As banks deal with the growing burden of re-regulation, fintech firms nimbly exploit financial technology to not only meet consumer needs but also create opportunities for spectacular returns. Keeping the mid-80s Big Bang twin vision of financial technology and deregulation alive, they gallop ahead into the future.
Finance theory is built in a two dimensional world. The key dimensions used to build the central models and equations of monetary value are Risk and Time. Let me start by demonstrating this by discussing the basic most central equation in finance theory, i.e., the discounted cash flow model and the calculation of what is commonly known as the Net Present Value.