Banking for Social Change: Welcome to Just Money

Welcome and Navigation
Welcome to Just Money

current section
Welcome to Just Money: Banking as if Society Mattered

As of today, we are a diverse community of participants from
over 120 countries around the world! Together we explore how banks
can act as forces for positive social, ecological, and economic
development for all. We call this Just Banking.
The global financial crisis of 2007/8 demonstrated the elemental role
banks play in our global economic system and our society as a whole.
While the crisis highlighted the ways failing banks can undermine societys
well-being, in this course, well explore how banks operate that use
finance as a tool to address social and ecological challenges.
This course will introduce you to different models of just banks, and
explore how they finance social and green businesses and connect to
broader movements to address the societal challenges we face. You will
also learn what it takes to run an organization that operates along the triple
bottom line, translating a mission and values into day-to-day operations.
Banking, at its core, is about collectively moving capital into the future
we envision. So, we will also connect with questions about what that
future should look like and how it can be achieved. By the end of this
course youll understand what just banking is, what these banks do, and how
they address social and ecological challenges. But most importantly, youll
gain the tools to change the world with your own money and your own
voice.
To support this journey, we will blend the online material with:

1.
An eco-system of place-based learning communities

we call "Hubs"
2.
Online peer coaching groups, and
3.
Real-time live classroom sessions throughout the

course.
We'll explain how this all works in just a moment. But first, let's begin with
the basics - how to navigate this course.
Click the right arrow below to continue to the next page.
BASIC NAVIGATION TIPS

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GETTING STARTED
This is an orientation week. Please use the time to become familiar with the
structure and features of this class. At the end of this week, you should
have answers to the following questions:
1.
Where do I find the course material?
2.
How does edX work?
3.
How (and why) do I use the Presencing Institute website?
4.
How can I prepare myself to get the most out of this class?
5.
Who are the other students?

Welcome & Navigation requires about 30 minutes to complete, so please
plan accordingly.
This is the last page in this section. To continue, click the next section on
the left side of your page titledWhere to Find Course Content.
Where to Find Course Content
WHERE TO FIND COURSE CONTENT

The online elements of this class exist on two related websites: edX and
the Presencing Institute.
edX
The edX platform is where you will find the videos, live sessions, guest
faculty, interviews, and readings. This is where you will learn the core
concepts of Just Money.
Presencing Institute
The features on the Presencing Institute Just Money site give you the
opportunity to make your learning experience unique. If you want to
connect to other participants and connect the concepts to your
work, you should use both platforms. The Presencing Institute site
offers features that allow you to co-create a deeper learning experience
through Hubs, Coaching Circles, and Discussion Boards.
We'll provide the link to the Presencing Institute Just Money site in the
sections that follow. Click the next section (Presencing Institute Website) on
the left side of your screen to continue.
Presencing Institute Website
PRESENCING INSTITUTE WEBSITE

Just Money: Banking as if Society Mattered, was created as a joint effort
between the MIT Community Innovators Lab (CoLab) and
the Presencing Institute (PI). The Presencing Institute, co-founded by
Dr. KatrinKaeufer, is an awareness-based action-research community that
specializes in building social technologies and facilitating spaces for social
change.
The PI Just Money site hosts features that allow you to co-create various
learning experiences with your fellow participants in this course. Click ahead
to the next section (Create a Profile) to find a link to the PI Just Money site.
Create a Profile
CREATE A PROFILE
The link at the bottom of this page will take you to the PI Just
Money website. The first thing you will do there is create an account.
On the homepage, look for this box and click "Create Account" or log in
using Facbook, Google, LinkedIn, or Twitter:
After creating your account, or signing in using your pre-existing Facebook,

Google, Twitter, or LinkedIn account information, complete the intentionsetting questions by clicking:
Here is the link to the PI Just Money website (we suggest you bookmark
it): https://uschool.presencing.com/just-money
Participant Directory
PARTICIPANT DIRECTORY
After you have created a profile, you will be able to search the Just
Money Participant Directory (you must be logged in to access). In the
directory you can:
Find out who the other participants are
See who else is currently online
Sort by country and more
Send each other direct messages
Discussion Board
DISCUSSION BOARD
We have set up our own discussion forum with more social features to help
you connect and collaborate.
As with other features, the discussion board is separate from edX and sits on
the Presencing Institute website. You will need to log into the PI site in
order to participate.
Please note: If you have taken other edX courses - we will not be using the
edX discussion forum.
Access the discussion board here (you must be logged in for access).
Live Sessions
LIVE SESSIONS
Pre-recorded videos are a great teaching tool and we've been working hard
to create a set of videos to facilitate your learning in this course. Each
week, we will release pre-recorded videos and assignments that will help you
put the Just Money ideas into practice.
In addition, during Week 2 and Week 5, there will ALSO be a LIVE
classroom session facilitated by Dr. Phil Thompson and Dr. Katrin Kaeufer
that will bring you and your classmates from around the world together in
real time. These live sessions will be an important element in using this
MOOC to activate a global, action-based community. If you are unable to
join, the session will be recorded and available for viewing on-demand.
Schedule
Live Session 1: April 27th from 15:00-16:00 UTC
Live Session 2: May 18th from 15:00-16:00 UTC
UTC means Coordinated Universal Time. Check your time in UTC here.
Hubs
HUBS
As part of this class, we invite you to create a place to learn together with
other people. We call these places Hubs.
Creating a Hub is actually quite simple. A Hub is any space where Just
Money participants gather together to watch the live sessions and, if you
choose, engage in dialogue and reflective exercises in small groups before
and afterward. Hubs complement the online/digital part of the course with a
place-based, in-person component. We say it's simple because you start by
having a conversation after each of the live sessions - something anyone can
organize.
There are at least three different ways to form a Hub, described below. For
more detailed information, download the Just Money Hub Host Guide.
If you are hosting a hub and would like to connect to other hub hosts
around the world, please email: justmoney@presencing.com
VIRTUAL SPACE FOR HUBS
On the PI Just Money site, you can search, join, and create online spaces
for your hub members to interact: https://uschool.presencing.com/hubs/justmoney
CIRCLE OF FRIENDS
Form a hub with a small group in your home or another suitable location.
Invite your friends or use the Participant Directory to find other Finance Lab
participants in your area and arrange a space to meet.
INNOVATION HUB
Convene a group of stakeholders who want to change a system in which

they work. If you are taking the Just Money course with others in your
organization, use the course as a 5 week innovation period to co-create and
accelerate new ideas.
Coaching Circles
COACHING CIRCLES
Coaching Circles are probably the single most effective method you will
have in this course for moving concept into practice.
What is a Coaching Circle?

A coaching circle is a group of 4-6 Just Money participants who will meet
virtually (or in person, if possible) for about 60 minutes each week to
discuss some of the core questions raised in this course. The goal is to dive
deeper into the course materials and to support each other in connecting
the course content to their work and life.
How Do I Form a Coaching Circle?

It's possible that you might find others in your Hub who could form your
coaching circle. But, for most participants, who don't know anyone else
taking this course, we will show you how to meet other Just
Moneyparticipants and create or join a coaching circle. All coaching
groups will be self-selected. You can start a new group, or browse
groups that are still in need of members. When browsing groups, you'll be
able to search by preferred meeting time, preferred language, other group
members' interests, and more. Here's a preview of what the coaching circle
selection page looks like:
Should I Join a Coaching Circle?

For a coaching circle to be effective, each member needs to be committed to
meet each week. See if one of the following applies to you:
1.
If you're definitely interested in participating in a coaching

circle on a weekly basis, sign up next week.
2.
If you've joined Just Money and only intend to browse the

course material - we're happy that you're here - but you should not join a
coaching circle.
3.
If you're not sure whether you want to join a coaching

circle, it's better to wait and create or join a group later in the course than to
join a group and not participate or to join a group and then drop out.
4.
If you're definitely interested but know in advance that you

won't be available to join a coaching circle during a particular week, you
should still join, but we recommend you bring this up in advance in your
circle. Make sure that you can fully join all other sessions.
FAQ
How do I join a coaching circle? At the end of Week 1, you will see a
tutorial explaining how to create or join a coaching circle
I'm not going to join a coaching circle. Can I still participate in the
class? Yes, absolutely. It won't be the full experience, but you can still
participate and earn a certificate.
I'm participating in a Hub. Can I form a coaching circle with people
in my hub instead of joining one virtually? Absolutely. If you choose to
do this, we encourage you to ALSO create an online space on the Presencing
Institute website where members of your coaching circle can share written
assignments and thoughts with each other. We'll explain how to reserve a
coaching circle next week.
When does my coaching circle meet? That is entirely up to your group to
decide. When looking for a group, you can sort by the day and time you are
most likely to be available. Your coaching circle should always meet before
the next week of the course goes live. New weeks go live on Tuesdays.
Navigating edX
THE EDX PLATFORM

EdX allows people from anywhere in the world to learn at their own pace, in
their own location, and according to their own interests and
background. This sub-section contains a brief tutorial that explains how to
navigate the edX learning environment.
If you have never taken an edX course before, we recommend that you
spend a few minutes reviewing this section. It will help you get familiar with
how things work and may save you time in the long run.
VIDEOS ON EDX
The functionality of the edX video player should be familiar to most Internet
users, but the edX video player does have some extra features. Check out
the video below to learn more.
Using the edX Video Player

1.
Start of transcript. Skip to the end.
2.
LILA FISHER: Hi, welcome to Edx.
3.
I'm Lila Fisher, an Edx fellow helping to put
4.
together these courses.
5.
As you know, our courses are entirely online.
6.
So before we start learning about the subjects that
7.
brought you here, let's learn about the tools that you will
8.
use to navigate through the course material.
9.
Let's start with what is on your screen right now.
10.
You are watching a video of me talking.
11.
You have several tools associated with these videos.
12.
Some of them are standard video buttons, like the play
13.
Pause Button on the bottom left.
14.
Like most video players, you can see how far you are into
15.
this particular video segment and how long the entire video
16.
segment is.
17.
Something that you might not be used to
18.
is the speed option.
19.
While you are going through the videos, you can speed up
20.
or slow down the video player with these buttons.
21.
Go ahead and try that now.
22.
Make me talk faster and slower.
23.
If you ever get frustrated by the pace of speech, you can
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adjust it this way.
25.
Another great feature is the transcript on the side.
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This will follow along with everything that I am saying as
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I am saying it, so you can read along if you like.
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You can also click on any of the words, and you will notice
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that the video jumps to that word.
30.
The video slider at the bottom of the video will let you
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navigate through the video quickly.
32.
If you ever find the transcript distracting, you
33.
can toggle the captioning button in order to make it go
34.
away or reappear.
35.
Now that you know about the video player, I want to point
36.
out the sequence navigator.
37.
Right now you're in a lecture sequence, which interweaves
38.
many videos and practice exercises.
39.
You can see how far you are in a particular sequence by
40.
observing which tab you're on.
41.
You can navigate directly to any video or exercise by
42.
clicking on the appropriate tab.
43.
You can also progress to the next element by pressing the
44.
Arrow button, or by clicking on the next tab.
45.
Try that now.
46.
The tutorial will continue in the next video.
47.
VIDEO PLAYER FEATURES

You can control each video's speed, volume, screen size, and captions:
You can play or pause the video whenever you like:
Also, when transcripts are enabled, the transcript appears alongside the
video. Select any word on the transcript to jump to that point. You can
also download videos, transcripts, and handouts.
You can watch the video lectures at any time of the day or week that is
convenient for you.
DUE DATES AND GRADES

