Holistic Finance, a movement launched in Switzerland!

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Combining Investing with Faith, in Zug under the auspices of the Alliance of Religions and Conversation (ARC), is a game changer. For me, a member of the Greek Orthodox faith and a 25yr finance professional, it was enlightening. I do use words cautiously and hopefully, our 20,000+ subscribers don’t disagree (objections welcome in the commentary below).

I am Greek in origin and have been taught from Aristophanes’ play “Ploutos” that the God of wealth was blind (by his father Zeus) so that he could dispense his “gifts” without prejudice. In the play, Chremylus invited Plouto to his home by promising that he will have his vision restored, meaning that “wealth” will now go only to those who deserve it in one way or another. I looked for Plouto in disguise at the Swiss Impact Investing Association (SIIA) conference but didn’t spot him anywhere. However, my “Aha” moment came out of nowhere at this odd (in a way) conference when I connected the dots and it became clear to me that this is a way for Holistic Fintech. At least this is My Way for transforming what I do anyway, and make it fully aligned with my faith and values! Specifics on this will follow in the weeks to come.

Thank you Soren Fog, Founder and CEO of Iprotus and TokenBooster and Board member of the CryproValley association, for the introduction to Klaus-Michael Christensen, President of the Swiss Impact Investing Association (SIIA) who invited me to participate. I was a panelist at the end of the first day, sharing insights around Blockchain for Social Good with a diverse group from the ecosystem: Karl H Richter, UNDP SDG Social Impact Finance (UNSIF), Olinga Ta’eed, Centre for Citizenship, Enterprise and Govern., Marcelo Garcia, BroadLights.org, Myself, and our moderator Toni Cardonna, PorininFoundation

I can only share a few takeaways today from the 2 days at the Impact Summit-Faith in Finance

Takeaway 1: Finance can become Holistic. Blockchain is the enabler for investing and managing all kinds of Digital Assets

 Impact investing is not mainly charity and feeding children in poverty. Environmental and Social issues are the two large categories that underpin our lives. We live on a planet using its resources and we humans are social beings whether living in nomadic or urban arrangements.

Finance has been traditionally focused on monetary assets, allocating capital (monetary) and managing risks. But IMHO Blockchain technology which is challenging our thinking, offers us a great opportunity to broaden the scope and include allocating and managing risks of all kinds of Digital assets (explained in more detail later). Preliminary thoughts around soft skills that can become Digital assets, were introduced in my post Secco Bank and the Future World of MyDigitalAssets last September. In mid June this year, right when the tipping point for the ICO market was occurring (i.e. funding via ICOs surpassed VC fudning) in my post about Lykke: the early pioneer in the next generation of Global Digital Asset Marketplaces I highlighted three Digital assets on the Lykke platform that clearly support this vision.  The TREE colored coin which entitles the holder to a Mangrove tree CO2 certificate, the TIME colored coin from Chronobank which is a labor market token, and the Solar coin by the Solar Coin foundation.

Takeaway 2: Finance can become Holistic through the alignment with Faiths

All faiths agree that a holistic life on earth is the only way to nurture our spiritual, intellectual and physical aspects.  Faiths all over the world control a significant amount of wealth and thus, can become leaders in showing the way for investing. The Right and Smart Way around environmental and social issues.

We all (individuals and institutions) continue to mainly focus on and articulate What we are not engaging in and What we are not investing in. We are not yet at the stage of living by principles that replace What is not working for us and our planet.

While we are all in need for drastic solutions, the process has started through multiple initiatives that address one or more of the Sustainable Development Goals (SDGs) listed in the official UN agreement from 2015 “Transforming our world: the 2030 Agenda for Sustainable Development” – a set of 17 “Global Goals” with 169 targets among them.

We now need to accelerate the movement so the Tipping occurs as soon as possible. The SIIA conference showcased a great diverse selection of SDGs and ventures that are in alignment with the movement.  Starting with speakers from the Alliance of Religions and Conversation; from the Vatican’s Integral Human development initiative; from the Geneva Agape Foundation; from the UN development program (UNDP) and the SDG Impact Finance initiative (UNSIF).

Including ventures like (not a comprehensive list):

Equileap, focused on gender diversity

TBLI Group, educating asset managers about impact investing

MicroVest, a wholesale microfinance solution with a Faith alignment

SweetBridge, a blockchain solution for the inefficiencies in the Supply Chain

The Seratio Faith Coin, a platform to tokenize value based ventures based on the world’s leading think tank on the movement of value (CCEG).

