Individual people own a huge proportion of the global financial system. The amount of money saved up and invested through pensions alone across the world accounts for half of all the money in the world. People often connect to the financial services sector through their pensions, but also their savings, their investments, and the 'real' assets that they own - houses and land (if they are lucky enough to have those). Everyday people also support and unwittingly perpetuate the dynamics of the financial system, through financial transactions and debt, by supporting a system that does not reflect the society it is supposed to work for. The sector lacks diversity, inclusion, representation and voice.
This lack of diversity, inclusion, representation and voice means that investment decisions are made that harm people and planet rather than help them. Our hypothesis is that if people played a more active, rather than passive role in the financial sector then investment decisions would be different, and better.
This challenge focuses on the interplay between two dynamics:
- That everyday people do not understand their connection with the financial system.
The majority of the world's population receives no education about finance, investment or banking through their schooling. There are demographic aspects to this education and knowledge gap. People often don't know how their lives connect to the financial system and what agency or role they have in helping change it (or why they would want to change it) They don't know that impact the financial system has on building the world around them. Finally, they don't feel agency to try to reform the system, why they would want to or how to go about it.
- The financial system does understand how it should relate to society.
Financial markets are dehumanised and distanced from the real economy, and social and environmental impacts like xxxx are also externalised. Prevailing models for financial education exclude large parts of what constitutes society such as . Actors within the financial sector largely do not feel that they are allowed to care about wider global dynamics - and those that do speak from a place of connection struggle against the power of incumbent discourse about profit maximisation.
This disconnection and intermediation harms everyone, leading the entire financial system to make poor investment decisions, but more importantly poor decisions for people and planet.
These two dynamics contain problems on a range of levels:
- Education and social/cultural norms about finance are perpetuated.
- Regulation and rule/institution change
- Systemic questions of the purpose of finance are difficult to question due to entrenched ideology.
As part of scoping our Challenge, we might want to focus on one of these levels, or rule some of them out.
The key challenge I see, therefore, is to understand current intersections between individuals and the financial system, explore how they could transform, and aim to identify effective methods to move us towards transformation.
What could this mean?
- Bottom-up vision: Models for saver/citizen voice or representation
- What opportunities and rights do individuals have to engage with the financial system? What examples do we know of?
- Under what power / whose authority do they act?
- Top-down vision: Models for an inclusive system
- What would an inclusive financial system look like, and what are the barriers to it being created? This short piece is helpful around the language of 'inclusion'.
- What examples do we have that we could draw on?
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INPUT REQUEST #1: Key Challenge
- What additional clarification would help you better understand the Key Challenge we are trying to address in this dialogue?
- What key ideas or questions did the Key Challenge statement spark in your mind?