Assignments may be graded, meaning they count towards your final
course grade. Assignments may also have due dates, or the last
possible time you can submit an assignment. Once the due date has
passed, you cannot receive credit for any incomplete portion of the
assignment.
Some graded assignments do not have due dates, and some assignments
with due dates are not graded. If an assignment has a due date, the due
date appears under the learning sequence name in the course accordion. If
an assignment is graded, the name of the assignment appears under the
name of the learning sequence, and a blue alarm clock appears next to the
learning sequence name in the course accordion.
The image below shows three different assignments. The last assignment is
graded and has a due date. Unless otherwise specified, the time zone for
assignment due dates is universal coordinated time (UTC), the international
time standard.
To determine what time assignments are due, you can look up your time
zone & convert it to UTC here.
Unfortunately, edX cannot offer any extensions on late assignments.
If no due date is displayed, the assignment can be completed at any time.
FULL EDX DEMO

The units you just reviewed are part of a more
comprehensive edX demo. We chose them because they are the most
relevant to our course and we wanted to give you a quick overview to help
you get started. If you want a more detailed overview of edX, we encourage
you to take the full edX demo here. It takes about 30 minutes to complete.
Optional: edX Mobile App
EDX MOBILE APP

edX has a mobile app!
Installing the Mobile App - Android: To install the edX mobile app for
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Week 0: Orientation Week

Overview
WEEK 0: ORIENTATION WEEK

Welcome to 11.405x Orientation! This week, we will be introducing you to
the information and tools you will need to complete this course successfully.
Here is an overview of the specific actions you will need to complete this
week:
Watch the about video for 11.405x Just Money: Banking as if

Society Mattered
Create a profile on the PI Just Money website
Complete the entrance survey
Introduction to Just Money
INTRODUCTION TO JUST MONEY: BANKING AS IF

SOCIETY MATTERED
In this video, you will meet the instructors, who will introduce the content
and discuss the core purpose of the course.
Introduction to 11.405x
1.
2.
3.
The global crisis of 2007-2008 demonstrated
4.
the fundamental role the banks play
5.
in our global economic system and in our society as a whole.
6.
Without functioning banks, people lose their jobs,
7.
businesses shutter, and our economies threaten to collapse.
8.
While the crisis highlighted the ways in which failing banks can
9.
undermine our economy and our society,
10.
in this course, Just Money-- Banking as if Society Mattered,
11.
we'll explore how banks can play a positive role using finance
12.
as a tool to improve our environment,
13.
increase the economic well-being of community residents,
14.
and create a better society for all.
15.
As intermediaries between borrowers and lenders,
16.
banks are in a unique position in the economy and in society.
17.
Some banks leverage this position
18.
to improve the environment and to address
19.
social and economic inequalities.
20.
We call this just banking.
21.
Over the past 10 years, we've worked with banks
22.
that fund social and ecological projects
23.
and that bring financial services and often the ultimate
24.
into education to those who have been excluded.
25.
We've traveled around the world and spoke
26.
to bankers of just banks to bring you
27.
stories and examples of banks that are trying
28.
to have a positive impact.
29.
This course will introduce you to different models of just
30.
banking and how they finance social and ecological
31.
businesses and movements.
32.
You will learn what it takes to operate along the triple bottom
33.
line.
34.
How do you combine the profitability with the mission?
35.
What does it take to translate values into mission,
36.
into day-to-day operations?
37.
However, this course is more than a technical exploration
38.
of just banking.
39.
Banking, at its core, is about collectively moving capital
40.
into the future we envision.
41.
So whether you're interested in environmental change,
42.
social justice, inequality, or even the community
43.
you live in, it's important for all of us, not only bankers,
44.
to understand how to use banking as a tool for change.
45.
We designed this course for a wide range of participants,
46.
and it does not require a background in finance.
47.
Our participants include undergraduate and graduate
48.
students, finance professional, coworkers from just banking
49.
institutions, and lifelong learners interested
50.
in economic and social change.
51.
In this course, you will also have the opportunity
52.
to connect with your fellow participants
53.
through in-person learning communities exploring
54.
new pertinent and deepening your understanding of how
55.
the material here own experience.
56.
By the end of this course, you will
57.
understand what just banking is, what just banks do,
58.
and how just banks improve the environment and society.
59.
But most importantly, you'll learn
60.
to use your own voice and your own money to change the world.
61.
So join us in 11.405x Just Money--
62.
Banking as if Society Mattered.
63.
64.
ENGAGING WITH THIS MOOC
This video will introduce you to some of the key ways to engage with this
MOOC.
Engaging with this MOOC

1.
2.
3.
Welcome to this class, Just Money:
4.
Banking as a Society Mattered.
5.
And in this short clip we want to explain
6.
what options you have, how to use this class material.
7.
So first, an online class differs
8.
from a class where you sit-in a classroom together.
9.
An online class is really driven by your interest.
10.
So you ask yourself, what clip, what material,
11.
has sparked my interest.
12.
And you just follow this interest.
13.
But this program differs from some other online programs
14.
because we offer you, or they invite you to,
15.
several additional forms of learning.
16.
So one is we outline different practices
17.
that you can do by yourself, to explore the material
18.
from different perspective.
19.
But you also have the opportunity
20.
to meet other participants of the class.
21.
And to form small coaching, or discussion circles,
22.
that we provide instructions for,
23.
and where you can explore the theme of just money
24.
from different angles.
25.
Another form of engagement is that you actually
26.
meet people face to face.
27.
We call this hubs.
28.
And you find a link how to either join a hub,
29.
or how to organize a hub, also on this website.
30.
And lastly, I want to mention that this program differs
31.
from other programs because it provides also live sessions.
32.
We have two live sessions that will be streamed from MIT.
33.
And where you can also send questions to us
34.
that we will try to respond to.
35.
So enjoy.
36.
37.
Syllabus
OUR INTENTION
Enable participants to understand and use finance as a tool for economic,
social, and environmental change through banking.
OUR APPROACH
We believe that learning is the most profound when it is done with others
and connected to our lived experience. In this course, we invite you to
engage with your fellow participants through live sessions, hubs, and
coaching circles to deepen your understanding of the content and how it may
affect our individual and collective actions.
WEEK 1: BANKING AS IF SOCIETY MATTERED

Core concepts
How banks operate
The role of banks in our economies
Issues with the mainstream banking system
Introduction to Just Banking

Voices from the Field
Brian Argrett (City First Bank of DC)

Guest Faculty
Simon Johnson (MIT Sloan School of Management)
Otto Scharmer (MIT Sloan School of Management)

Practices
Reflective Journaling
Join a Coaching Circle: Sign up for a coaching circle,

learn the method, and have a call or meeting with your group to introduce
yourselves
WEEK 2: WHERE DOES YOUR MONEY SLEEP AT

NIGHT?
Live Session - April 27th from 15:00 16:00 UTC
Core Concepts
What is just banking?
Transparency: What does my money do?
What is the impact of just banking?

Amy Domini (Domini Social Investments)
Jean-Louis Bancel (Credit Cooperatif)
William Azaroff (Vancity Credit Union)
Darrin Williams (Southern Bancorp)
Cesare Vitali (Banca Etica)
Miguel Torres Recinos (SAC Apoyo Integral, Client)
Marion Cuny (Credit Cooperatif)
And more...
Practices
Watch 1st Live Session
Coaching Circle #1
Respond to Lending Case
WEEK 3: RETHINKING MONEY AND DEBT

Core Concepts
What is money?
What makes some debt good and other debt bad?
Asset-based development
Economic Democracy
Asier Ansorena (Instituto Banco Palmas)

Jorman Nunez & Nick Iuviene (Bronx Cooperative
Development Initiative)
Practices
Reflective journaling
Coaching circle #2
WEEK 4: BALANCING PROFITABILITY AND A

MISSION
Core Concepts
How are lending decisions made?
Is there a tradeoff between profit and mission?

6 Anchors of Intention in a bank: Culture, Ownership,
People, Leadership & Governance, Policies & Processes, Accountability
Tamara Vrooman (Vancity Credit Union)
Sam Moore (Bendigo and Adelaide Bank)
Cecilia Velasco (Banco Fie)
Juan Pablo Meza (SAC Apoyo Integral)

Practices
Coaching Circle #3
WEEK 5: BANKING FOR THE FUTURE

Live Session - May 18th from 15:00 16:00 UTC
Core Concepts
Impact of new technologies and regulations on the banking

sector
What is the future of banking?
What kind of banking does our future need?

Guest Faculty
Peter Senge (MIT Sloan School of Management)
Peter Blom (Triodos Bank)
And more...
Practices
Watch 2nd Live Session
Coaching Circle #4
Grading
GRADING
Each week, there will be three types of activities you can do to earn credit.
1.
Watch the videos (50%)
2.
Participate in a coaching circle (25%)
3.
Journaling and Practice (25%)

Week 0 (this week) is orientation and will not be graded
Week 1-Week 5: Each one of the 5 weeks is worth 20% of your
overall grade
There are no graded tests, exams, or quizzes. You will be expected to
complete a reflective journaling exercise each week, beginning in Week 1.
This course is pass/fail. You will need a 60% overall grade to pass and earn
a certificate. Additionally, our grading system is completely based on the
honor code. At the end of each week you will find a section called
Certificate Track. In this section you will indicate what work you completed
during the week.
Create a Profile
CREATE A PROFILE
The link at the bottom of this page will take you to the PI Just Money website.
The first thing you will do there is create an account.
On the homepage, look for this box and click "Create Account" or log in
using Facbook, Google, LinkedIn, or Twitter:
After creating your account, or signing in using your pre-existing Facebook,

Google, Twitter, or LinkedIn account information, complete the intentionsetting questions by clicking:
Here is the link to the PI Just Money website (we suggest you bookmark
it): https://uschool.presencing.com/just-money
Meet the Team
MEET THE COURSE TEAM

This course was built with generous collaboration of just banking
practitioners from around the world. The course team listed below includes
those who are most visible in the videos and online platforms but many
more contributed greatly to the creation of this course.
Dr. Phil Thompson

Dr. Phil Thompson is an urban planner and political scientist. He received a
B.A. in Sociology from Harvard University in 1977, a M.U.P from
Hunter College in 1986, and a PhD in Politic Science from the City University
of New York Graduate Center in 1990. Phil worked as Deputy General
Manager of the New York Housing Authority, and as Director of the Mayors
Office of Housing Coordination. Phil is a frequent advisor to trade unions in
their efforts to work with immigrant and community groups across the
United States.
Dr. Katrin Kaeufer

