I was asked to speak to the theme of Banking for Humanity at a conference the other day, and it made me realise that the five areas I’ve recently been blogging about came together nicely.
First, there’s financial inclusion which is the theme of Digital Human. The fact that anyone who can get access to a mobile telephone can now get access to finance is why so many people are getting engaged in trading and transacting. According to the World Bank, 69% of adults – 3.8 billion people – now have an account at a bank or mobile money provider, a substantial rise from the mere 51% in 2011, all thanks to the mobile phone and the internet. That’s financial inclusion for you. Get a phone, get a credit history, get a bank account.
It’s more than that though. It’s more to do with the fact that the internet and mobile telephone is a cheap way of supporting anyone with a bank account, whether that person has a few cents or a few millions. Digital is cheap.
Second, there’s financial literacy, which I recently called a scourge of our times. What is interesting here is that there are many FinTech start-ups trying to address this by offering apps and fun games to kids. Companies such as PlayMoolah (Singapore) and Dojo (Canada) are good examples although, to be honest, they are the exceptions to the rules. For example, boutique investment bank Keefe, Bruyette & Woods launched a financial technology index on Nasdaq to provide a benchmark for fintech investors. However, less than half a dozen of these companies actually does something to help consumers save and invest their money. The vast majority are focused on ways to make it easier for people to send and spend their money. Shame.
Third, there’s financial capability for the financially less abled. This builds on financial literary but I guess focused specifically on the most vulnerable financial users, such as financial management for the elderly or GrandTech for short. When your mum or dad gets dementia, Alzheimer’s, Parkinson’s or some other disease that means they can no longer cope, these apps help their kids – if they have them – look after their finances or, at least, helps them to avoid being ripped off by scammers and criminals.
Fourth is financial wellness overall. Psychologists find those who have the worst mental health problems are usually those who have the worst financial health. Multiple studies report people with mental health problems are more likely to be in debt. And those with addictions are most likely to be at issue, so help people with those addictions.
A great example of action here is the recent BBC reporting on how Monzo and Starling Bank are helping customers to give up gambling by offering a block on their apps to anything gambling related. Bearing in mind there are two million people at risk of mental health issues caused by gambling in the UK, that’s good thing to do.
Finally, there’s sustainability and responsible banking which, for me, is best illustrated by Ant Forest. By playing in a fun app whilst making payments, 500 million Chinese Alipay users have planted over 100 million real trees in nearly 1,000 square kilometres of arid drylands. This is estimated to reduce the carbon emissions of China by five percent by the end of next year. Amazing.
So yes, there’s a lot happening here that is improving humanity. Unfortunately, none of it is coming from banks, however.
Banks think financial inclusion is a charitable cause, and ignore it as far as they can; they’ve never been interested in improving financial literacy or managing elderly customers finances (they leave that to the mum, dads and kids of this world); and appear to be more interested in destroying the planet, rather than saving it.
In other words, most banks do nothing for humanity. This is due to the fact that most banks reflect most governments: morally corrupt and socially useless.
You may disagree, but most people in power are corrupted in some way. I blogged about it last Spring, and told the story about the renowned photographer Platon. At one United Nations Summit, he was given the privilege of photographing every world leader attending from Gadhafi to Berlusconi. On presenting these photographs, he noted that nearly every single leader was now on trial for corruption, fraud, bankruptcy or just generally on-the-run.
I believe this is why Lord Adair Turner, the then Chairman of the UK financial regulator, said that most of banking was socially useless (something I blogged about in depth ten years ago) and have lost their moral compass.
How can banks shift from being socially useless with no moral compass to being good for society and Planet Earth?
When banks are the biggest investors in fossil-fuel firms and the companies who damage Planet Earth, can they really find a moral compass and demonstrate responsible banking to avoid further climate damage?
When banks don’t support financial wellness and financial literacy, can they really find a way to be good for society?
I don’t know.
All I do know is that many the new breed of FinTech firms are focused on the five things I discussed here:
- financial inclusion
- financial literacy
- financial capabilities for the financially less abled
- financial wellness
- Planet Earth
How many traditional banks can you name that are championing these causes?
There are many initiatives that are trying to create finance for good and these themes are explored often at the Financial Services Club (FSC) and Nordic Finance Innovation (NFI), which I chair.
The next FSC meeting on the subject will be on July 31, which is a Long Finance focused meeting discussing how distributed ledger technology can help make world trade better, whilst our NFI meetings on May 28 and 29 in Helsinki and Copenhagen are dedicated to the subject of the United Nations Principles for Responsible Banking.