GoBeyond, angel investing empowering women

ThinkYellow, a gender led investing platform

Symbiotics, financing social SMEs

Kompotoi, the rentable composting toilet

1Bank4All, the global social bank

Opinion: Chaos theory and the concepts from Blockhain technology will lead to the Tipping Point

Chaos theory is all about subtle shifts in a parameter of a complex (seemingly random) system, which results in a large change. Olinga Ta’eed and myself, we have both used Chaos theory in our Ph.D.s. We need to preach more to the world about this concept until the Tipping point occurs. The shift can only come from a change in our beliefs. Such a subtle shift in the thinking of a sufficient and appropriate mass of people, can Tip over the way we invest everything.

We are investing continuously our assets, consciously or unconsciously. Whether it is our time, our knowledge, our relationships-network, or the conventional fiat wealth we accumulate. Blockchain is really helping in pushing all of us to think differently. First around the possibility of digitizing “assets” that are in the conventional category of “soft skills” or “qualitative aspects” of humans or organized networks of humans (e.g. corporates, agencies, governments etc.). Second around the possibility of reducing the inefficiencies in many of the established business processes that have so much slack in them and result in the current inequities in terms of allocating resources (natural or in consumer goods and services or education etc).

Terrafiniti, the UK based sustainability consultancy, distilled the message, for me. I come from the financial world, that of course respects and bows in front of Warren Buffet whose original motivation was to show the world that financial success (as we measure it still today) can be attained in ethical ways.

What became clear to me when Joss Tantram, partner at  Terrafinti, was on stage was that we all admire Warren Buffet and go or want to go his Woodstock style annual festival but our ingrained beliefs are that it is not replicable. We tell ourselves that he is the exception. We go with the herd and the conventional wisdom that in the corporate world it is a prey-predator kind of engagement and “watch your back”. We feel the pressure of year end performance metrics and we focus on the bottom line of investors-shareholders! We have an ingrained belief that finance is not a collaborative domain and doesn’t thrive on network effects. Finance is a domain operating by the hunting kind of rules.

The only way to deal with the current problems we are facing on the planet and those coming at us, is to change the metrics we use to judge performance. Whether it is in our savings and private bank account; our work; our network; our consumption behavior. As decision makers every minute of our life (spending time or money, investing time or money) we need to get under our skin the Subtle but Essential difference between Price and Value.

This shift introduces intention or purpose into our way of living.

We need to become focused on compounding and long term value. Instead of discounting and short term which is programmed like a quarterly or an annual time bomb ticking. It is all conventional anyway. Accounting frameworks which have been a tool for transparency and accountability for investors and the markets, have been set globally to 1 year! Why not 5yrs? Structural changes can have huge behavioral effects (see chao theory). The existing incentives are in complete alignment with “Maximize return over the minimum time frame”! Whether for stocks, career, or education. We have to shift away from being subservient to Capital. This Max-Min combo is designed to make investors “happy”. It also is used to make employers “happy”. Because simply their success will be judged on that Max-Min metric.

The shift is towards “Maximizing return over the maximum time frame”! This is holistic and entails purpose.

Currently, impact investing asset management businesses are still judged by the one traditional metric. Often they feel proud of their performance if they manage to offer “market returns” plus show some social or environmental impact.

If a fish is judged by its ability to climb a tree , it will live its life believing it is stupid

(Albert Einstein).

Media is only reporting stock market daily performance multiple times a day. So impact investing asset management business, believe and are judged as mediocre performers in the best case (with the financial only metric.)

Other core beliefs that need to shift are the realization that there are a lot of commercial profitable businesses whose mission is to make this world a much better place. Such businesses are not showcased in Media in that way.

One of the speakers at SIIA said: ”Think of #impactinvesting as a philosophy not an #asset class; a #purpose not a #portfolio!”

I firmly believe that Intention has a material effect, a hypothesis that already has significant scientific support. Group intention is really powerful. Lets shift our thinking. There is no other alternative.

We cannot solve our problems with the same thinking we used when we created them.”
Albert Einstein

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The Faith Groups handing over the Zug Guidelines to the United Nations at the end of the SIIA Summit.

Efi Pylarinou is a Fintech thought-leader, consultant and investor. 

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2 comments

  1. Efi, this is a great and timely post. Commenting as a Catholic (separated around teenager years from Eastern Orthodox if I remember my religious studies properly). I think this is so timely because I am with those who think that technology can be a power for good. Of course technology can also be used for bad purposes. For example, some of the behaviour in the ICO market puts Wall Street to shame (and that is hard!) and yet ICO type models could help fund innovation that improves lives for billions. In earlier days misuse of payday lending and microfinance was terrible. All religions have something to offer. For example from Islam, Arun already covered innovation around lending and Stephen recently covered Takaful in Insurance. I like the Buddhist idea of right living. Methinks we need something beyond laws and regulations (which can be gamed by people to do things that are not good). Bernard

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  2. Dear Efi,

    Thank you very much for the namecheck and for the quick precis of some of my ideas.

    The conference was an inspiring reminder that the tide for valuing a more sustainable and equitable future might just be turning!

    Best regards,

    Joss

    Like

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