On Trust: The Crowd is the New 'Credo'
We are living in turbulent times. Times in which the changes affecting our society, climate, politics and finance are creating both anxiety and exponential growth in creativity. Changes for the better, however, can only become reality if we focus first and foremost on the one key ingredient of funding these changes: trust. We therefore start our new blog, based on a vision of 'financial democracy', with a history lesson. Our journey begins in 13th century Venice with the birth of modern banking.
The eastern side of Italy, on the eve of the Renaissance, was a crucial gateway for trade between Europe and the Middle East. Demand for middlemen who facilitated this trade was growing, not least because there were so many different types of coin exchanging hands. On the plazas of Venice so-called benci begin to emerge, big wooden tables or ‘banks’ that would be used to weigh coins and determine the amount of gold, silver, bronze and nickel they contained.
It was mostly Jewish citizens who operated these early banks, and for good reason. At this time Christians were not yet allowed by the Church to ask for interest on loans. There was even a special place in hell reserved for those Christians who would do it regardless, vividly described in the most popular play of that time, Dante’s Inferno. The Jewish faith, however, did not hold such beliefs. So, when you needed a loan in the 13th century, you’d talk to them.
The modern bank
The famous House of Medici, described in Il Principe by Machiavelli, devised a loophole that would change this practice forever, effectively signalling the start of the Renaissance. Instead of calling it interest, they called it "a fee for services provided", sidestepping the doctrine of the Church and creating the modern bank. All of a sudden the up-and-coming families of Venice had the capital to grow their trade and businesses.
Shakespeare later described this practice in The Merchant of Venice, whereby the benchers (or bankers) would be the ones who would judge if someone was ‘good’ for the money. In this context, ‘good’ refers to the conviction that a person is able to repay the loan - they are, quite literally, good for the money. This led the way to a profession with very high social status: the banker. Bankers traditionally bore a big responsibility towards society because they were the ones tasked with judging who was good for the money or, in other words, who could be trusted. It should come as no surprise that the word credit itself comes from the Latin expression of credo, meaning ‘I believe’ or ‘I trust’.
In this day and age, our benci are high-rise buildings in which accounting software algorithms determine whether people can secure funding for their business. Computer calculations decide who is good for the money. Bankers have become much less approachable, even physically. In the "good ol' days" they would take the time to meet personally in order to assess your credibility. Nowadays, the people making the final decisions on interest rates are faceless. The only people with whom we have direct, human contact are stuck in a call centre somewhere.
So, with the credit crisis fresh in our minds, it's no surprise that people are looking for a new type of credo, just as they were on the eve of the Renaissance. They have discovered a new, somewhat surprising, but nevertheless credible, source of trust: ourselves. The popular term to describe this movement is crowdfunding - a modern buzzword which, at its core, is about financial inclusivity. We at Symbid have gone one step further. By building the first true funding network - The Funding Network - we're expressing the need for an online tool to build this trust with each other.
It may never be perfect, but at least it's more democratic. Crowdfunding platforms all over the world are paving the way for financial democracy. So if you wonder how we can ever address the big challenges facing our world, remember the story of Venice and the trust we once put in each other. The crowd is our new credo.