Dr. Katrin Kaeufer is a Senior Research Fellow at the MIT Community
Innovators Lab (CoLab) in MITs Department of Urban Studies and Planning,
and President at the Presencing Institute. Her research focuses on

leadership, social transformation, and socially responsible banking. Kaeufers
dissertation on Socially Responsible Banking was published as a book. She
has consulted with mid-sized as well as global companies, non-profit
organizations, the World Bank, and with the United Nations Development
Program in New York. She is also a co-founding member of the Presencing
Institute.
Lily Steponaitis
Lily Steponaitis is a Post-Graduate Fellow at the MIT Community Innovators
Lab. Her work focuses on banks that use capital as a tool to build economic
democracy and support social and environmental wellbeing. She received
her B.A. in Geography and Economics from the University of North Carolina
at Chapel Hill and her M.A. in City Planning from the Massachusetts Institute
of Technology.
Kelvy Bird
Kelvy Bird is a visual facilitator specializing in systemic mapping of content within
collaborative and multi-stakeholder environments. In addition to drawing the images,
icons, maps, and slides that feature prominently throughout the U.Lab, she works with
the Presencing Institute to cultivate spaces of co-creation, exploring the role of art in
social transformation. You can find out more about Kelvy's work here.
Benjamine Friderich
After graduating from EDHEC, a France-based Business School, where she
obtained a Masters Degree in Arts and NGO Management, Benjamine went
on an around-the-world trip to explore social economy issues; she worked
with NGOs in Africa, Asia and South and Central America, carrying out
communication and consulting assignments in microfinance and fair trade.
Back in France, she worked in corporate sponsoring, where she was in
charge of both internal and external communication and philanthropy
projects. In 2009 she moved to the International Affairs Department where
she managed financial and commercial operations with European sustainable
banks during 5 years. She now works as an investment officer in private
equity for the social and solidarity-based economy in France.
Janina Zajic
Janina Zajic gained international experience while working for the UN in New
York and the German Embassy in Prague. She has been connected to valuesbased banking for 10 years and currently serves as Advisor to the CEO and
GABV Board member Thomas Jorberg at GLS Bank in Germany. Her
responsibilities for the GABV Secretariat include development of the GABVs
European Chapter and the Human Capital action track, with a special focus
on the GABV Leadership Academy. Janina is married, has three children and
lives in Herne.
Jeffry Bos
Jeffry Box is the Director, People Innovation & Impact at Vancity Credit Union.
He and his team are charged with understanding what is needed for
Vancitys people and leaders to activate our values-based business model at
scale, and to design innovative programs to meet those needs. Jeff has been
a Global Alliance for Banking on Values Values Ambassador since 2012. Over
the past two years he has co-designed and facilitated the Values
Ambassador program, and leads the Values Ambassador network activities
between meetings. He holds an MBA in Sustainable Business from the
Bainbridge Graduate Institute (Seattle, USA), and an honours degree in
Biology and Economics from Queens University (Kingston, CAN).
Juan Pablo Meza

Juan Pablo Meza is the CEO (Gerente General) of SAC Apoyo Integral, S.A., El
Salvador since June 2011. He holds a BA in Economics from the University of
Virginia, an International Diplome dadministration Publique from the Ecole
Nationale dAdministration, Paris, France and an MBA from INCAE, Costa Rica.
Prior to joining INTEGRAL and the world of Microfinance, he pioneered the
concept of Private label credit card issuing in El Salvador while working for a
local retail entity. He then worked in the field of Consumer Finance for the
Bank of Nova Scotia. At Integral he has led the implementation of important

restructuring and redirectioning of overall Strategy. INTEGRAL also has
Microfinance operations in Guatemala.
Calvin Thompson
Calvin Thompson is an Undergraduate student at Duke University who was
raised in the Greater Boston Area. In a yearlong leave of absence from Duke
he has worked for two start-ups, and now interns for Next Shift LLC in
Cambridge, MA and contributes to the Just Money MOOC as a consultant to
the Presencing Institute. His interest in Just Banking stems from a desire to
re-imagine urban development as well as the specific tools that go into
progressive development.
Angela Baldini
Angela Baldini is project manager for several events hosted by the
Presencing Institute. She has worked as a social worker in Austria and
Germany, as a project manager in concert promotion, and spends her free
time supporting the Berlin-based collective BurgerEnergie Berlin that aims to
buy back and run the electric power grid of Berlin.
Julie Arts
Julie Arts is a co-facilitator for the U.Lab, supporting and cultivating the
emerging network of global hubs and a Theory U practitioner working with
the Presenting Institute. Outside of U.Lab, her recent work has focused on
improving quality of life for people with disabilities in
Belgium, developing innovative solutions for water quality in The
Netherlands and a Climate Change Leadership lab in Burundi.
Entrance Survey
MITX ENTRANCE SURVEY

Please take a moment to complete this survey for MITx to help us
understand how you intend to participate in this course. It should take
about 10 minutes to complete.
Week 1: Banking as if Society Mattered

Overview
current section
WEEK 1 OVERVIEW
In Week 1, we introduce what banks are, how they work, and what role they
play in our economies. Building on that foundation, we will explore how their
unique position as intermediaries in our economies can lead to crises - like
the global financial crisis of 2007/08 - or to productive social, economic, and
environmental change.
Here is an overview of what else you can expect this week:

Core Concepts
How banks operate
The role of banks in our economies
Issues with the mainstream banking system
Introduction to Just banking

Brian Argrett (City First Bank of DC)

Guest Faculty
Otto Scharmer (MIT Sloan School of Management)

Practices
Reflective journaling
Coaching Circle: Learn the method, find and join a circle;
get to know your group
Hubs: Find a hub, start a hub, connect to others in the

course
Time Commitment This Week
Videos: Watching all of the videos will take you at

least 70 minutes
Reflective Journaling: You should budget around 30

minutes to do the reflective journaling exercise, post to the discussion
board, and respond to other participant's posts.
Coaching Circle: If you plan to join a coaching circle, you

will need 40 minutes or so to find a group, introduce yourselves, and plan a
time to do your first case clinic in Week 2
Extra Material: Please leave adequate time for any extra

reading you may want to do and joining a hub
Enjoy the week!
INTRODUCTION TO WEEK 1
The video below introduces the content of Week 1.
Introduction to Week 1
1.
2.
3.
Welcome to Just Money-- Banking as if Society Mattered.
4.
This course is about money and banking,
5.
and how both can address and perhaps solve
6.
some of the most pressing social and ecological problems
7.
in the world today.
8.
This course was developed by a group of researchers
9.
here at MIT Community Innovators Lab that
10.
includes Phil Thompson, Lily Steponaitis, myself-- Katrin
11.
Kaeufer, a group of fellows, the Mel King Fellow group of 2015,
12.
and a wide network of community banks,
13.
social banks, green banks, especially the Global
14.
Alliance for Banking on Values.
15.
And the purpose of this course is to introduce you
16.
to a different type of banking.
17.
And some of you may say: I have no clue about finance,
18.
I don't know anything about banking.
19.
But in a way, we are all bankers.
20.
We all deal with money.
21.
We all make financial decisions.
22.
And the purpose of this course is
23.
to open up this black box of what banking is
24.
and ask the question, what impact can banking have?
25.
Is it just the negative impact or is there potential
26.
in banking in general?
27.
So why do we want to open this black box?
28.
It's because banks are crucial intermediaries...
29.
And banks actually make decisions about which ideas
30.
and which ventures to fund.
31.
And in that way, they actually are
32.
critical in shaping the future of our economy
33.
and of our well-being for all of society.
34.
Many people think of banks as speculative, as profit-making,
35.
and that's about it.
36.
However, the other side of banking,
37.
and what we want to address in Just Banking,
38.
are ways in which banks can take into account not only profit,
39.
but also the world we live in, the ecology,
40.
and social problems, and intentionally support ideas
41.
in ventures that address people, the planet, and profitability.
42.
Which is another way of saying economic sustainability,
43.
together.
44.
So just banking is a form of banking
45.
that uses finance as a tool to address the challenges
46.
that Phil outlined.
47.
And in this first week of the course,
48.
you will learn about the challenges
49.
we have right now with our current economic system,
50.
the challenges we have with banking
51.
and what the positive impact of just banking can be.
52.
So this is a five-week course.
53.
And in this first week, we look at the banking
54.
sector in general and the role of just banking in there.
55.
In each week, in this week, we will introduce some concepts.
56.
What's the definition of just banking?
57.
How does it differ from conventional banking?
58.
We will introduce real-life examples;
59.
talk to people who run just banks.
60.
And we also offer you the opportunity
61.
to connect to other participants of this course,
62.
either live in hubs or through coaching groups.
63.
Welcome to week one.
64.
65.
Voices From the Street
YOUR VOICES
Before we get started, we want to know how you perceive banks. In each of
the boxes below, write a word that you think of when you think of
banks. These can be concrete things, feelings, or perceptions. Whatever
comes to mind.
Press Save to reveal the answers your classmates have entered.
Your words:bank is a financial institutions who is

getting or collecting deposits from the surplus unit
of the society by offering interest and lends that
procured money to the deficit unit of the society by
charging interest from them and meets its
operational cost, employee cost, establishment cost
and gives benefits to the owner and stack holder of
the banks. 0%
Total number of words: 4183

VOICES FROM THE STREET
We went out on the streets of Cambridge and MIT to ask people the same
question: What do you think of when you think of banks?
This is what people had to say:
Voices from the Street

1.
2.
[MUSIC PLAYING]
3.
4.
When I think of banks?
5.
Um, money.
6.
Banks.
7.
Banks.
8.
Wow.
9.
Um, huh.
10.
Banks.
11.
Money.
12.
Service.
13.
14.
What is the word?
15.
Incompetence?
16.
17.
Complexity.
18.
Black box.
19.
Well, I think of traditional banks.
20.
I think of banks where you put your money, and it's safe.
21.
Bank.
22.
Money.
23.
Investment.
24.
25.
Saving.
26.
27.
Difficult to deal with.
28.
[NON-ENGLISH SPEECH]
29.
30.
I think of high fees that are charged to the public, which
31.
I think that they should not be charged for having
32.
your own money in the bank.
33.
When I think of banks, probably mainly the financial crisis
34.
and in some ways, definitely that there
35.
is a level of mistrust and of some things happening behind
36.
closed doors.
37.
And yeah, the areas that they're investing in,
38.
which keeps popping up, especially
39.
with the whole divestment movement,
40.
is probably the one thing that I think of most.
41.
42.
What is Banking?
WHAT IS BANKING?
Many of us taking this course have a bank account, use a credit or debit
card, have taken out a loan, or we may even work at a bank or in the
financial industry. Despite the fact that we interact with money and some
form of banking on a daily basis, how well do we really understand the
basics of banking?
The following video will help illustrate what banks are before we take a
deeper dive into Week 1.
What is Banking?
1.
2.
3.
From a young age, many of us are taught
4.
the value of saving money.
5.
We are encouraged to put what little we earn
6.
in a piggy bank or a shoebox and to save it for a rainy day.
7.
As we get older, some of us open bank accounts
8.
and do the same thing, but on a larger scale.
9.
When choosing our bank, we think about a number of things.
10.
Which bank gives me the best rates?
11.
Are there any fees?
12.
Is there a branch nearby?
13.
Regardless of which bank we choose,
14.
we feel safe knowing that the bank will take our money
15.
and lock it away in their vaults, right?
16.
Not exactly.
17.
Banks are allowed to take a portion of the money you
18.
deposit and use it to make more money by spending it
19.
in the economy.
20.
The remaining portion of your money,
21.
they must hold in the central bank or as currency.
22.
This is called the fractional reserve rate.
23.
For example, if you deposit $100 in a bank that
24.
has a 1% fractional reserve rate,
25.
the bank can take $99 of your money to invest or loan out
26.
to other clients.
27.
Your money can then be used by an entrepreneur
28.
to start a business or by a family to purchase a house.
29.
The full amount of the deposit is available for the depositor
30.
to withdraw at the same time that the bank
31.
has loaned out $99 to whoever got the money as a loan.
32.
When you take a step back, you see that there is suddenly
33.
$199 circulating in our economy instead of your initial $100.
34.
This is how banks create money.
35.
While the fractional reserve policy
36.
stimulates economic activity, it also presents a risk.
37.
What if everyone who deposits their money in a bank
38.
decides they want to withdraw it at the same time?
39.
Because the bank only has 1% of the depositor money in reserve,
40.
they would not be able to pay every depositor back in full.
41.
This is called a run on the bank.
42.
When banks run into trouble like this,
43.
they can borrow from the central bank to repay client deposits,
44.
or the fractional reserve rate can
45.
be adjusted to help mitigate risk moving forward.
46.
In the end, it is the amount of trust banks
47.
are able to instill in their depositors that ensures
48.
there isn't a run on the banks.
49.
In general, this lending and investment activity
50.
is also how banks make their money.
51.
The money they make through interest on these transactions
52.
is used to pay the interest on your account.
53.
The difference between the return on investment
54.
and the interest you receive is the net interest income
55.
for the bank.
56.
These loans and investments can take many forms.
57.
As a customer, you usually don't know
58.
what your bank does with your money,
59.
except for what you can learn from websites
60.
or annual reports.
61.
Your money could become a personal loan for purchases,
62.
like cars, mortgages, or home renovations.
63.
Or it could help an entrepreneur grow a business
64.
by purchasing new machinery.
65.
It could also finance more controversial activities,
66.
such as the weapons industry or nuclear energy.
67.
Banks can give out your deposits to finance loans,
68.
but they also have a wide range of investment options
69.
in something called the financial economy.
70.
We see hedge funds, stocks, bonds.
71.
Within this range of investment options,
72.
there are investments that are more closely connected
73.
to the real economy, and some that
74.
don't connect to a physical transaction
75.
but aim to make profits by speculating on price changes.
76.
Why is that a problem?
77.
The more speculative a financial product becomes, the more risky
78.
it is.
79.
In the 2007 to 2008 financial crisis,
80.
we all witnessed how banks were pulled down
81.
by their speculative investments.
82.
Governments jumped in to save failing banks,
83.
because without a functioning banking system,
84.
our modern economy would collapse.
85.
Within this general framework, there
86.
are several varieties of banks.
87.
There are retail banks, commercial banks,
88.
investment banks, and central banks,
89.
all specializing in different types of transactions
90.
and client groups.
91.
Despite these different specializations,
92.
what all banks have in common is that they
93.
are regulated by local, national,
94.
and international authorities.
95.
The goal of this regulation is to provide oversight and manage
96.
the risks banks are taking with your money
97.
when it's out of the vault and circulating in the economy.
98.
Even more important is that proper oversight gives us
99.
the confidence to trust banks to make
100.
good decisions with our money.
101.
This trust is what keeps our economies running.
102.
103.
The Crisis of Finance
FINANCIALIZATION OF THE GLOBAL ECONOMY

