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The Finance Innovation Lab: Changing the Finance System to Strengthen People and Planet

Sitting in a coffee shop in London run by Aussies, I felt a slice of home from the aroma of quality coffee! I was meeting with Lydia Hascott, who is the Head of Intrapreneurship at the Finance Innovation Lab.
The Finance Innovation Lab incubates the people, ideas and movements building a financial system that serves people and planet.

Lydia told me that the Finance Innovation Lab started with a very important question ‘What would a finance system look like that served people and planet?’
This stemmed from the work of the Lab’s co-founders at WWF-UK and in the sustainability team of the Institute of Chartered Accountants England and Wales (ICAEW). There seemed to be a disconnect between financial institutions committing to sustainability initiatives that they would receive environmental awards for and them financing projects that caused major environmental issues.
The sustainability initiatives were only bandaid solutions to a bleeding system. So, a group of committed individuals from a range of organisations came together and began the amazing journey of the Finance Innovation Lab.

Lydia shared that understanding the tension of business’ role in society has shaped her career. In particular, finance has been a focus as it is the cornerstone of modern economies.

‘What we really need to remember is that finance is a tool to create outcomes, it is not the end game. Our role is to reshape the finance system so it serves all people and the planet.’

Lydia Hascott

What is Systems Change?

The Finance Innovation Lab have spent years learning about and unpacking the complex finance system. They use this as a basis for building change. They do this by understanding the system, networks and organisations which create the culture, regulation and products/services, in order to find leverage points where small changes can lead to large, positive ripple effects across the system.

According to London Funders, systems change is defined as ‘addressing the root causes of social problems, which are often intractable and embedded in networks of cause and effect. It is an intentional process designed to fundamentally alter the components and structures that cause the system to behave in a certain way.’

Rather than creating short term change through a series of initiatives, systems change explores the relationships of people and power and understands how they influence structures like regulation, culture and products. Ultimately, if we are to make wide scale change, we need to understand systems thinking as an approach to find solutions to the root cause of issues.

Robert Pirsig, writer and philosopher, explains the importance of looking at the system:
‘If a factory is torn down but the rationality which produced it is left standing, then that rationality will simply produce another factory. If a revolution destroys a government, but the systematic patterns of thought that produced that government are left intact, then those patterns will repeat themselves … there’s so much talk about the system. And so little understanding.’

Systems Change in Action: Finance Innovation Lab

Lydia spoke with great passion about how the Finance Innovation Lab is reshaping the finance system through their unique approach.

Who: Focus on empowering people in the system

The Finance Innovation Lab’s role is to ultimately empower people across the private, public and civil society sectors. They focus their attention on three key areas:

  1. Create: Work with entrepreneurs who are creating alternative business models in finance.
  2. Advocate: Empower civil society leaders to advocate for regulatory and policy reforms
  3. Evolve: Identify and work with employees in mainstream finance who can work on evolving their organisation to create better outcomes for people and planet.

What: Using a Systems Approach to Drive Change

Lydia spoke about how understanding the financial system as a whole has helped their team to have a defined strategy.

Their strategic model has four key parts and follows an inverse pyramid.

Goal 1: Amplify

At the largest point is their ‘illuminate and connect’ strategy. Lydia spoke about the importance of creating a strong community, who although may come from varied backgrounds are aligned to a common vision. Her role is to hold a vision of what could be and seek to align the community to this. They do this through formal and informal events that focus on bringing diverse people together.

Goal 2: Demonstrate

This involves proving out new models of financial innovation that ultimately aim to change the system. The Finance Innovation Lab have an incubator called Lab Fellowship that supports future leaders to develop and grow their solutions. Below we showcase some of the solutions from the latest cohort.

Goal 3: Reform

Reforming behaviours, culture and creating network leaders. Future leaders need to see their role as a facilitator of change rather than a title for them to keep.

This concept of a network leader is fascinating as it moves from hierarchy to collaboration. Lydia spoke about how the role of an effective leader is to understand the conditions for change and to work tirelessly to empower people to make decisions based on a common, purpose-driven culture.

Goal 4: Scale

Scaling the Finance Innovation Lab is critical to maximising impact. This involves creating a robust and efficient model that can be replicated.

How: Meet Some Changemakers

In 2019, the Lab is working with 15 entrepreneurs harnessing the power of data to build financial innovations that serve people and planet. Their ideas have the potential to positively disrupt the financial system and pioneer the responsible use of data-driven technologies.

Here are a few I found particularly inspiring:

Bristol Pound

The Bristol Pound is the UK’s largest local currency. Launched in 2012, it aims to create a more resilient, sustainable and inclusive local economy for Bristol by keeping money circulating within Bristol’s independent businesses. The currency comes in paper and electronic versions, including a phone app with a handy map.

Open Credit Network

The Open Credit Network is an association of SMEs designed to help them to sell more and save cash through ‘trade credit’ – a quantification of the value of members’ available goods and services – on the basis of which members can exchange with each other.

TEEK TAKA

TEEK TAKA seeks to revolutionise transparency and accountability in global supply chains. The platform incentivises factories in Bangladesh to adopt ethical and sustainable behaviours, by rewarding them with access to cheaper and faster financing. It also provides garment workers with digital identities, making it easier to verify fair wage payments, contract hours and safe working conditions.

CoGo

CoGo is a free app that uses data on a person’s spending and their environmental/social values to make it easy for them to find businesses doing good in ways that matter to them, and help them use their spending power to drive change in the world they want to see.

You can see more fellows here on the Finance Innovation Lab website.

Overall

Lydia and the team at Finance Innovation Lab are taking a long term, highly impactful approach to changing the financial system so it serves people and planet, not just the powerful few.

We need to understand the systems we operate in if we are going to make positive change. This approach can be applied in Government systems and industries. Ultimately, if we are to see change from business and Government, we can all play a role in understanding the system, networks and relationships which lead to the root cause of the issues. Once we understand the root cause, we can be empowered to drive change!

If you want to read more about their approach to systems change, you can do so here and follow the Finance Innovation Lab on Twitter.

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