How to bank the new digital economy?

Sometimes, the most talented and innovative people just don’t fit in to the system. In the late 1800s, a budding 16-year-old prodigy took the entrance exams for a degree in Mathematics at a major Swiss university. He had shown immense precocious talent in subjects like algebra, geometry and physics and had been encouraged by friends and family to take the exams early.

Unfortunately, however, he was to be disappointed — the teenager was Albert Einstein and he failed to gain admission to the university on account of his grade in French. So while the urban myth that Einstein was a poor student is largely unfounded, the true story is even more revealing: the lesson here is that inflexible systems tend to fail to recognise unique talent.

Wholesale denial of banking services

Some of the most innovative and groundbreaking firms in the new digital economy are currently learning this lesson the hard way. In 2017, the UK regulatory body the Financial Conduct Authority (FCA) issued a report which highlighted that basic banking services are being denied to numerous firms because they are deploying new technologies such as blockchain and distributed ledger technology (DLT). Regardless of the merits of the individual business case, there appears to be a widespread policy of blanket refusal to serve the sector. This prompted the FCA to assert that “deploying this technology should not result in a wholesale denial of access to traditional banking services”.

A case in point: the automotive industry

This is not a matter of abstract concepts: firms in the new digital economy will influence our everyday lives in the coming decades. Take the example of the automotive industry: environmental legislation and emerging technology are likely to fundamentally reshape the industry in the next 30 years. By 2050, a McKinsey study predicts that in dense cities like Berlin, London and Paris, private cars will be replaced by a fleet of shared, self-driving, electric cars that customers will be able to hail using their smartphone.

This is not speculative futurology — half of global R&D in the automotive industry is already being directed towards advanced driver assistance systems today. But how can vehicle owners, insurance companies and end users share information to keep such systems running in a secure manner?

This is where blockchain technology comes in. Deloitte note that by using distributed ledger technology (DLT) to connect all of the relevant stakeholders, critical and sensitive data can be shared and verified in a way which does not rely on a central server, making it virtually impossible to hack. Yet, it was for deploying this same DLT technology that many firms have been denied fundamental banking services.

A bank for the new digital economy
This is why INITIUM is committed to moving beyond broad categories like blockchain, crypto, e-money, FinTech and gaming in order to judge every firm on its individual merits. While legal compliance and business fundamentals will be key considerations when taking on new clients, no firm will be refused banking services merely on account of belonging to a particular business sector.

In fact, INITIUM is building its services from scratch to meet the needs of pioneering firms in the new digital economy. A quick and transparent account opening process will help emerging firms get up and running quickly, without having to contend with months of paperwork and bureaucracy. Powerful and highly customisable APIs will enable the customer to automate financial reporting and tailor their product to client needs. Finally, INITIUM’s multi-jurisdictional reach will enable quick and painless transfers of funds across international borders, while ensuring full compliance with local regulations.

By benefiting from first-mover advantage and developing a highly targeted product offering, INITIUM aims to attract the best-in-class of the next generation of digital innovators.