$1M gift from Ripple to help University kickstart FinTech Collaboratory

Thursday, February 14, 2019 - 3:40pm

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Michelle Fan

As part of Ripple’s University Blockchain Research Initiative, the University of Michigan received a $1 million grant for education and research in blockchain and cryptocurrency —  types of financial technology, commonly referred to as FinTech. Ripple is a technology company working in the blockchain payments working in the field.

Ken Weber, head of social impact at Ripple, said UBRI aims to support students and faculty actively engaged in the blockchain space. The initiative hopes to streamline ongoing partnerships with universities across the world and Ripple will help tailor initiatives to fit each school’s curriculum and goals.

“The University Blockchain Research Initiative is a program for partnerships with universities to advance understanding and innovation in blockchain, cryptocurrency and FinTech and related topics,” Weber said. “It is given in the form of a gift and universities are able to utilize that funding in ways that are aligned with students and faculty interests.”

The University will use the gift to create the FinTech Collaboratory, which will engage students and faculty in educational and research opportunities. The Collaboratory will be an interdisciplinary effort between the Center for Smart Infrastructure Finance (UM-SIF) at the College of Engineering, the Center on Finance, Law and Policy at the School of Public Policy and the FinTech initiative at the Ross School of Business.

UM-SIF Director Peter Adriaens, a professor of civil and environmental engineering, highlighted education, case research and applying blockchain knowledge to real-world opportunities as the main components of the Collaboratory.

“There’s that student education side to help develop a pipeline that companies like Ripple can hire,” Adriaens said. “To new use cases, that’s really all about market expansion for opportunities for FinTech and blockchain. And then the third one is how do we translate all of this more into the public markets and public finance and public infrastructure systems.”

The financial technology space also has a social impact. Adriaens stressed the need to look past the algorithmic side of cryptocurrency to see the business needs and legal implications of financial technologies.

“It’s not because you can do it that you should do it, from a business perspective,” he said. “On the social side it’s again, it’s not because you can do it that you should do it. Or if you do it, you’re going to have to put some protections in place, privacy protections in place for people... It might potentially result in destabilization of the markets and that’s why we need financial policy. So, not just public policy but financial policy to be in place. That’s why we’re starting to look at students in all different sides, there are legal students involved both from the Center on Finance, Law and Policy but also in the Business School that look at the legalities.”

Blockchain and cryptocurrency fall under the broader umbrella of financial technology, aiming to improve financial service activities, usually through the use of algorithms. Originally created for Bitcoin, a blockchain is a growing linkage of “blocks” storing transactional information, which can be accessed by anyone and is stored on multiple computers as opposed to in one central location. Because of this, blockchain is seen as a more robust, protected way of making transactions. Cryptocurrency is a medium of assets using cryptography to secure financial data and transactions.

Student interest in FinTech has been growing rapidly and surged in popularity in 2017 when cryptocurrencies rapidly rose in price. On Jan. 1, 2018, Bitcoin hit its highest price of $13,412.44. Engineering senior Andy Walner, president of Wolverine Blockchain, sees interest from students in both blockchain and cryptocurrency.

“We were founded at the beginning of last school year, and that was a time when blockchain and cryptocurrency, which people often think of as synonymous, was getting a lot of media coverage,” Walner said. “We held our first event and had a turnout of 500 people at Ross in the Robertson Auditorium, and we're seeing a lot of interest in December.”

Business junior Rishi Prasad, co-founder of Wolverine Blockchain and president and founder of Michigan FinTech, a student organization that promotes education and opportunities in the field of financial technology, echoed Walner’s sentiments. He recalled a Michigan FinTech event in 2017, where Andrew Wu, assistant professor of technology and operations and finance, spoke and where the club saw how many students were interested in a FinTech course. The club would go on to develop the course, today taught by Wu and finance professor Robert Dittmar.

“That was one of our first events, we had 300 people come out to it,” Prasad said. “And (Wu) said, ‘If you’re interested in taking a FinTech course, raise your hand.’ And nearly every hand in the room went up, and he literally took a picture of that and sent it to the dean. That was proof right there that there’s insane interest in the space.”

According to Wu, meeting high student demand is difficult because already present resources like courses and faculty are being utilized to their full capacity. Resources from the Collaboratory and from Ripple would provide additional learning opportunities for students.

“We’re capacity-constrained by faculty, but the demand is there,” Wu said. “We’re going to launch a new MBA section this year. All of our action-based learning things, as you can imagine these things are very popular. But again, the Collaboratory would give us a lot more resources to develop more of that, maybe getting more faculty involved so that we can better serve student demand. Right now essentially the demand is so high that we’re capped by what we can do.”

Weber said one goal of the UBRI is to grow a network of students and faculty who can lead the way in cryptocurrency and blockchain development and application.

“Part of the program is to create more connecting tissue and more synergy between students and faculty who are working at these different universities,” Werner said. “There’s a lot of cross-pollination, it can happen in collaboration, already we’re seeing subjoined research happening. There are workshops and conferences planned for later this semester and later this year where, you know, Ripple partners will either be hosting, co-hosting or attending.”

As one of the 29 universities partnered with Ripple, the University serves as a “node” on a RippleNet blockchain. Wu said this will be particularly helpful as a hands-on approach for student learning.

“We’re going to have a Ripple validator here on campus,” Wu said. “That means we’re going to be part of the Ripple blockchain network, actually processing the Ripple transactions. As part of that, we’re also going to build what’s called stock servers for the students, our students, to get involved. So they can see the transactions, that’ll give them a better understanding of how this blockchain actually works. They can see that in real time, live.”

Since FinTech, cryptocurrency and blockchain are new topics, Wu said there are no textbooks and no cases for students to study. Instead, he said, students will engage through action-based learning.

“We already launched a bunch of projects which we are going to do more with the FinTech Collaboratory,” Wu said. “We’re going to build essentially action-based learning projects for students to actually work in these FinTech companies. Be it Ripple, be it startups, across different markets. In the U.S., we have one here this spring in the U.K., we’re going to build new markets in China and Israel … just to give these guys first-hand experience in actually working with the companies. And in doing so they can learn what FinTech is and how it works.”

Prasad believes the Collaboratory can help solve challenges on campus, including a lack of recruiting events for those interested in a FinTech career, as well as increasing student engagement and education across the University.

“I think it’s tremendous that the University is doing this, I think it’s definitely a step in the right direction,” Prasad said. “I’d say the blockchain space can definitely be crowded and the legitimacy of companies in that space can definitely, to put it bluntly, be called into question. But I’d say Ripple is definitely one of the industry leaders, one of the most legitimate companies in the space, with their leadership team, the type of investments they’ve attracted and the partnerships that they’ve garnered with some of the biggest financial industries and companies in the world. I think it’s great and in terms of research and connections it should help a lot.”