance approach in the framework of global value chains, which extends to financial activity (Milberg, 2008; Coe et al., 2014; Seabrooke & Wigan, 2017). The emphasis on socioeconomic effects for disadvantaged market segments and particular industries and projects represents an additional feature of FEs as outcome-oriented systems. While financial ecosystems are primarily targeted at economic efficiency and stability of the system itself, FEs emphasize territorial target groups and projects (Langley, 2016; Langley & Leyshon, 2017). Regarding governance, the focus of FEs has been on network governance of a complex and multi-actor adaptive system (Leyshon, 2020). Network governance is considered not only from the perspective of power relations and resource allocation, but also from learning and financial practices (Lai, 2016). As evolutionary and dynamic phenomena, financial ecosystems and FE undergo substantive and conceptual developments. One of the ongoing breakthrough transformations stems from Fintech. Financial ecosystems are increasingly reconceptualized as the ultimate mode of financial services governance transformed by financial technologies (Wójcik & Ioannou, 2020; Łasak & Gancarczyk, 2022; Gancarczyk et al., 2022). Similarly, the intensive development of FEs is closely related to technological changes that enable a flexible establishment of new forms of cooperation between economic entities (Arsanian & Fischer, 2019). Fintech increase efficiency and availability of existing and launch of new financial products (Hill, 2018; Livesey, 2018; Nicoletti et al., 2017; Sabatini, Cucculelli, & Gregori, 2022; Scardovi, 2017). However, negative effects are also reported, such as over-indebtedness of risky customers, Fintech surveillance, and exclusion of some customers due to computer illiteracy (Kong & Loubere, 2021; Łasak & Gancarczyk, 2021; Brooks, 2021). The economic and social outcomes of the emerging FEs transformed by Fintech have not been fully understood and systemized (Langley & Leyshon, 2021; Wójcik, 2021b). Given technological influences, the FE undergoes developments in its core elements, i.e., actors, governance, and outcomes, acknowledging spatial contexts. Despite the increasing stock of empirical findings that describe the impact of Fintech on the functioning of FEs, we lack a synthesis reflection to reconsider FEs from this perspective. Therefore, we formulate the following research questions: RQ1) How does Fintech affect the FE phenomenon in the area of its actors, governance, and outcomes in various spatial contexts? RQ2) What are the conceptual and policy-related implications of Fintech influencing FEs?

Sharing information and knowledge, co-innovating with clients, communities, and competitors and adopting cognitive technology, robo advisors, crowdfunding, and blockchain reflect current socio-economic behaviour. Emerging growth regions in Asia, demographic shifts, intergenerational wealth transfers and increasing regulations are other trends that amplify each other, disrupt the client journey, and affect the entire economy. Moreover, unprecedentedly, new market entrants outside the financial sector, be it Amazon, Apple, Google, or Facebook, are increasingly expanding their scale and scope to offer financial services. Featuring case studies of Chinese business ecosystems, such as Alibaba/Ant Financial, that have transformed from displaying domestic and organic growth to rapid global expansion, this highly readable book gives you glimpses of how banking services are evolving. We break down everything you need to know about the foray of challenger banks into the financial services. You learn how they link health to wealth data and gain advantages through analytical capabilities in the race to attract sophisticated clients with highly personalized experiences. The next level of creating and capturing value for clients and businesses involves platform models embedded in cross-sector ecosystems. Digital platforms are the crucial entry point to global markets, creating value for multiple sides. They leverage self-driving ecosystems that go beyond linear value chains applied in traditional business models as the sources of growth in an interconnected world are collaboration and network effects. The winners will be those who open up and engage themselves in an ecosystem that transcends organizational boundaries and performs without sector borders because every actor contributes to the value constellation of the system. The book provides practitioners and scholars with new insights into open and holistic business models, where competition in future will be between ecosystems rather than at the company level. It encourages leaders to expand their skills and think through the lens of the ecosystem theory while developing compelling strategies to serve the next-generation clients.

This book, written jointly by an engineer and artificial intelligence expert along with a lawyer and banker, is a glimpse on what the future of the financial services will look like and the impact it will have on society. The first half of the book provides a detailed yet easy to understand educational and technical overview of FinTech, artificial intelligence and cryptocurrencies including the existing industry pain points and the new technological enablers. The second half provides a practical, concise and engaging overview of their latest trends and their impact on the future of the financial services industry including numerous use cases and practical examples. The book is a must read for any professional currently working in finance, any student studying the topic or anyone curious on how the future of finance will look like.