Professor Milos Petkovic, PhD Lecturer at Berlin School of Business & Innovation


Prior to 2022, the global financial market was characterized by the prevalence of cheap money, which brough prosperity and fortune to many. However, this all changed in 2022. Back then, this trend had persisted for 14 years in total, from 2008 until 2022. During that time, people could access banking products at very low interest rates and favorable conditions, with some countries not even requiring one to have a job to qualify as a banking client. Inflation was almost non-existent in some countries due to low interest rates, and investors were unaccustomed to risks. This period was viewed as a time of stability and prosperity, but unfortunately, this is no longer the case.

The primary cause of the upheaval in the global financial environment is associated with inflation. During the Corona pandemic crisis, governments and countries distributed money to their respective populations to stabilize the situation, but it was anticipated that this would have consequences in the future, as we have seen in the beginning of 2022 with the onset of inflation. As a result of rising prices, national central banks have been forced to increase interest rates. The relationship between inflation and interest rates can be explained simply using an analogy: when a person has a high body temperature, doctors recommend reducing physical activity and resting to recover. Similarly, inflation is like a high temperature for the national economy, and to “cure” it, economic activity needs to be reduced by increasing interest rates. Higher interest rates make money more expensive, as we are currently witnessing.

The problem with these macroeconomic decisions is that they were made too slowly. Consumers did not significantly reduce their spending goods and services. Consequently, economic activity remained largely unchanged. The best “economic therapy” would have been a drastic increase in interest rates, rather than small and incremental increases that yielded little impact. Unfortunately, national central banks governors were hesitant to make radical decisions, mostly due to political and social reasons.

Of course, this decision has its drawbacks. By decreasing economic activities, we risk hindering companies from expanding, developing new projects and growing. This, in turn, can lead to job cuts, as we are currently seeing with companies worldwide. Employment reductions are often accompanied by a decline in large capital projects and investments, as investors dislike uncertainties. However, the catch is that high risks and uncertainties offer significant returns and rewards, but this only applies to those who have the necessary funds. Who saved money during the period of stability before 2022, when the economic situation was much different?

The slowness of traditional big commercial banks to react to changes is noteworthy. They are too big to change overnight and they cannot make radical decisions such as those related to interest rates. As a result, I strongly favor financial technology companies that bridge the gap between the weaknesses of old, traditional banks. Fintech companies are agile, adaptable, and knowledgeable about the current landscape , offering modern solutions that serve as a viable alternative to traditional banking products. Furthermore, the expansion of fintech companies goes hand in hand with the growth of artificial intelligence (AI) and machine learning (ML). AI and ML will revolutionize the banking sector, including risk management, accounting, investments, and more. Fintech companies can technologically automate processes related to bank loan originations, and accounting financial information and fraud protection. However, it is important to note that this technological advancement with AI and ML will reduce the need for human labor and increase efficiency, as the history of numerous human factors errors and mistakes in the past necessitates.

In a conclusion, the current time reminds me of the 1970s when global events triggered the global financial crisis. Back then, the decision-making processes were similar to today. Unfortunately, we have not learned from the past on how to mistakes from recurring, but we have at least learned how to manage the consequences.

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