Foundations for the new banking


Sep 27, 2017
The answer to the banking crisis is building banks from scratch. Being rebuilt from zero, prepared for new environments, prepared for new economic models, prepared for new P2P networks, prepared for zero cost societies, prepared for freemium models, prepared for new commerce – says Salvador Casquero Algarra, Founding Partner & Co-CEO in 2getherbank, in’s #SundayInterview.

What are the cardinal sins of traditional banking?

Salvador Casquero Algarra: Among many others, banks biggest mistake was forgetting their primary function: promoting economic activity. They were born to facilitate economic flow (production-distribution-consumption) but they perverted this function when they were allowed to freely create money through:
– finantial intermediation,
– credit creation and
– fractional reserve.

They forgot to keep trust, confidence and client protection as their key obligations. But instead of that, they move their focus, they change their essence towards two other purposes:
– speculative purposes, which is a zero sum game (if I make money someone is loosing it),
– consumption purposes that it is not sustainable as it cannot last forever and it is unfair one as part of the world has more than they need whereas more than a half is missing the basic.

The banks built their profitable business model on one underlying: interest rates and at the same time Central Banks were driving them towards 0 or below zero breaking bank models. As many other times crisis came but this time something was different.

Banking alternatives, called fintechs, starting to emerge as flexible, faster, cheaper, fair options that completely unbundled bank offering. Money issuing was democratized and not „stupid” money, but smart one and not non-backed money, but intrinsic value one: blockchain

Banks cannot compete in this new environment because they have not prepared their culture, their organizations mind for completely new economic models beyond the exhausted capitalism and they have not prepared their infrastructures, their legacy, for a kind of chaotic innovation as it comes from everywhere, from everyone, for everyone: people empowerment.

And to make things worse, banks are completely disconnected from society, from their final clients. Crisis led people to lose confidence on banks, they have their reputation on the floor.

Full interview on: