Without money we would all be rich
Could we transcend money in the future of finance?
by Blair Hudson
What’s that old saying… “money makes the world go round”?
Aristotle considered every object to have two uses: the function or purpose for which it was created, and for trading or bartering. However, without the timely coincidence of wants between traders, barter potential remains severely limited unless there is an underlying medium of value exchange.
Hence money emerged. 💰
The Greek philosopher has been criticised for suggesting that money was invented to replace bartering, instead created as a quantifiable form of “I owe you” or a store of value or credit in modern day terms.
Early money manifested as cattle or grain, metals and artefacts. Gold and silver became a common commodity as it could be tested for purity (value) more easily, was easily distributed and couldn’t perish.
To improve distribution and simplify valuing, standardised coinage emerged through government minting and transitioned primarily to gold. Goldsmiths served as financial intermediaries, allowing depositors to store their wealth in private vaults and charging a fee and providing a non-transferable receipt of quantity and purity.
Goldsmiths eventually began re-lending on behalf of the depositor, forgoing the fee for storage and even paying interest in return. Receipts became transferable, and enabled safer and more convenient transfer of money representing their underlying assets.
In time, goldsmiths became banks, and banks began issuing banknotes giving rise to paper money (only a fraction of which would be backed by actual deposits, but theoretically convertible at any point). Banknotes were standardised as legal tender and precious metals were replaced with symbolic money.
The first Australian banks were regulated by the government, with controlled interest rates. They provided deposit and mortgage products to consumers or investment banking and private equity to businesses.
Deregulation slowly allowed banks (and lenders) to set their own rates, provide new finance options, operate in both consumer and commercial markets, as well trade in the money market — the buying and selling money in the form of various layers of financial instruments such as loans and deposits.
Technology advances post-deregulation brought with them opportunities to reduce operating costs, notably ATMs and the subsequent self-service enhancements surrounding the digitisation of the industry.
Our world is transforming with digital. A renewed focus on customer centricity is driving changes all around us to make products and services more competitive by appealing to human needs.
With the advent of fintech, each day we’re able to utilise money a little quicker and a little smarter, but the financial products and services sitting behind the technology layers have remained essentially the same since the emergence of money itself.
Digital experiences, beautiful designs, responsive applications, push notifications, social identification. Machine intelligence, recommendations, natural language processing, predictions, crypto-ledgers. Each one a step forward for technology, bringing yesterday’s financial products closer to tomorrow’s societal needs.
Economies are changing. Decentralisation and sharing are powering adoption of new platforms for financial (and ultimately human) collaboration. Automation, robotics and artificial intelligence are bringing us closer to a post-work society. The distribution of wealth is becoming increasingly disparate, challenging economic equality and extending wealth gaps in every nation.
Without money we would all be rich. Money unlocked the potential of value exchange, allowing us to give more than we have and take more than we need.
We live in a time of serious opportunity to unlock financial services for our future, but who will rise to the challenge?
It’s time to free money.
If you enjoyed reading this and want to read more about disrupting financial services in the future, make sure to hit 💚 below.
Calling on entrepreneurs who are ready to disrupt finance
Are you an entrepreneur working to transform some aspect of the ecosystem? You could be the founder of a fast-growing startup incubated by Pollenizer and partnered with Pepper Money.
Much more than just ‘fintech’, you have an idea that could fundamentally transform how both consumer and business transactions work to meet the needs of 2020 and beyond.
Come along and find out more at our Free | Money information event on November the 7th at 6:30pm.
The views and opinions expressed in this article are those of the author, and do not necessarily reflect those of any employer.
About the Author
Blair Hudson is the Innovation Portfolio Manager for Data Science at Pepper Group.
Blair joined Pepper Money — one of Australia’s leading non-bank lenders — in May 2016, working within the Innovation Centre to meet unmet customer needs through all things data-related: from machine learning to real-time analytics and simulations.
With Pepper’s Innovation Centre built on a “fail-fast” approach, his initiatives are designed to engage the business with new and innovative practices and culture, trading technical perfection for speed to accelerate reaching valuable outcomes.
Before Pepper, Blair was an analytics consultant within a Big Four management consulting firm — supporting clients across many sectors and at various stages of their data journeys.
Blair holds a Bachelor of Information Technology from Macquarie University, and continues to collaborate with universities in his initiatives — recognising the importance of working with students for their creativity, enthusiasm and alternative perspectives.
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