Year In Review
The Future of Consumer Finance
By
In 2022, MIT Sloan established the Consumer Financial Services and Technologies Research Initiative, a new major research initiative led by Antoinette Schoar (Stewart C. Myers-Horn Family Professor of Finance) and Jonathan A. Parker, PhD ’96 (Robert C. Merton (1970) Professor of Financial Economics; Co-Director, MIT Golub Center for Finance and Policy).
“Financial services and consumer finance markets are undergoing dramatic transformations across a number of fronts. These are fueled by new technologies but are also a response to technological, social, and environmental changes. Greater retail access to financial markets, increased customization, and automation are changing how people interact with the financial system and the risks they bear. Examples of these new technologies range from robo-advisors and online lending platforms to retail investing in derivatives and other complex securities to innovations in payments systems and cryptocurrencies. These changes can be empowering for households but can also undermine their trust in the financial system,” says Schoar. “At MIT Sloan, we are building this initiative to bring together faculty from around campus to work on these issues and improve our capabilities.”
It is important to understand how individuals and financial markets are adjusting to these changes. As such, the initiative will build an understanding of the markets, benefits, best practices, and best regulations as technologies change consumer financial markets.
However, the nature of this emerging research field requires a different production model from that of many traditional forms of finance research. At the core of consumer finance research is the use of big data and new forms of data such as blockchain data. Accessing, securing, and manipulating such data is expensive, because it requires more computing power, greater storage, dedicated programmers, and research assistance.
