Pathfinders: launching the Finance Innovation Lab

Pathfinders, ICAEW Great Hall, London, Friday 25th September 2015

Responsible, democratic and fair: how many of us think those words can be reasonably applied to the global financial system? Not many, I would guess. Yet finding a path from today’s crisis, to a financial system that lives up to that description, is the ambitious goal that the Finance Innovation Lab has set itself.

At least the Lab is no stranger to unlikely outcomes. It was born out of collaboration between the Institute of Chartered Accountants for England and Wales (ICAEW), and WWF – not the most obvious of bedfellows. After seven years of existence as a cross-institutional partnership, bringing people from finance and beyond together to try to stimulate change, the Lab has now set up as a standalone organisation. It celebrated this with a “Pathfinders” launch event at the ICAEW’s City headquarters last Friday.

Despite the scale of the challenge, the mood at the event was broadly optimistic. Early on, participants were asked to position ourselves at the “most significant point” along a giant financial crisis timeline, running along one wall of the room, from 2008 to 2015. In fact, many people stood before 2008, taking the roots of the crisis back to the 1980s, the 19th century, or even “the Medicis”. Yet even more stood in the future. And for these people, the predominant reasoning seemed to be “the future is where we’re going to change things for the better”.

The speakers for the day also focussed on inspiring action. Chris Hewett of the Lab sketched out a journey from the problematic financial system the world has today, to one that is more transparent, inclusive, sustainable and where people are more engaged in financial decision-making.

Julia Groves of the UK Crowdfunding Association gave a picture of a sector driven by competitive and confrontational spirit: “half of the Association’s founding members were run by redheads”. The very formation of the Association was in part an acknowledgement that growing an alternative to mainstream finance would be challenging and take “a united front” in the face of inbuilt conservatism of regulators and government. But on the plus side, she identified seven forces for “financial innovation for real people”, covering demand for change from individuals and SMEs mistrustful of and poorly served by the existing system, the power of IT, and the positive aspects of financial competition regulation and markets. Overall, despite the impact of recent government cuts in support for renewable energy, she remained optimistic that “investing in real things that people can understand”, rather than arcane financial products, would ensure a strong future for social and environmental popular finance.

Fran Boait of Positive Money looked at UK civil society campaigns for changing the financial system. She felt that a movement was growing that had established a clear vision of what was wrong and what could be right, and of concrete proposals for change. In some cases this was through empowering people to make change themselves, through comparison websites (e.g. Move Your Money) or new investment opportunities including crowdfunding; in other cases, it was about building advocacy, aimed at government (Positive Money) or financial corporations (e.g. Share Action). The movement had also networked well to “build a community” of trust and support. However, she warned also that “there’s no short cut to system change”: its inherently difficult, and most people are (still) bored by finance! In particular, she identified “the continuing reality of inequality”, lack of sustained media interest in financial reform, and lack of political interest in substantial change as areas where “more work is needed”.

Nick Robins gave us the global perspective, and some idea of the coming-soon report from the UN Environment Programme’s Inquiry into Sustainable Finance, which he leads. He said that there has been a “quiet revolution” going on around the world: the Inquiry found over 100 measures in the area of environmental finance innovation. These cover both particular market practices; public policy measures; and broader cultural changes. He was particularly struck by “innovation at the edges” of global financial systems, where people don’t often look for it: Bangladesh, Brazil, South Africa, Indonesia and Holland were all visited on his whistle-stop tour of groundbreaking change. His conclusion? “My sense is that we’re at the beginning of a huge wave of financial reform” – placing him among the future optimists from the first session.

There were more speakers, with Sue Charman from WWF and Robert Hodgkinson from ICAEW reflecting both on the changes born out of the Lab (including Positive Money and the Natural Capital Coalition), and how they do things differently now as a result of it. James Vaccaro of Triodos challenged us to be clear about the purpose of the financial system.

But a large part of the day was about the participants in the hall – “the Lab community”. We were kept busy debating with each other, writing question and summing up our thoughts in “messages in a bottle” (actually a jam jar). These saw calls to “cut the jargon” and show people how their everyday experience was connected to finance, and – alongside appetite for scaling up ethical finance innovations, concerns for governing values and ethics. Or – to “cut the jargon” myself – as one message said, “how can the grassroots go mainstream without losing its soul?”

What did I take from the day? As a newcomer to this world, I was impressed with the blizzard of ideas and optimism around me. My research for FITTER* is focussed mainly on the social aspects of crowdfunding, and its potential to contribute to local economic resilience. On Friday there were crowdfunders, but also a huge range of activists working on lots of different issues and scales – great for placing my work in context. Indeed, I met lots of active and enthusiastic people, who I hope to stay in touch with over the course of my research. As for the path to a better finance system, I don’t think it will be a short, straight or smooth one; but I’m encouraged to see a lot of people determined to walk it.

* more info coming soon on Bauman Institute website.

Our FITTER project is funded by Friends Provident Foundation via grants awarded under their ‘Building Resilient Economies’ programme.  

To find out more, please visit: http://www.friendsprovidentfoundation.org/programme-overview/

Author

Dr Tim Braunholtz-Speight
Tim is a Post-Doctoral Research Associate at Tyndall Manchester. Previously, he most recently worked on a study of the social implications of alternative finance, at the University of Leeds. He has...
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