During the past few years, European markets have experienced an almost unprecedented pace of change. Liquidity is booming, even though the Quantitative Easing programme has recently ended. In addition, new trade agreements have been cemented. And, volatility has almost remained a constant in its own right. Two prerequisites of a market and its participants to cope with this, as well as other major challenges are i) individual rights and ii) an emphasis on high-performance. The former because they provide the individual with the space to function well within the social and economic context, and the latter to stay abreast of competition. Self-evident as it seems, there are a couple of serious challenges I could identify based on my research, (junior) experience as a financial, and conversations with whistleblowers, executives, bankers, fintech insiders and academics. At least the following challenges are alive and well in Europe:
- For approximately 30 years, we have had a unipolar world order based on free trade. This model has increasingly become fragmented into a multipolar world order, with various competing ideologies. This has an immense impact on supply chain stability, trade agreements, balances of power and market reach, and thus affects economic performance, not necessarily for the better.
- The EU has naturally been an advocate of individual rights, and is also home to the Single Market, an area for freedom of movement regarding capital, goods, and persons. Despite that, several whistleblowers, some of whom have exposed and reported frauds in excess of several billions of Euros, continue to face repression, isolation, legal threats or actual threats, a fact that I can demonstrate, based on a verifiable degree of correspondence. These people can save billions and reduce bureaucracy to the benefit of society and industry, provided they are taken seriously and have at least some proven level of safeguards (and other incentives).
- There is still room for improved cooperation between conventional banking and FinTech, which has not been optimally used. This is at least the case for Frankfurt, and further research indicates a persistent presence of legacy problems within conventional banking that needs to be addressed. On top of that, there are several challenges in the Europe (and other continents) that require immense investments, climate change among those.
In a (very) simplified manner, below model describes a balance between individual rights, conventional/traditional finance and 'neo-banking', which taken together - in my view - are necessary to provide the infrastructure that markets as a whole need to function. If one of the three is over-emphasised, the other two need to catch up. Whereas some regions in the world compete purely on price, keep wages (sometimes artificially) low and have access to vast amounts of natural resources, this is not so much the case for Europe. Hence it would be useful - in fact critical - to get the three aspects as described right and focus on these, in order to stay a continent of freedom and focus on best practices in financial infrastructure. Would that not provide the foundations for a model worth exporting to other regions?
