The future of finance and humanism
The capitalist system is being destroyed by external innovation shocks and technology. This is not the time to mourn. The existing system has been disappointing us lately, failing to improve the lives of humanity – billions are still living in poverty and it has been pushing us over the cliff-edge of climate change into ecological collapse. But the ashes of capitalism have the potential to flourish into a promising system. I see the birth of a new humanity as an ‘unstoppable evolution’. It is in our nature to invent something better, not only to survive but also to thrive.
Now is a good time to get rid of old paradigms and have an inspired, clear-headed conversation about our future. Switching from systems based on the assumption of competition for limited resources – putting each person in debt – we are now talking about collaboration for abundant systems in which everybody has universal basic income (UBI) without having to do work that robots can do.
Let’s examine the recent changes that have shaken us all, including leaders, corporations, and government agencies.
1. What is a Bank?
Banking and financial services are losing their meaning completely, as we know it. Finance is seen as value extracting, as opposed to value-creating. Research also shows that banking is exposed to criticism from its customers and upcoming generations. There are four top areas that accelerate disruption in industries, and banking checks all boxes:
- Trust Gap
- Bad Experiences
- Unnecessary Intermediaries
- Access Blocks
Take anything that banks and insurance companies are delivering right now: there is a company out there who makes it better than them! And the number of these companies is only increasing. Sometimes they are global giants like Alibaba or Amazon who have their own payment systems, and sometimes they are new startups focusing on just one area – churning traditional player’s new-generation target audiences with their value propositions. Here are a few examples:
Revolut. Business or Consumer, Revolut wants to become the ultimate banking alternative designed for your global lifestyle. The company is on a mission to build the future of money beyond banking. The company believes that today’s hyper-connected world deserves a financial partner that adapts to your needs, gives you control and constantly pushes you into new exciting spaces. Free international money transfers, fee-free global spending – at the interbank exchange rate.
After just two years, Revolut has gained over 730,000 customers across Europe, who have collectively transacted over $3.2 billion. In July 2016, the company raised £1m in a crowdfunding campaign, oversubscribed by over 10,000 would-be-investors who pledged to invest £17m.
Revolut aims for 50 million customers globally in three years.
eToro lets anyone learn from other investors on their social trading platform using bitcoin, ethereum, ripple and other (virtual) currencies. Users can connect with other traders, discuss trading strategies and use their technology to automatically copy their trading portfolio performance. With six million registered traders, eToro is the world’s leading social trading network.
Funding Circle is a direct lending platform that connects investors to borrowers and has a valuation of more than $1bn. It is one of the UK’s “unicorns” and the largest British online “peer-to-peer” company by cumulative amount lent. More than £3bn has now been lent through the platform, with £1.1bn of that in 2016. Funding Circle has an investor base of more than 60,000 lenders providing funding globally to more than 24,000 small businesses.
Charles Schwab recently launched the Schwab Intelligent Portfolios, which provides investors with the ability to get portfolio recommendations from a few hundred lines of code. Instead of consulting a professional, customers rely on an algorithm to create a portfolio tailored to their level of risk aversion and their long-term investment goals. Instead of employing a stockbroker to carefully curate your portfolio, customers can utilise intelligent systems and software to accomplish their goals.
Elon Musk is so sure of the safety features bundled into Tesla vehicles that his company has begun offering some customers a lifetime insurance and maintenance package at the time of purchase. No more monthly insurance bills. No more unexpected repair costs. Farewell to old paradigms!
2. I AM BECAUSE OF YOU!
People increasingly want to have a say in their own lives (their data, health, wealth, how they are governed) and design their own future. Young people especially see these as their ‘birthrights’. They are already fed up with being defined as ‘consumer’ or ‘customer’. These new communities want to contribute to their companies by getting involved in every process: from product development to funding of ideas, data collection to design (of products, services, processes and experiences) and even deciding their future roadmaps.
They show the same dedication in destroying the companies who act against their own values. Most traditional companies do not focus on this incredible community power, beyond social media management focused on ‘clicks-and-followers’ or innovation gimmicks for the sake of PR. They are missing out this energy as they missed out alternative money systems, time banks, cooperatives and sharing economy.
