Dr Ester Vinas, leading Digital Finance innovation at UTS

"Digital finance is redefining who can invest, what can be traded, and how markets operate.” 

A new era for global finance 

You might think of trading as a largely computerised process, but according to Dr Vinas, a Research Fellow at the Digital Finance Co-operative Research Centre (DFCRC) and the Coordinator of the Digital Finance Major in the UTS Master of Business Administration (MBA), it’s actually an activity that makes humans … well, human. 

“Trading is very unique to humans. No other species does it. We all engage in trading every day,” she says. 

As such, Dr Vinas reasons, the goal should be to expand the number of tradable assets available, allowing a much broader range of people to participate in markets that might otherwise be out of reach. In the emerging world of digital finance, everyday investors could own part of real-word assets like blue-chip property, carbon credits, gold or fine art. 

But how, exactly, will this new, more digital economy come into being? The answer lies in leveraging the power of new technologies, particularly blockchain, smart contracts and tokenisation. By cutting out intermediaries and rigid trading and payment systems, digital finance makes trading cheaper, borderless, transparent and available to investors from every walk of life. 

“The foundation is blockchain, which is a shared and decentralised digital ledger on which all digital trades are recorded,” Dr Vinas says. 

“Next, we have smart contracts, which are small computer programs that live in the blockchain and that automatically execute deals when conditions are met. There are no middlemen, no delays.

“Then there are tokens, which are digital representations of physical and financial assets. Tokenisation is really what powers digital finance.” 

Digital finance is building momentum fast. Around the world, governments, financial institutions and technology firms are experimenting with tokenised markets, central bank digital currencies and new forms of digital infrastructure. 

“In Australia, the economic potential is enormous: new research from the DFCRC shows that innovation in digital finance could unlock around $19 billion per year in economic gains, equivalent to about 1% of Australia’s GDP.” 

A world-leading digital hub 

As countries around the world jostle to take their place at the forefront of this emerging field, Dr Vinas and her DFCRC colleagues, including DFCRC’s Chief Scientist and Co-CEO, Talis Putnins, who is also a professor at UTS, are working hard, together with industry and the government, to help position Australia as a competitive digital finance hub.

To this end, Dr Vinas is working on a broad program of research to investigate both the barriers and opportunities of digital finance. Her work includes an exploration of whether automated market makers (AMMs), a type of market that operates on the blockchain, can provide fair and informative prices for assets. 

Prices on traditional financial markets are set through a process of bids to buy and offers to sell assets, such as exchange-traded funds (ETFs) or shares. By contrast, AMMs use a mathematical formula based on the reserves of the two assets being traded for one another. Dr Vinas’s research looked at whether AMMs could create prices that accurately reflected an asset’s fundamental value. 

“In short, they can,” she says. 

“This finding has huge implications, because it means this is a type of market design that can support new asset classes that don’t trade yet.” 

In another project, she and her collaborators looked at the prevalence of insider trading in digital markets, focusing on cryptocurrency listing announcements on a major exchange. By examining blockchain transactions, they found that certain wallets consistently bought coins right before they were announced and sold them immediately after the announcement. Many of these traders attempted to conceal their actions when regulators started cracking down. 

“Insider trading happened in about a third of the listing announcements we tracked. This shows that regulators face important challenges, as anonymity and concealment make enforcement more difficult in digital markets than in traditional ones,” Dr Vinas says. 

This work is helping build an evidence base for a future in which digital finance becomes a widespread trading system, supported by robust regulation and policy that enable real-world innovation. 

Growing the future digital finance workforce 

Digital financial innovation is all well and good, but the research and technology that support it are only half of the story. Equally important, says Dr Vinas, is building a workforce of digital finance professionals who can lead the way towards an increasingly digital future. 

That’s where the Digital Finance Major of the MBA comes in. This specialist degree, delivered in collaboration with the DFCRC, UTS and Curtin University, brings together leading researchers and industry experts to connect postgraduate students with the latest in digital finance research and practice. 

According to Dr Vinas, who convenes the degree at UTS, the result is a world-class qualification designed to equip professionals with the skills and insights needed to lead the future transformation of finance.

“Digital finance democratises finance by making markets better functioning and more accessible,” Dr Vinas says. 

“Learning these skills can put students at the forefront of how the financial system is changing. It’s a rare chance to be ahead of the curve.”