Since the 1980s, the size of the financial sector has grown rapidly relative to
the overall economy. What does this mean and how does it affect us?
Financialization
1.
2.
3.
So this animated video has described,
4.
I think, really well, the importance of the role
5.
that banks hold in our economic system.
6.
Banks sit at this connecting point between the deposit
7.
side and the loan side, so they're intermediaries
8.
in our economic system.
9.
And in that role, they decide our future;
10.
because they actually decide what gets financed.
11.
They decide where capital flows.
12.
And with that, they decide the future of our society
13.
as a whole.
14.
Yeah, and so this is a very powerful position
15.
in the economy.
16.
And this has actually been growing, especially
17.
since the 1980s.
18.
There's been a massive financialization
19.
of the global economy, which is essentially
20.
the growth in the size and the importance
21.
of the financial sector, relative to the real economy
22.
and relative to the overall economy.
23.
And for a long time, the political consensus
24.
seemed to be that this was actually a good thing,
25.
that growth in this sector would then sort of trickle down
26.
to the rest of the economy.
27.
It would create jobs.
28.
It would be good for the real economy.
29.
So this is the mental model of what's
30.
good for Wall Street is good for the rest of the economy.
31.
But what we've seen with the financial crisis
32.
is that this is not true.
33.
So one negative side effect of the growth
34.
and the speculative sphere, where basically money makes
35.
money, is that it's high-risk.
36.
And a crisis creates a downward spiral
37.
for the rest of the real economy.
38.
What is not often discussed is that there
39.
are other negative side effects of this growth,
40.
of the speculative financial economy in relationship
41.
to the real economy.
42.
And one negative side effect is that there are expectations
43.
for the return of a business.
44.
So if you are operating in the speculative financial economy,
45.
you have chances to create returns of 15%, 20%, 25%;
46.
And to create these returns in the real economy
47.
is almost impossible.
48.
So small- and medium-size companies
49.
operate on a return of 7%, 8%, or 10%.
50.
But they operate well.
51.
They employ people.
52.
They create products.
53.
They offer services.
54.
But now they compete with a return of 10%, 15%, 20%
55.
in the speculative financial economy,
56.
and that's a real issue.
57.
And the other issue is that the growth in the financial sector
58.
is not mirrored by a growth in the real economy.
59.
So there's this other disconnect.
60.
Right.
61.
So we ended up, leading up to the global financial crisis,
62.
with banks that were essentially seen as too big to fail.
63.
So when they started to collapse,
64.
we, as taxpayers around the world,
65.
were essentially obliged to bail them out.
66.
And so in the US, that was about $700 billion
67.
worth of taxpayer money to bail out these banks,
68.
because the fear was if they collapsed,
69.
the whole global economy would collapse with them.
70.
Which basically means that this high risk taking was rewarded.
71.
And those who took the risk didn't
72.
have to take also the negative effects of the risk.
73.
74.
GUEST FACULTY: SIMON JOHNSON

In this video we will hear from Dr. Simon Johnson, Professor of
Entrepreneurship at the MIT Sloan School of Management and author of the
best selling book: 13 Bankers: The Wall Street Takeover and the Next
Financial Meltdown.
Interview with Simon Johnson

1.
2.
[MUSIC PLAYING]
3.
4.
My name is Simon Johnson.
5.
I'm a professor of entrepreneurship at MIT's Sloan
6.
School of Management.
7.
8.
Well, on the global level, obviously, we
9.
had a big crisis in 2008 that had
10.
massive negative implications in United States,
11.
in Europe, and in other countries.
12.
We've struggled to recover.
13.
The United States shows some sign of recovery.
14.
Europe is still quite, quite problematic.
15.
And the banks are very cyclical.
16.
They go up and they go down with the broader economy.
17.
And they drive fluctuations in the broader economy.
18.
So to be honest, the picture is mixed.
19.
And some of our biggest banks, they
20.
might look OK on the surface.
21.
But I think beneath that surface, lurking,
22.
are some pretty serious systematic problems.
23.
24.
Well, the biggest challenges are that some of the banks
25.
are extremely large at this point.
26.
And it's not possible for them to fail.
27.
No government in its right mind would let them go bankrupt.
28.
So then they have an exemption from failure.
29.
And that, of course, means that their creditors
30.
don't face the risk of failure.
31.
They have a lower cost of borrowing.
32.
They can run a more opaque business model.
33.
And they are encouraged to take a lot of risk.
34.
When things go well, the people running these bigger banks
35.
get the upside.
36.
When things go badly, the downside risk
37.
is pushed onto the rest of society.
38.
It's a form of externality.
39.
They don't care about the downside
40.
because they don't feel the downside.
41.
But we feel the downside.
42.
In society, we feel it as citizens.
43.
We feel it as taxpayers.
44.
And we feel it as people who could lose our jobs.
45.
46.
The biggest negative systematic effects
47.
are obviously crises, big crises like the one
48.
we experienced in 2008.
49.
If you think that we've fixed those underlying problems,
50.
then there is nothing to worry about.
51.
But I don't think we fixed them.
52.
And I spent a lot of time studying
53.
the details of various policies, trying
54.
to address the issues of risk in banks and in global mega banks
55.
in particular.
56.
So this problem is still with us.
57.
And therefore, there is a risk of another debilitating crisis,
58.
or maybe a crisis that's worse and has
59.
more negative implications.
60.
61.
Well, the banks are a very powerful lobby-- the big banks.
62.
And they have a lot of friends in high places.
63.
Many of those friends used to work for the bank.
64.
And after they've finished working in government,
65.
they go back to work for the bank.
66.
So there is a circle of people who
67.
are convinced that the big banks are good for the society
68.
and good for all of our economies.
69.
But that circle of people is really largely seeing the world
70.
through somewhat self-interested glasses.
71.
72.
Well, look.
73.
I'm a professor of entrepreneurship at MIT.
74.
I like risk-taking.
75.
I like people who create new businesses.
76.
And I don't think it's for me to judge that this is a good idea
77.
and this is a bad idea.
78.
So with regard to the real economy,
79.
the non-financial economy, I'm happy to see
80.
lots of innovation, lots of new ideas tried out.
81.
With finance, I'm also in favor of new things.
82.
I'm also in favor of innovation.
83.
I think we've learned the hard way
84.
that we have to worry about unintended consequence
85.
in the way that systemic risk can be created inadvertently.
86.
And big negative spillovers have negative effects
87.
on the rest of the financial system
88.
and the rest of the economy.
89.
So I want us to have that caveat and that concern more clearly
90.
in mind for the financial sector.
91.
92.
Well, if we're talking about powers
93.
in the sense of regulations and rules that could be made,
94.
I would limit the size of the largest banks in the United
95.
States.
96.
We don't have a history of big banks.
97.
We don't need banks at their current scale.
98.
They pose a big risk to the system.
99.
I would also require that banks here and in other countries
100.
fund themselves more with equity and relatively less with debt.
101.
Sometimes these are called capital requirements.
102.
But it very simply means how you fund yourself.
103.
Banks have, unfortunately, developed a taste
104.
for funding themselves with a little bit of equity
105.
and a huge amount of debt.
106.
So if things go badly, they become insolvent.
107.
And that's exactly the cornerstone
108.
of what we call financial crisis.
109.
So I think that structure of incentives
110.
really needs to change.
111.
And it needs change profoundly.
112.
And of course, not many people agree with me
113.
who work in those big banks.
114.
115.
Look, I think banks and also other companies absolutely
116.
can and should take on a wide range of issues.
117.
I think the way to do is to explain
118.
to your customers and your investors what you're doing
119.
and why and let them choose with you to invest
120.
in certain things, to build certain things,
121.
and to avoid other kinds of activities.
122.
I think increasingly, that's what people are going to want.
123.
Not just the people running the banks,
124.
but their customers and the people providing them
125.
with funding are going to want to be aware
126.
all the impact of everything they do.
127.
128.
So the Independent Community Bankers of America
129.
were kind enough to name me one of their Main Street Heroes.
130.
It's really a great honor.
131.
And I was thrilled to receive it.
132.
I certainly talk to them, and I certainly
133.
have a good relationship with them.
134.
I don't work for anyone except MIT
135.
and one independent think tank in Washington.
136.
So I make up my own mind, and I'm
137.
saying what I believe to be right from a social public
138.
policy perspective.
139.
In that perspective, I think there
140.
is a bright future for smaller community banks
141.
because they're connected to the customers.
142.
And the customers believe in them.
143.
And they believe in what many of those community banks
144.
are doing.
145.
I think there is much more suspicion and hesitation
146.
to trust the larger global banks, in part,
147.
because consumers and investors have been trampled
148.
on by those banks in the past.
149.
And the chances they are going to be dealt
150.
with more fairly or better in any way going forward
151.
is extremely slim.
152.
153.
Extra Material
If you are interested in learning more, find links to more material from
Simon Johnson below:
The Quiet Coup: Johnson, Simon. (2009) The Quiet Coup. The Atlantic .
You may also be interested in reading his blog "The Baseline Scenario"
Excerpt from "13 Bankers: The Wall Street Takeover and the Next Financial
Meltdown."
Biography
Simon Johnson is the Ronald A. Kurtz (1954) Professor of Entrepreneurship at the
MIT Sloan School of Management, where he is also head of the Global Economics
and Management group, a member of the Executive Personnel Committee, and
chair of the Sloan Fellows MBA Program Committee. He cofounded and currently
leads the popular Global Entrepreneurship Lab (GLAB) course, working with startup
companies around the world.
Read More
THE GLOBAL FINANCIAL CRISIS
There are few places in the world that weren't affected by the 2007/08
Global Financial Crisis. Markets crashed, people lost their homes, their jobs,
and much more. This video takes a closer look into what led to the crisis.
To download the image created in this video, press the "Download Handouts"
button under the video player.
The Global Financial Crisis

