Most people believe that the financial sector is booming, when they review the mind-boggling numbers, the interconnection of colossal banks, and complex jargon. Because of this, some may ask how the financial system can be improved. Some of the ways can include proposing certain policies, such as placing a limit on the bonuses for bankers, but this doesn’t truly change how most people experience the financial system. A vision is needed that will provide a broad and simple guidepost for where the economy eventually wants to get to.
Here are some initiatives that are leaning in the right direction.
Step 1: More participation with financial production
Currently, only a group of elite professionals participate in the financial services production. Individuals such as fund managers, bankers, and traders reap huge rewards for the roles they play in financial production. Although they may be talented, they don’t always have the public’s best interest at hand. This is what leads to the occasional huge economic crashes. With more participation, the system would be more diversified and empowering for people.
Step 2: Increase access to financial services
Currently, the financial system is focused on providing money to the individuals that already have it. A great example is how large sums of money is given to hedge funds. At the same time, small businesses that benefit the society are overlooked by banks and investors, because they are not attractive like Facebook.
The introduction of crowdfunding has brought a challenge to the financial system. It has become an outlet for underdogs to obtain financing opportunities.
Step 3: Increase transparency
The financial sector is known for its notoriously opaque image. If you have ever attempted to learn about what your banking institution invests in, it seems to be almost impossible to find out. Banks in the UK, like Triodos Bank has made an effort to be accountable and transparent in what they do. Although the banks are a small percentage, they are setting a great example for other banks to follow.