Democratic finance can liberate us all

There's a serious revolution going on in the financial services sector, says Nima Abu Wardeh. The banks aren't lending or really rewarding, so others are instead.
Illustration by Gary Clement for The National
Illustration by Gary Clement for The National
Ever been frustrated at how much interest you get for your savings? Fancy yourself as a bit of a mini-magnate? Want to get into business but don't want to leave the security of your job?

Yes folks. This is all now possible. I'm talking serious revolution: the evolution and democratisation of the financial services sector. It's already happening.

The banks aren't lending or really rewarding. So now others are instead.

It all stems from access to information, pushing the boundaries of regulation and technology, and simply not taking "no" or "status quo" for an answer.

It's about people coming together. It's about us dealing directly with each other.

Here is a very basic look at some companies that are doing what I'm talking about:


Offers 7 per cent interest.

It connects people lending to people in business.

People lend. Others borrow. The company acts as broker. In the 18 months since its launch, nearly £40 million (Dh230.3m) has been provided to projects in agriculture, property development and renewables. If you put money with them, you could be an intrinsic part of bringing projects to life in the south-west of England - where Folk2Folk is based.

But to do this you need a minimum of £25,000 to invest.


Here's another company for a lower sum. Offering 6 per cent interest.

Its claim: the UK's first person-to-person platform for every day savers and commercial mortgage borrowers.

The promise: interest paid out will always be 5 per cent above the Bank of England's base rate.

The minimum you can deposit is £250. There is no upper limit. There are zero lock-in periods, zero fees. And yes, it is regulated by the Financial Services Authority in the UK.

These are companies that help you earn more on your savings - they do that by providing funds to a niche within their areas of expertise.


But what about other things that we need? Like car insurance? Well, in the same spirit, I give you Guevara, a car insurance company that pools motorists' premiums.

Here's the big deal: any money left over at the end of the year stays in the pool and lowers the cost of insurance the year after. Yes that's right. Good group behaviour is being rewarded.

You can read more on the company's website to find out how people are grouped together. And yes, you do get to choose who you're with, or vote people out of your group if their driving is costing you.

The point is that Guevara is using data and technology to help people get a better deal. The company goes as far as saying that the way it does things can save motorists up to 80 per cent in insurance costs over the years.

There are many others out there doing all sort of things, from helping start-ups raise funding to different types of loans between individuals and more.

This is what Rohit Talwar, a futurist and the chief executive of Fast Future - where it delves into what the future holds in store - has to say about these sorts of companies: "The new tools let us do everything that a traditional financial services player would do but more efficiently, at lower cost and with the customer in control."

He goes on to share his vision of a future where we can benefit from things we do and own.

"In the future we will be able to extract financial value from all our assets such as money, frequent flyer miles, our purchase data and the time our cars sit idle - innovative new players will emerge that manage all these assets for us - extracting the maximum possible value for the individual and charging only a small transaction fee rather than taking a share of all the profits."

As mentioned, one key game-changer is that companies democratising the financial services industry earn from charging transaction fees, not by taking a share of the profits. A giant departure from traditional companies that often take the lion's share at our expense.

The other thing to note is that the words "to help people" unite all the companies mentioned here.

At the core of this is disruption. Status quo cannot remain. The revolution can be held off - but only for so long.

Nima Abu Wardeh is the founder of the personal finance website You can reach her at

Follow The National's Business section on Twitter

Published: December 12, 2014 04:00 AM


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