1.
2.
[MUSIC PLAYING]
3.
4.
A Pulitzer Prize-winning report on the financial crisis
5.
by the National Public Radio in the US
6.
drew the source of the crisis back
7.
to something they referred to as the global pool of money.
8.
That is, all the money that people around the world
9.
are saving and looking to invest, technically known
10.
as the fixed income securities.
11.
Between the year 2000 and 2006, these global savings
12.
grew dramatically from about $36 trillion in 2000,
13.
to $70 trillion in 2006.
14.
The issue was that despite the fact
15.
that the global pool of money doubled in nearly six years,
16.
the number of safe investment options did not.
17.
In the hunt for new investments, residential mortgages in the US
18.
became a particular favorite of the global investment industry.
19.
While the federal interest rate was hovering around 1%,
20.
homeowners were paying 5% to 9%.
21.
The problem for the investors would
22.
be getting involved with the individual homeowners, which
23.
would be too much work for their return.
24.
What ended up happening is they devised
25.
a system in which smaller banks sold the mortgages to Wall
26.
Street banks, which then bundled the mortgages into packages
27.
and the shares of the monthly income from the packages
28.
were sold to investors.
29.
These were called mortgage-backed securities.
30.
Issues started to arise when just about everyone who
31.
wanted a mortgage and would normally qualify for one
32.
already had one, but the investors still wanted more.
33.
This led the banks to loosen the standards
34.
on whom they would lend to.
35.
It eventually reached the point that, in some instances,
36.
all that was needed to qualify for a mortgage
37.
was a stated income and money in the bank.
38.
No proof of income or assets were needed.
39.
No one was really worried about the risk,
40.
because no one was holding on to the mortgage
41.
for very long before selling it.
42.
Small banks were taking out loans
43.
from larger banks to buy mortgages
44.
and selling them to Wall Street banks.
45.
These banks were often highly leveraged, often 20 to 1,
46.
which means they were able to borrow up to 20 times
47.
the cash that they actually had.
48.
When the bubble burst, housing prices began to plummet
49.
and nobody wanted to buy these mortgages anymore.
50.
The whole system came crashing down,
51.
which affected not only Wall Street, but also the people who
52.
had taken out the mortgages and the entire global economic
53.
system.
54.
55.
A History of Exclusion
EXCLUSION FROM THE BANKING SECTOR

The global financial crisis was an illustration of how banks can fail on a
massive scale. Though this crisis was dramatic and well-publicized, it is not
the only failure of the financial sector. Banks have a long history of excluding
certain groups from accessing good-quality, non-predatory financial
services. This type of failure both drives and exacerbates conditions
of economic and social inequality.
A History of Exclusion
1.
2.
3.
[MUSIC PLAYING]
4.
5.
So the global financial crisis of 2008
6.
was one really powerful example that showed us
7.
a lot of the really endemic problems
8.
in the financial sector-- in the global financial sector.
9.
So we saw things like excessive risk taking.
10.
We saw predatory lending, and other really harmful activities
11.
that were part of the daily activity
12.
of these financial institutions.
13.
And with this clip, we want to shine light
14.
on one other issue-- that's the issue of exclusion.
15.
So today, over two billion adults in the world
16.
don't have bank accounts.
17.
That's almost half of the adult population.
18.
And even more don't have access to financial services.
19.
And this kind of exclusion creates a lot
20.
of negative effects on these individuals
21.
and on these communities.
22.
Yeah, and so talking about exclusion on the global scale
23.
can seem very abstract.
24.
But we actually see the effects of this exclusion
25.
from the banking sector, which has been going on
26.
throughout history, in Boston, which is where we are today.
27.
We can see it in how the city has developed.
28.
So in the US, there has been a practice
29.
called redlining that has existed for a long time.
30.
And that was started in 1935 by the Federal Home Loan Bank
31.
Board, which commissioned maps of over 200 cities.
32.
And they drew lines around neighborhoods
33.
based on how risky they saw the investment.
34.
So certain neighborhoods were outlined in blue,
35.
and that was a good investment.
36.
And certain neighborhoods were outlined in red,
37.
and that was seen as too risky.
38.
And so the thing was that these lines were
39.
drawn on racial boundaries.
40.
So blue neighborhoods were often white.
41.
Red neighborhoods were often black or minority
42.
neighborhoods.
43.
And what happened is this essentially
44.
became a self-fulfilling prophecy, where
45.
these neighborhoods that were redlined, because they couldn't
46.
access finance, they couldn't get mortgages or really develop
47.
their communities, it led to a really steep decline
48.
in a lot of these urban neighborhoods.
49.
So exclusion sounds like an abstract word,
50.
but it has very concrete effect on the individual,
51.
on the community, on the family.
52.
And in our economic system, where money and finance plays
53.
such an essential role, being excluded
54.
from financial services basically
55.
excludes this individual from society as a whole.
56.
And what happens in these neighborhoods
57.
is that then predatory lenders step in.
58.
So this open market is used by financial institutions that
59.
use the vulnerability and the difficulty of the situation
60.
to sell products that are basically
61.
toxic for the recipients of these products.
62.
We saw that in the crisis with the subprime mortgage products
63.
that were toxic.
64.
And so exclusion has a lot of long-term effects
65.
on these communities.
66.
And what we want to emphasize is that access
67.
to finance and access to banking is
68.
absolutely essential for developing well-being
69.
in a community.
70.
71.
VOICES FROM THE FIELD: BRIAN ARGRETT

In this video, we will hear from Brian Argrett, President and CEO of City First
Bank of DC about how his bank works to build wealth equitably in a
neighborhood of Washington D.C. that was long excluded from the banking
sector.
Interview with Brian Argrett
1.
2.
3.
I'm Brian Argrett, CEO, President and CEO
4.
of City First Bank of DC, which is in Washington DC.
5.
6.
The way City First was founded completely
7.
impacts and sets the course for what we do today.
8.
So what's unusual about the bank is that it really came out
9.
of activism, so to speak.
10.
Or out of community engagement, in the sense
11.
that it was founded by individuals
12.
who saw, in Washington DC, that there were neighborhoods that,
13.
essentially, where capital is not flowing.
14.
Where there have been large scale disinvestment.
15.
Where really the banking community was not interested.
16.
And they came together to fashion
17.
a solution of how to assist in having capital flow.
18.
They chose the banking model, obviously
19.
because of the benefits of leverage through deposits.
20.
So that you would raise a certain amount of capital.
21.
And then you can also raise additional funds
22.
through deposits, and have a larger impact in your lending.
23.
What they did though, was they formed a nonprofit.
24.
To really be the control shareholder, the founder
25.
of the bank, and to this day, that nonprofit
26.
is the largest single owner of the bank.
27.
It has voting control of the bank.
28.
And then they sold shares to other investors,
29.
who also share that vision.
30.
So what does that mean on the ground?
31.
It means that the heart of this for profit
32.
bank in Washington, City First Bank of DC,
33.
we really have the history, and the essence I say,
34.
a nonprofit spirit kind of flows through our veins.
35.
So there's really a sense of wanting to, and needing to,
36.
and being put here to really benefit those underlying
37.
communities.
38.
39.
In Washington DC you have, as you have in many cities,
40.
very clear barriers, whether you see them or not.
41.
Sometimes they are physical barriers.
42.
For where capital has flowed has flowed, and where it hasn't.
43.
And they often correlate very strongly
44.
with the ethnicity, in many cases, of the population.
45.
And so you have some really sharp lines.
46.
In Washington one of those lines is the Anacostia River,
47.
which separates portions of southeast
48.
Washington from the rest.
49.
We have been very active in really caring about it,
50.
and investing and lending in, what
51.
we call the east of the river, southeast Washington DC.
52.
And have been fortunate to be able to participate
53.
with other actors in the community.
54.
To be able to fund projects that will make a difference.
55.
The way we like to look at them is catalytic projects,
56.
that will start something that the community and other capital
57.
providers can help to, I won't say finish,
58.
because your work's never finished,
59.
but to continue to urge along.
60.
61.
Yes it's a really interesting question,
62.
because you really have to be engaged
63.
and not, from afar, kind of throwing in benefits
64.
or throwing in opportunities.
65.
But it's also difficult because as a bank,
66.
you're not doing the work.
67.
You're providing the capital in large part
68.
to those who are doing the work.
69.
So what it means is, for me, and what I found,
70.
is your very intentional.
71.
First of all, you have to be intentional.
72.
That's the answer, you have to be very intentional.
73.
And that means who you're choosing to work with,
74.
and who you're choosing to partner with to figure out
75.
what work needs to be done.
76.
Sounds easy, but it's not necessarily.
77.
Because everyone has different interests
78.
in an evolving community.
79.
So one of the things, for example,
80.
that we're doing to kind of do a little bit of a reset
81.
and continuation of our efforts is actually,
82.
in a couple of weeks, a week and a half from Wednesday,
83.
we're having a large forum we're calling it a summit.
84.
It's focused completely on east of the river,
85.
and we're bringing together all of the stakeholders who
86.
might be involved in and might be interested in,
87.
and are interested in, a more equitable economic development
88.
east of the river.
89.
So this is a community in Washington
90.
where economic development is coming,
91.
and the question is, as it comes,
92.
how can we make sure that resources are more fully shared
93.
by the community.
94.
So to do that, you need to bring together
95.
everyone who has a stake.
96.
Including the city government, the residents,
97.
and the nonprofits that are working within that community,
98.
the for profit developers who will have an interest
99.
in the commercial corridors, and housing,
100.
and the nonprofit providers , as well as other financing
101.
sources.
102.
And what we're trying to do is bring them together.
103.
Talk about the tough issues, everything from gentrification,
104.
to job creation, to entrepreneurialism
105.
within a specific community, and come out
106.
of that with hopefully stronger connections,
107.
better insight, maybe a little bit of a policy paper
108.
to be able to decide how we should encourage
109.
this on a go forward basis.
110.
And then, of course, for ourselves,
111.
greater clarity on where the needs are
112.
and how they might be bridged.
113.
So things like that, which you can't do every day.
114.
But when you have the opportunity to do,
115.
can give you great insight.
116.
And also connects you in a greater manner
117.
to the other folks who are involved,
118.
engaged, and interested in whatever that charge might be.
119.
In this case, equitable development
120.
within this community.
121.
122.
The real big challenge in engaging with the neighborhoods
123.
parallels the challenge of the business.
124.
And it's really just balance, right.
125.
In everything we do we're always balancing
126.
different interests that don't necessarily run parallel.
127.
It's been interesting for us because where
128.
the bank is located is at the corner of 14th
129.
and U Street in northwest Washington, which
130.
was an area, when we first located,
131.
that had been in our target area.
132.
And then over the years had changed
133.
as more and more investment had come in.
134.
In the early years we were focused
135.
on really creating housing, rehabilitating
136.
physical structures for use, putting them back in service.
137.
Clearly on retail, and on bringing in jobs and businesses
138.
into the area.
139.
But as the area became more successful in those endeavors,
140.
then our focus needed to shift to preservation
141.
of affordable housing.
142.
Because now, in a market where the values have risen,
143.
you are creating some real dilemmas for will
144.
how will folks be able to stay and enjoy that.
145.
And, for those who did, are the social services
146.
that may be helpful to families still going
147.
to be available, because they may also be displaced.
148.
So it's a huge issue.
149.
But I think as a community development organization
150.
and a values based bank, our job is to try and really figure out
151.
how to fit into that and make a difference,
152.
but also be flexible enough to recognize that those needs
153.
may change over time.
154.
When we were talking about our work east of the river,
155.
we're trying to get ahead of that curve.
156.
So that we have an opportunity to say let's
157.
not have to react, let's get out front,
158.
and try and develop some new techniques.
159.
Be it, for example, land banking, that
160.
might be used for the city to acquire significant real estate
161.
within a community where it's going to appreciate, and then
162.
be able to use that in trades, or in development,
163.
for more affordable uses when you know down the line that's
164.
where you're going,
165.
I think the first thing that has to be in place
166.
is intentionality.
167.
So you have to, or a community, or a set of leaders,
168.
or organizers of an institution, really
169.
do have to be very intentional that they're
170.
trying to solve a problem.
171.
And at the same time create an institution
172.
that will be there for the long run.
173.
And so balance again comes into play.
174.
They need to hire and work with a very spirited, but very
175.
experienced, individuals who can help bring that to fruition.
176.
Obviously it requires capital.
177.
That is one of the most important component parts.
178.
And it also requires, I believe, the government,
179.
be it the municipal government, or perhaps
180.
the federal government, to be a player.
181.
Because at the end of the day, the issues
182.
that particularly in community development,
183.
that you are concerned with really
184.
are the interest of the entirety of the people.
185.
And hence the government also has a role in that regard.
186.
187.
Biography
Brian E. Argrett, a Director since 2011, is currently President and Chief

