Economists often ask themselves how to grow the pie, and thus feed the underserved. Whereas should the question not be – how could we all invest in the growth?
The financial industry is the backbone that enabled global prosperity throughout the 20th century. As is necessary within a capitalistic environment that rewards investors that sustain the longevity of the macroeconomy. The system works well, but only for those that have access to participate in it and this is the unfortunate effect of the structure that we are so used to. We often see communities getting left behind in a world that requires one to interact and transact. These people are referred to as the unbanked, they are the ones who do not have access to retail financial services, the ones who are not deemed feasible clientele. It is important that we create systems that reduce the barrier of entry and therefore allow for higher efficiency within the overall system as a greater portion of capital comes into play.
The emergence of neobanks is one of the most significant developments within the financial services industry over the century. For the first time in history new entrants could compete with traditional banks in terms of retail banking services. By merging these services with various technologies they have brought on an offering that lives completely in the digital realm – no tellers, no ques, no neoclassical pillars. This process of automation has significantly reduced costs to the point where retail-focused banking services could be offered for free to clientele. Operational overheads are remarkably reduced by automating various functions and producing an internet-based service and client interaction that requires very few staff to facilitate. The result of which allows unbanked communities across the world to join the global economy by transacting through formal channels. While the current offering is helpful, numerous roadmaps aim to solve exceptional problems ranging from remittance and access to credit.
These modern digital banks only solve half of the democratization problem, as they are focused on the short term aspect, what is required now for people to utilize their assets. Compared to how do we allow them to preserve their value and generate intergenerational wealth? Long term focused services are far more complex and demand a higher degree of customization per investor. A principle that marginally improves services for high net worth individuals, this system creates an unequal playing ground. Access to sophisticated investment vehicles allows one to bootstrap returns over time as they often offer deferred tax opportunities and access to investment products at favourable prices. One such vehicle is the offshore trust account, an account that has been used by the wealthy to preserve and create intergenerational wealth for ages.
The Stackr project was started to democratize the savings community and allow for any person to save and invest in various currencies and investment products – and thus create global citizens. The project draws its strength from financial engineering, aggregation and technology. Combining these innovations a saving solution is brought forward that allows anyone to protect and grow their assets in the same manner as the world’s top 0.1% percent (i.e. using a personal trust account).
Hugo May