The question is how to make sense of the fact that there’s crazy stuff that happens but there are all these regulators as well. In order to catch the next wave, you can increase your prediction skills by paying attention to patterns. Every old system collapses, gives birth to new ones and transforms the systems around it. Steven Kotler’s Six D’s for exponential entrepreneurs is a practical tool for everybody to understand and prepare for exponential technologies: Digitalisation, Deception, Disruption, Demonetisation, Dematerialisation and Democratisation.
An example of unexpected development is blockchain. It is only a couple of years old but is already the biggest talk in Finance. It is not only the ledger system of virtual money, but it is also all sorts of data and relationships. Blockchain allows for a revolution in the way humans do transactions by allowing peer-to-peer, decentralised networks to flourish. This technology is being applied not only in Finance but also to everything from voting to currencies to healthcare.
Musicians can use blockchain to cut record labels out of the equation, retaining ownership rights while distributing their music and getting paid directly by users. Similarly, journalists and other writers — who so often work freelance or self-publish — could cut big media houses out of the loop, and sell their own work to readers for tiny premiums paid directly to them.
Universal Health Artificial Intelligence is the concept of applying blockchain technology and sensibility to healthcare. UHAI is a highly decentralised platform that processes, stores and unifies electronic medical information on the blockchain where machine-learning algorithms are used to detect anomalies and predict health outcomes for all participants on the network. Imagine a small rural village in a developing nation having instantaneous access through the Internet or mobile phone to a global, real-time database of healthcare information and getting insured for a telemedicine treatment!
It can play an important role in alleviating unforeseen humanitarian crises with alternative new citizenship and financial systems. For two years the Finnish Immigration Service has been giving prepaid cards to asylum seekers who don’t have bank accounts, instead of the traditional cash disbursements, and today the program has several thousand active cardholders. Developed by the Helsinki-based startup MONI, the card is also linked to a unique digital identity stored on a blockchain. The United Nations too is exploring using the technology in its effort to bring legal identification to more than one billion people who don’t have official documents.
Global digital governance is not a dream anymore. The basic concept of liquid democracy is that voters can raise their voice on an issue directly or delegate their vote to someone else they think is better placed to decide on their behalf. In turn, those delegates can also pass those votes upwards through the chain. Crucially, users can see how their delegate voted and reclaim their vote to use for themselves.
Sovereign works on Blockchain, but instead of producing units of cryptocurrency, Sovereign creates a finite number of tokens called “votes”. These are assigned to registered users who can vote as part of organisations who set themselves up on the network, whether that is a political party, a municipality, a country or even a co-operatively run company. No knowledge of blockchain is required – voters simply use an app. Votes are then “dripped” into their accounts over time like a universal basic income of votes.
For a future vision, joining the new UBI (Universal Basic Income) economy may soon be as easy as downloading an app, connecting with friends or loved ones, and heading to the nearest shop for lunch.
In summary: blockchain is the technology that has the potential to bring all these other technological and societal developments together to usher in the age of social organisation and new economic logic.
On the other hand, the power of communities can also be shaky for blockchain itself, as it has dark faces, too. First, it is not sustainable. A single bitcoin operation consumes thousands of times more energy than a credit card transaction. Do we have to give up on our planet’s health to feel trust? Second, we assume blockchain will help us build trust but what if blockchain is used to increase the monetary value by speculation? Blockchain may not turn into anything other than an accelerated copy of all the deficiencies of the existing systems. As with every technology, it is our (humans’) responsibility to inject consciousness into practices of blockchain applications.
3. Aligning the Systems
The main contradiction today is between the possibility of free, abundant goods and information, and a system of monopolies, banks and governments trying to keep things private, scarce and commercial. Everything comes down to the struggle between the network and the hierarchy: between old forms of society moulded around capitalism and new forms of society that prefigure what comes next.
Many people see salvation in Silicon Valley’s philosophy of robot technology. I do not agree with that. Giant technology companies have emerged at the speed that we have not seen in the last 200 years, as self-defence against the classic monsters, but they are not sustainable either. These companies create a very delicate weakness, similar to what we see in the demolition of monopolies: their business models and equity values are built upon what they grasp of socially-produced knowledge and they don’t share these values with the society.
