2008 Credit Crisis, but little bank innovation

Beginning in 2005, Urban Logic saw dark trends in the banking sector: a lack of transparency, little accountability for environmental or social impacts, and a high tolerance for breeding a professional culture on Wall Street and elsewhere of entitlement and rewarding the abject brilliance of pyramided schemes that generate no discernibly useful productive gain, only profits, to justify a bonus culture of Manhattanite excess. Gradually, a gloomy cynicism followed each debilitating moment of the subprime mortgage crisis, the 2008-10 severe recession, the widespread Ponzi schemes and subsequent discoveries. Urban Logic researched a more positive approach, wondering why the media focused so largely on disempowering solutions and solution builders.

High-Transparency, Impacts-Aware Banking

Gradually, Urban Logic saw that Industrial Age banks seemed to be refusing to embrace the instant transparency and accountability of the Information Age. Worse, they used the technology to accelerate a more predatory user experience, where social web and browsing promotes gawking over-consumption, paid for on unaffordable credit, to buy things whose impacts globally (such as child labor) were unseen and unreported to the consumer. What if instead of camouflage, banks were highly-transparent? What if instead of “dumb money” that shows none of its impacts, banks were agents for showing such impacts, and creating “smarter money?” Rather than create a rating agency for sustainable resiliency, with its internal conflicts of interest, Urban Logic proposed to create a bank – GoodBank™(IO) – that would use sustainable resiliency to see its own and its customers’ impacts and commitments to impacts clearly, transparently.

Further research showed that, while the data to determine the health of a U.S. bank was freely available, it is illegal for any FDIC-insured bank to reveal publicly its official rating of safety and soundness as determined by its bank regulators. What if in addition to showing impacts, GoodBank were to unleash a tool for comparing its safety and soundness data with any other bank’s? That level of transparency would let a small bank compete more effectively with a big bank, based on safety, soundness and impacts. Sustainable resiliency, the Means Meter, a bank safety and soundness data analysis tool and other technologies represent an Information Age response to reforming banks and banking, and so by design, GoodBank would license these tools to other community banks and credit unions to let them more effectively compete and create user-customized experience for living their financial lives.

Bruce Cahan

Bruce Cahan is CEO and co-founder of Urban Logic, a nonprofit that harnesses finance and technology to change how systems think, act and feel. He is an Ashoka Fellow, aa Lecturer at Stanford University's Department of Management Science & Engineering, a Distinguished Scholar at Stanford mediaX and a former CodeX Fellow at Stanford's Center for Legal Informatics. Bruce was trained as an international finance lawyer at Weil Gotshal & Manges in NYC (10 years) and as merchant banker at Asian Oceanic in Hong Kong (2 years). Bruce graduated The Wharton School at the University of Pennsylvania (B.S. Economics 1976) and Temple Law School (J.D. 1979). Bruce has been licensed to practice law in California (2006), New York (1980) and Pennsylvania (1980).

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