Ultra-modern fintech is dominated by ever-greater automation, new innovations in blockchain security, and even the emergence of AI-managed portfolios. But every one of these revolutionary new trends trace their roots back to a very much more tangible system of financial flows, which fundamentally disrupted the world within which they existed: the banking system of Medieval Europe. There are absolute parallels between the crypto entrepreneurs of today, and the Crusader-financiers of the 12th century.
The Crusader World
The invention of the earliest banks was intensely connected with the rise of large trans-national organizations, and the movement of people and wealth over long distances. The Crusader era (late 11th century – 1291 CE) saw the emergence of these conditions: there were enormous flows of people from Western Europe into the Levant, initially as pilgrims, but then as brutal invaders. The Crusader States, set up by Western Christian nobles in the conquered territories, were intensely connected with kingdoms in the West like France and England; many of the nobles who fought there repatriated vast amounts of treasure and gold back to their homelands in the West. The Crusader States were guarded against reconquest by military orders of knights whose names are very familiar to us: the Knights Hospitaller, the Teutonic Order, and, of course, the Knights Templar.
Whilst the Crusader States themselves were characterized by French, English and Italo-Norman nobles ruling over a mixed local population consisting of Muslims and Orthodox Christians, the military orders that provided ‘private security’ to those states were exclusively Western. The Knights Templar, the largest, wealthiest and most famous of these orders, was founded in 1118, shortly after the conquest of Jerusalem by the Crusaders. It was pitched to disgraced knights as a means to atone for their sins: Knight-Brothers took vows of poverty and chastity – and they were fearsome warriors who were utterly unmerciful to their sophisticated Seljuk opponents. Their popularity is such that any reputable medieval store stocks all of the equipment you’d need to outfit yourself to re-enact a Templar Knight.
By maneuvering itself into a favored position with the Papacy, the organization became staggeringly wealthy. The Templars quickly acquired the rights to found their own churches and to retain their own tithes. The surrendered properties of the Knight-Brothers were managed as a sort of corporate trust for the benefit of the organization. Other nobles going on Crusade would hand their property over to the Templars to be managed in their absence.
As well, they founded one of the first pan-European banking systems to facilitate the flows of wealth across Europe. Travelling with large quantities of material wealth, in the form of gold, currency or valuables, was incredibly dangerous – especially through Seljuk territory, or that of the changeable Byzantine Empire. Merchants or returning Crusaders would have to spend a large proportion of their wealth outfitting soldiers or mercenaries to protect them. The Templars solution was simple: you could exchange your wealth for a promissory note at any Templar castle – which you would take with you on your travels, and then cash out at another Templar office at your destination. This was quite literally a medieval blockchain: a security measure against thieves and raiders, secured by the Almighty Himself!
God and Mammon
The Medieval world was dominated by the social system of feudalism: oaths of loyalty and service, not money and capital, were what motivated society. A peasant would swear to farm their lord’s land and serve in their militia, in return for the right to keep enough food to subsist – and in return, the lord would protect the peasant and deliver justice to them. Such a static, unchanging system had no room for profit and finance: though the modern Islamic restriction on interest is well known, the Medieval Roman Catholic Church also banned ‘usury’ and censured the activity of moneylenders and financiers. This is why, frequently, Jews played an important but limited role in Medieval banking, since they were subject to fewer faith-based restrictions – cash-strapped Christian lords cynically skirted the rules by ‘outsourcing’ their fintech to people of a different faith!
The Templars themselves came unstuck: such a wealthy, successful organization was bound to make enemies, and in 1312 the Order was suppressed by the Pope, at the urging of King Phillip IV of France – who was likely heavily in debt to the Templar banks. But the Templar fintech model was a blueprint for the coming financial age.