When it comes to crowdlending or peer to peer finance, there is lots of talk about alternative finance, or new finance. For the time being, that’s exactly what peer to business lending is – a new way of lending and borrowing money. But what does the future hold? Is it simply a flash in the plan or is crowdlending part of a wider disruption to the financial status quo that will change the face of banking and finance forever?
Brett King certainly thinks that the entire financial sector is ripe for some serious change. He’s the man behind movenbank, a new entrant in the US who claim not to be “your typical bank” and who are setting out to launch “a banking experience that is fair, fresh, fast and maybe even fun:)”.
Amongst other things, movenbank are promising:
- No hidden fees – placing transparency centre stage
- No plastic – they believe that the future of payments lies with mobile phones and mobile wallets, after all, “when was the last time you were able to see your current account balance on your plastic card?”
- No paper – application forms, statements and recepits will be online.
- CRED™ – movenbank will use data from people’s social networking profiles to enhance credit scoring
We’ll be reporting back on Bank 3.0 once our new copy has winged its way to FundingKnight towers but in the meantime, here’s a snippet from Bank 2.0 that explains better than most why technology and innovation are guaranteed to change the way we live… and bank.
How long do you think it took Facebook to attract 50 million users? The answer’s not long… in the time that’s elapsed since their launch back in 2004, Facebook has amassed more than 500 million users, rather dwarfing the 50 million users that has historically been considered the point at which something ‘goes mass market’.
It used to be the case that new ideas or new products took time to bed in and become popular. Now, the speed of technological change and development, coupled with the global connectivity of social networks means that things get adopted into daily life far more quickly.
It took over 70 years for aeroplanes to become a mass market commodity, but now innovations such as the iPod or Facebook reach critical mass almost in the blink of an eye.
Why will that change the way we lend and borrow money?
Well, because it can do nothing but change it.
By 2020 all customers will have grown up being “digital natives” well used to social networking and online transactions. Already customers value mobile capability and online security and already people expect more personalized, more valuable communications from brands than they used to get from large mass advertising campaign on TV or billboards.
Banking has got to change from a one size fits all (unless you are extremely wealthy) model to a state where customers feel like they are genuine participants in their own financial futures and can make well informed, individual decisions rather than being shoehorned into products that don’t’ speak to their personal circumstances.
Mainstream banks used to see online banking as a way to cut costs and move customers to remote channels… now that couldn’t be further from the reality of what online finance means.
Rather than put space between a brand and its customers, online finance makes it easier to communicate and faster to do business.
Rather than hive customers off into remote channels, online finance provides better value for customers and new ways of doing everything from personal banking to foreign exchange.
Rather than keeping customers apart, it has brought them together in one big global network that can share opinions and provoke customer groundswell in an instant.
New finance is already here, in the guise of new high street banks like Metro Bank, in new entrants like The Currency Cloud who offer low cost, cross border payments and in the new wave of peer to business lenders like FuningKnight, Funding Circle or Thin Cats.
Whether or not such innovations have a long term place in finance is pretty much decided, the bigger question that we will have to wait to understand is just how mainstream banks will make the shift to a new financial order.
After all, as Brett King points out, “The future, in may ways, has already begun. The only question remaining is how you will make the journey?”
Want to read more about new finance or financial innovation? Try out some more posts from the FundingKnight blog that we’ve picked out below or, to start you own new finance journey why not sign up to become a FundingKnight lender? There’s no pressure to lend and no fees if you do… so what’s stopping you taking the next step of your own financial journey?