Executive Officer of the Corporation and the Bank and a member of the
Executive Committee. Formerly Mr. Argrett was founder and managing
partner of both Fulcrum Capital Group, an investment manager, and Fulcrum
Capital Partners, L.P., a traditional, institutionally-backed private equity
limited partnership.
Read more
INTRODUCTION TO JUST BANKING

In this video, we will introduce you to a type of banking that attempts to
respond to some of the systemic failures we have explored in this week. We
call this Just Banking.
You can download the slides referred to in the video using the "Download
Handout" button below the video player.

1.
2.
3.
[MUSIC PLAYING]
4.
5.
The purpose of this week was to look
6.
into how banks operate, and the challenges
7.
of the financial system, and the challenges with banking.
8.
Just banking takes a different perspective.
9.
Just banking means to look at banks and their potential.
10.
Banking becomes a tool to address
11.
social and ecological challenges.
12.
An example was City First that you saw in the clip before.
13.
A group of community leaders came together
14.
and they realized in order to have
15.
an impact in the neighborhood and to develop
16.
their neighborhoods, they need to provide financial services
17.
to the people who live there.
18.
They started a bank.
19.
They founded a bank.
20.
And banking here means that banking is really
21.
focused on the well-being of the clients they serve.
22.
In our research around the world where
23.
we looked into different banks that operate that way,
24.
we found a few criteria that define just banking,
25.
and those criteria I would like to share here.
26.
The first characteristic of just banking
27.
is that banks use finance as a tool
28.
to address social and ecological challenges.
29.
So banking is not focused on optimizing
30.
the profit of the individual organization,
31.
but finance becomes a tool.
32.
In order to do this, it's important for banks
33.
that operate in that way, that they're transparent,
34.
because that's their core business model.
35.
They want their clients to know.
36.
And they also want to reconnect the money
37.
that depositors bring to the bank to the impact
38.
and the loans they give out.
39.
So transparency is a core descriptor
40.
here for just banking.
41.
The third criteria that's important
42.
is that just banking means you have
43.
to move away from standardizing your financial products.
44.
For banks, it's much more efficient and effective
45.
to standardize their products.
46.
But if you operate in the mode of just banking that requires
47.
you to really understand the clients and customers' needs,
48.
you are interested in increasing the well-being of the client.
49.
For that you have limits of standardization,
50.
because you might need to innovate
51.
from the client's perspective.
52.
So you need to understand the specific context.
53.
For example in the case of City First,
54.
the needs of the people who live in the neighborhood.
55.
The fourth criteria here is that you
56.
want long lasting relationships with your clients.
57.
And only in a long lasting perspective,
58.
so in the longer perspective you have
59.
an impact on the well-being of the people you serve.
60.
And then as a result of that, I think everybody can easily
61.
conclude that just banking means that you're really
62.
focused on the real economy, and you're not
63.
focused on the just the financial economy.
64.
So derivatives and speculative banking business
65.
is not part of just banking.
66.
And lastly that all of these above criteria
67.
are part of the core business model.
68.
So it's not just sitting in a corporate social responsibility
69.
department somewhere, or it's a project of the marketing
70.
campaign that the bank holds.
71.
These operations are core to the business model of this bank.
72.
The question that we get right away
73.
is how do you know the bank has an impact?
74.
And this is very individual.
75.
And if you're a community bank, you
76.
have a different impact than if you're a green bank,
77.
and your main focus is on regenerative energy.
78.
But I think there is a way to describe what type of impact
79.
just banking can have.
80.
So let me briefly walk you through this.
81.
So one form of impact-- and we don't call this just banking
82.
yet-- is that you have a few green and social projects
83.
sitting somewhere in your banking business,
84.
but it's really not core to what you're doing.
85.
Just banking begins in the moment
86.
that it becomes core of your business model,
87.
and then you can have several levels of impact.
88.
So one, for example, is that you just
89.
have a business that's completely--
90.
all your loans are green, all your loans
91.
are socially helpful.
92.
So that's one form.
93.
100% of your business serves these kinds of activities.
94.
But is that the impact you want?
95.
The next level of impact can be that you try
96.
to identify lead innovators.
97.
So in your communities, who are the people
98.
who really shift the well being of the community
99.
in the right direction?
100.
So instead of just saying whatever comes onto my desk
101.
and is a social and green project,
102.
I finance, you become more proactive,
103.
and you ask yourself what are the key innovators
104.
in this community that I want to finance?
105.
And you can even go a level further,
106.
and we call this ecosystem innovation.
107.
And you will see the connection to the interview
108.
we did with Otto Scharmer, who is working with this notion.
109.
Ecosystem innovation means you look at the impact
110.
that you have, let's say it's a neighborhood,
111.
and you ask, what is needed to shift this whole neighborhood
112.
to another level?
113.
So it's not just identifying the lead innovators,
114.
but maybe even being proactive.
115.
Getting key leaders of this community together.
116.
Getting key innovators in wind energy
117.
together, and trying to find leverage
118.
points where you basically can shift the whole system.
119.
So this was a lot for one clip, and we will go
120.
into this in more detail later.
121.
But the purpose of this clip was really
122.
to introduce you to what is just banking,
123.
how does it distinguish itself from mainstream banking,
124.
and where is the impact.
125.
126.
JUST BANKING IN CONTEXT

If what you just learned about Just Banking feels a little abstract, lets give it
some context. In this video, we will hear from Dr. Phil Thompson about how
Just Banking fits into his work with labor unions and minority communities in
the United States.
Conversation with Phil Thompson

1.
2.
[MUSIC PLAYING]
3.
Well, the labor groups I work with,
4.
and the community groups I work with kind of view banks
5.
as the enemy.
6.
They have no real sense of how banks
7.
could be an ally, or supportive in any way.
8.
And they tend to see banks as part of the power
9.
structure that's oppressive.
10.
Historically in the US, there have been movements going back
11.
for more than a century for what we would call just banking.
12.
So there have been movements around credit unions.
13.
There have been movements around farmers cooperative banking.
14.
There have been movements, black banks.
15.
Long history.
16.
My own family ran an insurance company and so forth.
17.
But those things were crushed by the big banks.
18.
And if you take the case of African Americans, which
19.
I'm really familiar with, after slavery, African Americans
20.
got no land and they had no money.
21.
And slavery, you didn't get paid.
22.
They had no money, no land.
23.
And so debt was offered to millions of people.
24.
This is how you're going to survive.
25.
And people were imprisoned.
26.
Could not get out of debt for 100 years.
27.
And literally, the only way they got away
28.
was, literally, to flee.
29.
To run away in the dead of night and flee.
30.
And move to another part of the country.
31.
That's the only way they got out.
32.
And so you've got this really ugly history,
33.
here, that's embedded in people's mind.
34.
So you talk about mental model, banks symbolize to them
35.
that all oppressive structure of basically indentured servitude.
36.
37.
That's what is deeply embedded in the culture.
38.
I'll give you an example from history.
39.
So I'm the son of a Baptist minister,
40.
black minister from the South in the United States.
41.
And in the black church historically,
42.
when people didn't have banks to go to, per se.
43.
Regular formal banks.
44.
The church was actually a banking intermediary.
45.
And churches had something called
46.
the board of the deacons, who were
47.
the religious, spiritual leaders of the Church.
48.
Then they had something called the board of trustees.
49.
And the board of trustees were business people
50.
who also were strong community citizens.
51.
Upstanding.
52.
And they were given a role of honor within the church,
53.
and they helped manage the finances of the church.
54.
But, because they were in this privileged position,
55.
people also trusted them to manage
56.
their personal investments and personal finances.
57.
And these are the people that became the conveners.
58.
The church actually was a convening, once a week.
59.
And people would not only talk about God,
60.
they'd also talk about their investments, and their future,
61.
in their burial fund, and their insurance fund,
62.
and their this fund, and their that fund.
63.
So it was a combination of social and finance
64.
through the mechanism of a church.
65.
I think banks will look like that.
66.
And maybe not around God.
67.
Maybe around solar.
68.
Maybe around affordable housing, or something else that people
69.
value.
70.
But there's no necessary contradiction
71.
between a social convener and a financial convener,
72.
an investor.
73.
It's not, it's just something that's
74.
been created in our modern society
75.
by political institutions and banks.
76.
They've made it that way.
77.
It actually is a nonsensical separation
78.
that we just tend to take for granted.
79.
80.
Well, I definitely think we need-- this is all political.
81.
And ultimately, the only way to change banking and finances
82.
politically: to re-regulate.
83.
But before that, I think people have
84.
to have some vision or goal that they're trying
85.
to achieve through regulation.
86.
And that's kind of where we are.
87.
It's creating that vision.
88.
Helping to give people an idea through practical examples, as
89.
well as education and discourse.
90.
What things could be.
91.
I think that's where we are.
92.
But one of the things I'm trying to do now in practice
93.
is I've been going around to labor unions,
94.
showing them that if they invested in affordable housing
95.
for their members, that they could actually increase
96.
the monthly income of their members
97.
much more than they can at the bargaining table with firms.
98.
With employers.
99.
Because housing has become so expensive.
100.
And a lot of the cost of housing is debt, and compound interest
101.
on debt.
102.
And by wiping that out, they can actually empower workers.
103.
Well, that forces them to think about, well,
104.
what is a union then?
105.
It's not just about bargaining at the workplace.
106.
If their job is really to help improve the lives of working
107.
people, then why do they just limit it to bargaining
108.
at the workplace?
109.
Why wouldn't they just take a much more expansive view?
110.
What are all the resources and capacity that they have,
111.
and how can they be put to better use
112.
to help workers economically?
113.
Well that's a whole, radical rethink of a union.
114.
And so that has to happen along with the rethink of the bank.
115.
We have to rethink all of these different approaches
116.
and sectors together.
117.
Then people begin to get it, to get a different a image.
118.
So when I talk to unions about that,
119.
they actually become very excited.
120.
And so that's why I'm saying, I don't
121.
think you can revolutionize finance without also
122.
revolutionizing other sectors.
123.
You have to have different kinds of projects,
124.
proposals, business models, coming into the room.
125.
And then the financial people can--
126.
even if they want to do the right thing,
127.
there has to be something they can put the money into.
128.
And so it needs a more comprehensive, I think,
129.
kind of strategy and approach.
130.
And I'm trying to say to unions, you've
131.
got to get into the actual business development business.
132.
You just can't wait for the auto industry
133.
to come tell you what the next transportation
134.
product is going to be.
135.
Or if you're in the hospital, you
136.
can't wait for the hospital industry
137.
to come tell you what the new health care delivery
138.
system is going to look like.
139.
You actually have to get in there
140.
and help fashion that thing.
141.
And then you could put your money to help make it happen.
142.
And put pressure on all of your fund managers
143.
or whatever to help make that happen.
144.
That's a radically different framework
145.
for these organizations.
146.
Radically different.
147.
And it's kind of a chicken and egg thing, in a way.
148.
Because... and I think that's why education, and dialogue,
149.
and communication are so important.
150.
So a lot of folks might have ideas,
151.
but they won't develop those ideas because they'll say, oh,
152.
nobody would ever support this.
153.
And if they know that there are people who actually might,
154.
if they have a good idea who actually
155.
might invest in or listen to it, then they'll
156.
be more willing to go out and try things, and venture.
157.
And so you kind of have to create a culture.
158.
A different kind of culture, I think.
159.
160.
Ego To Eco-system Economies
GUEST FACULTY: OTTO SCHARMER

