The secret power behind the scenes: how banks support, shape or stymie future development – and why we’re working on a much-needed overhaul
It’s all about the money, honey
Building something great requires investment: of ideas, labour, time, space – and capital, to keep the doors open and the (virtual) engines turning. While some entrepreneurs can draw on private savings, family support or enthusiastic volunteers, sustainable, strategic growth ultimately requires a neutral, fungible and friction-free medium of exchange – money – and an equally impartial institution to provide cash and guide its flow.
This is where capital and banks come in: two concepts that have changed over time, and two concepts that continue to shape our shared future to this day. This is our simplified overview of capital and banking and the reason behind our own business model.
A medium of exchange – and growth
If money is a way to understand and assign value, capital is its super-charged, strategic sibling – a way to invest in, build and develop budding or existing enterprises. This means that capital is inherently neither a force for good or bad, but an entirely neutral tool that has been in use for millennia. A targeted capital injection can amplify any cause, scale any business, move (almost) any mountain. Capital merely directs the flow of development.
Banking on banks
Banks, on the other hand, are a slightly more recent innovation. Banks have been designed to balance both sides of the equation: as intermediaries between entrepreneurs and investors, creditors and lenders, and as a way to keep your money safe. Ideally, this set-up benefits everyone involved. Since banks specialise in leveraging capital for the best financial returns, their specialised skills play a vital part in driving efficiency and productivity through targeted resource allocation.
How long has banking been around?
Well, this depends on your definition of banks. Focusing on their original prime function of taking deposits and issuing loans, we can trace banking back to at least 2000 B.C. and the cradle of civilisation, ancient Mesopotamia. Here, temples as prime gathering points offered safe places to store valuables – and also supported the community by often lending grain to farmers. Banking as we know it today, from loans and brokering to fundraising, has been around since the Middle Ages and really took off in Renaissance Italy, facilitating trade and increasingly influencing politics.
From facilitators to gatekeepers
This role of banks as financial intermediaries and, ultimately, decision-makers, comes with a great amount of responsibility. The artificial barriers to entry (from early guilds to modern-day banking restrictions) help to safeguard and regulate the financial realm, But they also turn established players into powerful gatekeepers – gatekeepers ultimately not governed by the needs of society or their customers, but by self-interest and the wishes of their management and shareholders.
Modern-day banks, in fact, have become money-making machines using complex conceptual products to generate ever higher returns. This is often happening at the expense of those they are meant to serve – and those who create real value to society. Everyday people and businesses.
By concentrating capital, banks became an invisible source of power, deciding where resources should be allocated, i. e. steering business decisions that should really be taken by those in the know.
The secret might of the banking sector: capital concentrated by banks
The amount of capital commanded by banks is so large that it’s become hard to grasp: in 2019, the banking sector’s global market cap reached US$ 90 trillion. To give you a better idea of the sums involved, let’s take a look at how bank assets measure up to the world’s gross domestic product. In 2017, bank assets reached around 100 % of GDP in nations like Germany, France and Brazil – and a staggering 175 % in China.
Reinventing banking – and how it can foster a better future
In other words: all this capital represents a huge amount of influence and power – power to shape our shared future. Wherever your own capital goes (as a company or individual), or whichever banking model you support, you are betting on that specific future. So, which future do you want to create? And when was the last time your banking or loan conditions were actually tailored to your business need – and not to the bank’s or lender’s bottom line?
We believe that banking activities and decisions shouldn’t be governed by price tags, but by making a difference through the conscious and mindful choice of clients and projects. Banks should actively be a part of shaping the world in a way that serves all of society. A big part of this is incentivising businesses to make social and environmental issues a strategic building block of their business plan for long-term success.
And while startups like Tomorrow Bank, Aspiration or Good Money are making excellent strides in the B2C realm, startups that are impact-driven or want to be, are still woefully underserved by existing banking and financing options.
Let’s Remagine our shared future
This is why we are a financial platform for founders and startups that want to scale while being a force good – and one with a powerful feature set. By focusing financial flows, data and people on the right things, we want to build a real community. By leveraging innovation and technology, we want to create a one-stop hub that lets you manage different sources of revenue and various investment channels while keeping an eye on the actual impact of your business and capital. The result is a true one-stop solution for everyone who wants to build their own business AND a better, more attractive future.
Our model questions the current rules for capital allocation and financial incentives – and reimagines the role of financial players in this equation. Because conscious entrepreneurship is no longer an option. It is the only way forward.
We Remagine finances – to help you Remagine your future path and impact.