A meaningful transformation will not emerge from approaches focusing on competition, growth of profits and gathering all resources for ourselves, but from approaches that focus on development, sharing, circular-resource based economies and inclusive sustainability. We urgently need role models who can lead the path in governments, private companies, start-ups, impact organisations, associations and academies.
Redefining Wealth for Meaningful Future Decisions
Many people think that technology can both save and threaten the world. No, neither is the job of technology! We can use technology to facilitate, accelerate and disrupt what we envision, but technology doesn’t have the will to save, destroy or create. It is us humans who have the will to create good lives for us and for the children of this world to come, as well as the other beings we share our lives with. That’s why we first shall wake up to our will, to our thoughts about the future of humanity, and how finance can play a role to take us towards those future scenarios:
1. Raising Inspirational Role Models and Stories
The encouragement and development of good examples on the micro-level is a good place to start. When we find these examples, our ‘but’s and ‘not possible’s collapse too. None of what we can dream of is actually radical. As humans, in tribal times, we lived without money, focusing on human values and nature. Now we know what we (don’t) want better, we can do better, and we can organise better, thanks to our evolution and technology! As Douglas Rushkoff curated beautifully, there are many community examples out there waiting to enlighten the path of many other fellow humans.
Focusing on the values of society and the sustainability of the resources of the world are important beginnings for this transformation. We can achieve the realisation of this transformation by protecting these instances by governments and/or organisations and communities, then making necessary cultural changes to spread these methods around the world.
2. Unlearning Finance and Redefining It
Siena, Italy was the birthplace of both romance and finance. Finance has been an important tool to distribute wealth and for ordinary people to dream better lives. Finance became very quantitative. It’s become more scientific in an effort to become more precise. It’s become more abstract and detached from reality. And it’s become much more specialised until average people became totally disassociated with the real understanding of finance or finance experts living in their bubbles: disengaged from people, the real owners, traders and borrowers of the system.
In order to make a revolutionary jump from where we are to where we want to be, we need to merge finance with humanism. We need to decode the ideas of finance that would help more than regulatory or outreach paths. Decoding our thoughts and transforming our understanding of old paradigms is a part of the ‘Human Innovation’ process. Innovating self and community is essential for every leader or change-maker, regardless of whether she/he is running a business, society, enterprise, political body, family or just her/his own life. It’s fundamental to the way we borrow, the way we live, the way we spend, the way we invest, the way we think about retirement, so it’s only smart to invest some time and energy into it.
We need to revisit our thinking (or rehearsals of old thoughts) about ‘technology, ownership, business and wealth’ in a virgin way.
Let’s re-define wealth. Wealth is not just money, it involves being well in physical, emotional and spiritual health, in relationships, in career, in quality time (for self and loved ones) and in contributing to others (and in spirituality for some).
Traditional financial players and new start-ups can focus on delivering products and services that will enhance the real wealth of masses. It’s easy to see the struggle of many people in societies, in the dimensions under the new wealth definition.
Why couldn’t an insurance company not only be active in the sickness of people but also as life partners for healthy days, helping people acquire the understanding and methods towards a healthier life? Why shouldn’t a bank help people design their careers for an AI world, to make them stay active in their careers and lives to reach their dreams? After all, that’s what they were promising to do by giving interest on the money while you saved. What about a government designing future scenarios together with citizens, getting their ideas, expertise and energy investments instead of relying on taxation? Or what about people actually using finance to create great art, like the great novels from the Renaissance? Let’s get back to ideas so that we guide better behaviour. Because that’s the only sustainable path forward.
When we have a new future scenario, we can design the business models so they are sustainable, not just in terms of profitability but also in the impact we are creating on the planet and future generations. We can increase resources with ecosystem collaborations, common intelligence, run experiments and reach common goals using technology.
Today is the day to channel our willpower, thoughts, gestures and actions, with our best versions. Not artificially, but with our human intelligence and consciousness. There is no dream impossible to achieve for conscious and connected human beings. Then, by creating the elements of the new system, we can say to ourselves, to others, and most importantly to the children of the world: ‘this is no longer just my survival, but the model of the good life for all of us.’