In this video we will discuss Just Banking in the context of Ego- to Eco-system
economies with Dr. OttoScharmer, Senior Lecturer at the MIT Sloan School
of Management.
Interview with Otto Scharmer

1.
2.
3.
Otto, thank you so much for joining us.
4.
Otto Scharmer is senior lecturer at MIT Sloan
5.
School of Management.
6.
He's co-founder of the U.Lab.
7.
And we're really excited to have you here today.
8.
This week, we introduced Just Banking, how they operate.
9.
Just Banking describes banks that
10.
use finance to address social and ecological challenges
11.
we see today.
12.
And the core idea is that to address the challenges we face
13.
as society, we need entrepreneurs and business
14.
to develop business models around these challenges.
15.
And we see this all over.
16.
And we were wondering, what we are seeing there,
17.
is this an isolated phenomenon, or is this something
18.
that you see in your work?
19.
And how would you describe what's
20.
happening right now in our economic system and society?
21.
Well, I definitely see it as part of a bigger pattern.
22.
And I'm sure just about everyone who's
23.
participating in this MOOC, probably
24.
has the same experience.
25.
Which is that if you go from one country to another today,
26.
you face the same situation.
27.
Which is most people feel that we live in a time
28.
where something is ending, and something else
29.
is wanting to emerge, and wanting to happen.
30.
And that applies to both our social and political democratic
31.
order, but also in particular, to our economic order.
32.
So one way of doing business, is ending and dying.
33.
That creates all the negative externalities, and so on.
34.
And another way of business that we haven't quite figured out
35.
yet, but that we can already see in small beginnings,
36.
is about to happen and take off.
37.
So what would you describe as Just
38.
Banking, and the financial industry,
39.
can be also seen-- if you look and if you move
40.
to other sectors, you see a whole new breed
41.
of entrepreneurs emerging.
42.
And while in the past we had business on the one hand,
43.
and NGOs, mission driven entities, on the other hand,
44.
we now see a whole breed of enterprises
45.
that really operate like a business,
46.
but with a social mission, business
47.
with a social mission to basically make
48.
the world a better place.
49.
And in other words, using the power of business,
50.
and also the power of money and investment,
51.
for positive social and environmental impact.
52.
So that's like, you could say, the space
53.
of new entrepreneurship.
54.
But let's go into the old world, the old business,
55.
the old global tech, and traditional business companies.
56.
What do you see there?
57.
You see the same thing.
58.
Because most of them today, when they
59.
talk about strategy, and leadership, and innovation,
60.
they use the term ecosystem.
61.
And that means they deal with challenges that you cannot
62.
address successfully if you just think and operate inside
63.
the boundary of your own organization.
64.
What's an example for that?
65.
I think historically, one of the first and most visible examples
66.
has been Nike.
67.
In the 1990s child labor came up.
68.
They outsourced basically all their production to Asia.
69.
And then the child labor issue came up.
70.
And Nike said, well that's not us.
71.
That's our suppliers over there in Asia.
72.
Talk to them.
73.
And of course, that almost killed them,
74.
because as a global brand you are vulnerable.
75.
You're vulnerable to public opinion, basically.
76.
And that's where NGOs started hitting them.
77.
And that's why they had no other chance
78.
than taking care of the entire ecosystem,
79.
improving the way business is done in the entire ecosystem,
80.
that includes all the suppliers, that includes all the customers
81.
and users, that includes all the other departments,
82.
including the social and environmental context.
83.
So I think that's why really ecosystem thinking, is not
84.
a moral imperative.
85.
It is like an economic imperative.
86.
It's good business principles that
87.
teach you to think in that way.
88.
And that's where we are today.
89.
So if you could describe a little bit more
90.
what is this shift in mindset.
91.
So what does it mean to act from an ecosystem awareness
92.
and ecosystem perspective?
93.
How would you describe that?
94.
What does it take?
95.
Well it's a very good point.
96.
One way to say that, and of course, then how
97.
do you do that?
98.
That's of course where all the difficulties come in.
99.
And I think if you summarize that in one word,
100.
I would say it starts with listening.
101.
It starts with shifting your mindset,
102.
or shifting your listening, from just listening
103.
from within your own framework, towards empathic listening
104.
towards sensing, and seeing the situation through the eyes
105.
of your users, through the eyes of your stakeholders,
106.
through the eyes of the most marginalized participants
107.
in the ecosystem you're operating.
108.
So in terms of practical skills, and if you look at-- so here's
109.
another word where more maybe in mainstream business,
110.
this is coming across.
111.
It's silo thinking.
112.
That's the problem, right?
113.
And more than 50% of all change management today
114.
in bigger, more complex, organizations,
115.
deals with moving from a silo perspective way of operating,
116.
which is what we call egosystem awareness, to the more
117.
ecosystem awareness mindset, that includes the impact that I
118.
have on the other stakeholders.
119.
So when we use the term ecosystem awareness,
120.
here's what we mean.
121.
We mean an awareness that is focusing
122.
on the well-being of not only myself, but also all
123.
the other stakeholders in a system.
124.
And many of the innovation challenges that we face today
125.
require us to move from ego to eco, because otherwise,
126.
you cannot be effective in the relational leadership space.
127.
So economic theory argues that ego, so myself interests,
128.
is the driving force for our capitalistic system,
129.
and this is where our creativity sits,
130.
and that's the dynamic element in our society.
131.
If we take your thinking around ecosystem,
132.
how would that translate in the economic or the larger system
133.
perspective?
134.
Well I actually think that at the core, and maybe
135.
the unseen, and maybe most exciting and interesting,
136.
and part of the-- we all feel we are part of a transformation,
137.
or a moment of disruption, whether it's a transformation,
138.
we will figure out, right?
139.
So it could move us forward, backward, we don't know.
140.
But we live in a moment of disruption,
141.
and the most exciting part, I believe,
142.
that could evolve if we can use this moment of disruption,
143.
as transformation opportunity.
144.
The most important part, the most exciting part,
145.
is evolving how the operating system,
146.
how the economy works, by introducing a new governance
147.
or coordination mechanism.
148.
And we all know from our computers,
149.
once in awhile, we need to update the operating system.
150.
How did that happen in our global economy?
151.
The same way.
152.
The first operating-- and each operating system
153.
creates a new response, how to deal basically
154.
with division of labor, which is the key to productivity,
155.
and to progress, in our economy worldwide.
156.
So the first answer was centralization, hierarchy.
157.
And then the second one, which is good,
158.
because it creates stability.
159.
And it's bad, because it lacks dynamism.
160.
Which gives us rise to the birth of the second sector,
161.
the private sector.
162.
And now its markets and competition,
163.
as the second coordination mechanism
164.
coming into play, huge growth, huge success, huge wealth
165.
created for many, and huge problems
166.
in the form of negative externalities, poverty,
167.
inequity, and environmental destruction.
168.
Which then gives the rise of a birth
169.
of the third sector, which is the social sector, or the NGO
170.
sector.
171.
And that has led to basically evolving
172.
the regulatory framework around these key externality issue
173.
areas, through a whole set of institutional innovations,
174.
which includes the Federal Reserve System, Social
175.
Security, standards for labor, the environment, and so
176.
on, and so forth.
177.
So that happened in Europe, in the US, about 100 years ago.
178.
That moved us from a 2.0 let's say, fair capitalism, to 3.0,
179.
more social market economy, or stakeholder capitalism,
180.
capitalism how we call it here in North America.
181.
But at the beginning of this century,
182.
this system is hitting the wall, because we cannot deal
183.
successfully with global externalities.
184.
And that's really the moment we are living in.
185.
And what we believe is that these three mechanisms
186.
that we have, central planning, market and competition,
187.
and then basically, stakeholder groups negotiating
188.
with each other, needs to be complimented
189.
with a fourth mechanism.
190.
Which we call awareness-based collective action,
191.
basically creating arenas, creating holding spaces, that
192.
allows us to bring together the key stakeholders,
193.
look at the current situation.
194.
And from deeper understanding what's currently going on,
195.
and where innovation challenges are,
196.
find new ways of collaboration, of innovation,
197.
among the stakeholders.
198.
So awareness-based collective action,
199.
which is basically a different way of saying,
200.
which only works if you move egosystem awareness
201.
of ecosystem awareness.
202.
So in a way, what I believe is that if you look
203.
at the evolution of the global economy
204.
and of economic thought, you can see that that evolution is
205.
an embodiment of an evolving human consciousness,
206.
basically from ego to eco-- from egosystem awareness-- something
207.
we still teach in business schools--
208.
to the ecosystem awareness, something
209.
that you need to master, that you need to practice in order
210.
to deal with reality today.
211.
And so that principle, which is form follows consciousness,
212.
is what I believe, is the hidden writing
213.
in our moment of disruption.
214.
And if you translate that to the financial sector,
215.
I don't know what to call it.
216.
But you could say it's money follows consciousness,
217.
or money follows meaning.
218.
So it's how we can realign the flow of money and flow
219.
of capital more closely with where our real intentions are,
220.
as opposed to just being driven by externalities that are
221.
outside of our own awareness.
222.
So in a way you could say what we
223.
see in leadership in business today
224.
is that, to be a good leader, you need to be aware of,
225.
and literate in terms of the global externalities,
226.
that you as a company are dealing with.
227.
And the same applies, I believe, to money,
228.
and to the financial system that is
229.
part of the operating system.
230.
And that's why the MOOC and the topics,
231.
and the examples that you are exploring in this MOOC,
232.
are so vital, are so central for evolving the economy
233.
as a whole.
234.
Because in many ways, the core mechanism
235.
of what keeps capitalism together is capital, of course.
236.
So the questions that you guys explore,
237.
and where you try to innovate, are really
238.
central to evolve the economy as a whole.
239.
It's not good enough to just have
240.
socially responsible organizations in a small pocket
241.
as you have argued.
242.
But the fourth level of impact in new banking, really
243.
is about banking in a way that's transforming the system.
244.
How?
245.
Well by operating more from this ecosystem awareness that
246.
is inclusive of all its participants,
247.
and not just organized around the well-being of a few.
248.
Which basically means that egosystem banking means focused
249.
just on the profit, and I circle in the speculative realm
250.
of the finance economy.
251.
And ecosystem banking means that I
252.
use finance to bring ideas that address
253.
the challenges we have to life.
254.
So I expand my awareness, and thinking, and the money
255.
following consciousness, and channel money
256.
into these new ideas.
257.
Thank you so much for your time.
258.
All right.
259.
Thanks.
260.
261.
Extra Material
If you are interested in learning more, here is an article from Otto Scharmer
about Ego- to Eco-system economies:
"From Ego-system to Eco-system Economies": Scharmer, Otto.
(2013) From Ego-system to Eco-system Economies. openDemocracy.
You may also be interested in reading his Huffington Post blog.
Biography
Otto Scharmer is a senior lecturer at MIT, Boston, a visiting professor at Tsinghua
University, Beijing, and co-founder of the Presencing Institute. A global action
researcher, Otto works with leaders in government, global companies, and NGOs to
achieve profound innovation across sectors and cultures. He chairs the MIT IDEAS
program for cross-sector leadership capacity building in China and Indonesia.
Read more
EGO- TO ECO-SYSTEM ECONOMIES

Though Just Banks may seem unique within the banking sector, the ideas
that underpin Just Banking are part of a growing movement to change how
businesses -- not only banks -- operate. In this video we will explore what it
means to operate in the economy with an awareness of the system as a
whole.
To download the image from this video, please press the "Download
Handout" button under the video player.
Ego to Eco-System Economies

1.
2.
[MUSIC PLAYING]
3.
4.
With that, we are at end of week one,
5.
and the purpose of this week was to introduce the unique role
6.
that banks play in our economic system
7.
and to describe how just banks use this unique role
8.
to address ecological and social challenges that we face.
9.
At the end of this week with this video
10.
we want to take a step back.
11.
Here at the Community Innovators Lab at MIT, we created,
12.
after the financial crisis of '07-08, a work group to look
13.
at the broader picture and to look at how do our economies
14.
operate.
15.
How could it come to this point of crisis again and again?
16.
And I just want to share a few thoughts that
17.
emerged from this work group.
18.
So let me start from the beginning.
19.
So what is our economy?
20.
So if I built this table and I just use it for myself,
21.
I'm not taking part in our economic system.
22.
Only in the moment I sell this table
23.
to someone I'm taking part in our economy.
24.
So basically, I know the system is a coordination challenge.
25.
So I have to find someone who likes this table, who
26.
likes the way I build it and who's willing to pay
27.
a price that I am accepting.
28.
And when you look into history, you
29.
see that for this coordination challenge
30.
there were different answers.
31.
So the first answer in the pre-capitalistic system
32.
was a very hierarchical answer, and we still
33.
see this in socialist-driven economies.
34.
They have a very strong state that
35.
creates stability and answers most of these coordination
36.
challenges.
37.
What market, what prices, et cetera.
38.
So the advantage is that you have stability,
39.
you have functioning market to a certain degree,
40.
and the issue of, obviously, how slow
41.
these markets are that they're not responding
42.
to customers and clients.
43.
That there's no dynamic in it.
44.
And what we saw with the Industrial Revolution
45.
was that this dynamic entrepreneurial force
46.
was set free, so the coordination
47.
had been suddenly decentralized.
48.
Everybody could be an entrepreneur.
49.
And the advantages in this form of coordination,
50.
which we call today the free market system,
51.
there's a lot of dynamism in it.
52.
So everybody can step up, have ideas, and move forward.
53.
The obvious challenges that we have in economic theory
54.
is called negative externalities.
55.
So I'm building this table, but I'm polluting the river,
56.
or using child labor, et cetera.
57.
So historically, a reaction to the negative externalities
58.
of the free market system was that the state intervened again
59.
and set up some regulations.
60.
There are hundreds of these regulations
61.
basically to reduce these negative externalities.
62.
So we have child labor laws, we have pollution laws.
63.
And when you look at our political discussions today,
64.
you see that most of the discussions
65.
are basically a debate between these two positions.
66.
Free market should be dominating or we
67.
need a state to reduce a free market system
68.
and to address the negative externalities.
69.
But we believe that there is actually
70.
a fourth form of coordination.
71.
And that this is something that's emerging today
72.
and that's becoming more and more visible and dominant
73.
and that also explains how just banking operates.
74.
So when you look at companies that
75.
operate along the triple bottom line, --and I'm sure all of you
76.
have examples in mind for businesses
77.
like that-- it's not just entrepreneurial-driven
78.
and ego system driven.
79.
It's not just my self-interests that defines the business
80.
that I'm operating.
81.
So what banks do that want to combine profitability
82.
with an impact is that they look at the financial bottom line,
83.
but they also have an awareness of the ecological and social
84.
impact they have.
85.
So this difference between just market economy or a regulated
86.
market economy to this fourth way of operating
87.
is a shift in awareness.
88.
So my self-interest doesn't end at the end of my organization.
89.
My self-interest becomes bigger and includes the impact
90.
that I have in society.
91.
And we hope that this basic concept
92.
allows you to see the work of just banking
93.
from a broader perspective and also
94.
see their role in economics as a whole.
95.
So with that we're at the end of week one.
96.
And in the next week, we will take a closer look
97.
into what do just banks do actually.
98.
How do they create an impact?
99.
How can we see the impact?
100.
Thank you.
101.
102.
Survey
Please take a moment to answer these two survey questions. Once you click
"submit" you will see the results gathered from the other participants.
Thank you!
Question 1
What was the primary factor in choosing your current bank?
Convenience
39%
Rates & Fees
20%
Mission or Impact
20%

Other Reason
13%
Inherited Account
8%
Results gathered from 1040 respondents.
Question 2
Do you think banks should invest your money in alignment with your values?
Yes
86%
Unsure
8%
No
6%
Results gathered from 1057 respondents.
Actions For This Week
REFLECTIVE JOURNALING
Reflect on the following questions:
1.
What is my personal relationship with money?
2.
How much money do I need to be happy?

Keep your response short. The total length of your writing should be one
typed page, maximum.
Post your writing, or a summary of it, either in the discussion board
or in your coaching group. Read at least two other peoples statements
and comment on what they have written. You can choose to do this within
your coaching circle or on the discussion board. Please do this with the
intention of being helpful!
COACHING CIRCLE
The purpose of the coaching circles is to find conversation partners for
you for the duration of the class. We encourage you to make use of this
opportunity. You have a chance to meet people from all over the world, to
understand different perspectives, and to deepen your learning.
For this first week, the objective is to find 3-5 other people, identify a time
that works for you, and try out the communication.
If you manage to connect during the first week, then during the first call:
Go around your circle and introduce yourselves. Start by

sharing your name, where you live and why are you interested in this
course.
NOT GRADED: HUBS

This action only applies to those who already belong to a hub or are
looking to join one
If you are looking to join a hub, check out the PI Just Money hubs page.
For Hubs that Meet in Week 1:
Depending on the size of your hub, how well participants know each other,
and the interests of the group, adjust the questions accordingly:
Who are we?
Go around the circle and introduce yourselves. If
the hub is more than 15 people, form groups of 4-5 people and introduce
yourselves.
Share: Why am I interested in this class? What are
my expectations?
Choose one or several of these questions for your conversation in

the hub:
What questions do I have about how banks operate
and why they are important for our society?

What are questions that came up for me in the
material that I watched?

What are the key social and environmental issues
in the area that we live, and how could banks help address these issues?
Review
REVIEW OF WEEK 1
In this week we learned about:
The basics of how banks work and why they are important
Issues with the current banking system, including

increasing financialization, cyclical crises, and practices of exclusion
The core principles of Just Banking:
1.
Addressing social and ecological challenges
2.
Transparency
3.
Moving beyond standardization
4.
Developing long-lasting relationships with

communities
5.
Operating primarily in the real economy and

avoiding speculative activities
6.
All these practices at the core of the business

model
Moving toward a more eco-system focused economy
The discussion board is always open for continued conversation on the PI

Just Money site.
Coaching Instructions
COACHING CIRCLES
Coaching circles are probably the single most effective method in Just
Money for moving from concept to practice. In this section, you will find
instructions for how to join a coaching circle. If you intend to join a circle,
please continue reading.
We suggest you wait until Week 2 to do your first coaching session. Use this
week to meet your group and introduce yourselves. However, if your group
would like to begin this week, and all members agree, you are free to do so.
For more information and Frequently Asked Questions about
Coaching Circles, see the Coaching Circles unit in the Welcome
& Navigation section.
Below are the options for joining a coaching circle.
FORMING AN IN-PERSON CIRCLE

Form a circle with people you already know (friends, colleagues, people in
your hub) and meet in person.
FORMING A VIRTUAL CIRCLE

If you don't know five other people in Just Money then you're not alone! For
those looking to make new connections, we've created a feature on the PI
Just Money site that allows you to self-select into groups of 4-6, join
video/phone conversations, and engage in generative dialogue.
Before using the coaching circle selection feature on the PI site, please read
the detailed instructions explaining exactly how this self-selection process
works. It's very important that we all understand and follow these instructions. Please
take 5 minutes to read the instructions before attempting to join a coaching circle. It will
save you and your classmates significant time in the long run.
After reading the instructions
Go to the Coaching Circle Selection Page on the PI Just Money website where
you will see boxes that look like this:
Notice at the very top of the gray box, each Coaching Circle is associated
with a particular date and time. The time is listed in UTC, so be sure to do
the conversion (in your head, on paper, or online) to your own time zone. If
you know what day and time you want to meet, use the drop down menus to
find circles that meet at that time.
Certificate Track
Week 1 due May 26, 2016 at 13:00 UTC

Banking for Social Change: Welcome to Just Money

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Welcome and Navigation

Welcome to Just Money

Welcome to Just Money: Banking as if Society Mattered

To support this journey, we will blend the online material with:

An eco-system of place-based learning communities

Online peer coaching groups, and

Real-time live classroom sessions throughout the

BASIC NAVIGATION TIPS

Where do I find the course material?

How does edX work?

How (and why) do I use the Presencing Institute website?

Who are the other students?

Where to Find Course Content

WHERE TO FIND COURSE CONTENT

Presencing Institute Website

PRESENCING INSTITUTE WEBSITE

After creating your account, or signing in using your pre-existing Facebook,

Find out who the other participants are

See who else is currently online

Sort by country and more

Send each other direct messages

VIRTUAL SPACE FOR HUBS

Convene a group of stakeholders who want to change a system in which

What is a Coaching Circle?

How Do I Form a Coaching Circle?

Should I Join a Coaching Circle?

If you're definitely interested in participating in a coaching

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THE EDX PLATFORM

Using the edX Video Player

Start of transcript. Skip to the end.

LILA FISHER: Hi, welcome to Edx.

I'm Lila Fisher, an Edx fellow helping to put

together these courses.

As you know, our courses are entirely online.

So before we start learning about the subjects that

use to navigate through the course material.

Let's start with what is on your screen right now.

You are watching a video of me talking.

You have several tools associated with these videos.

Some of them are standard video buttons, like the play

Pause Button on the bottom left.

Something that you might not be used to

is the speed option.

or slow down the video player with these buttons.

Go ahead and try that now.

Make me talk faster and slower.

If you ever get frustrated by the pace of speech, you can

adjust it this way.

Another great feature is the transcript on the side.

This will follow along with everything that I am saying as

I am saying it, so you can read along if you like.

that the video jumps to that word.

navigate through the video quickly.

If you ever find the transcript distracting, you

can toggle the captioning button in order to make it go

out the sequence navigator.

Right now you're in a lecture sequence, which interweaves

many videos and practice exercises.

You can see how far you are in a particular sequence by