Deploying, innovating, and disrupting—designing digital infrastructures for alternative financial systems:digital intermediary exchange ‘toolkit’

Perry, Mark and McKnight, John Carter and Ferreira, Jennifer and Fish, Adam Richard (2014) Deploying, innovating, and disrupting—designing digital infrastructures for alternative financial systems:digital intermediary exchange ‘toolkit’. 3rd Party Dematerialisation and Rematerialisation of Capital.

Abstract

The UK economy has a huge dependence on financial services, and this is increasingly based on digital platforms. Innovation in consumer financial services through the use of digital technologies is seen as increasingly important for market growth, efficiency, and user empowerment. These new digital solutions may allay an over-reliance on the traditional banking sector, which has proved itself to be unstable and risky, and we have seen a number of national policy moves to encourage growth in this sector. Partly as a result of the 2008 banking crisis, there has been an explosion in digitally-mediated peer-to-peer financial services for consumers, rather than professional financial managers. Firms in this area act as intermediaries between users looking to trade goods or credit rather than as depositories or investors. Although their businesses are not always purely computer-based, these services are made possible through digital technologies that allow these organisations to act as intermediaries between users looking to trade goods or credit – we call these organisations ‘digital intermediaries’. However, building self-sustaining or profitable financial services within this novel space can be fraught with commercial, regulatory, technical and social problems. This document reports on how social, organisational and technical infrastructures augment and assist users and businesses in making financial decisions, and how new technologies might change the use, utility and nature of this activity. To do this, we draw from the detailed analysis of case studies carried out in two retail digital financial intermediary organisations: Zopa Limited and the Bristol Pound. Its purpose is to serve as a ‘toolkit’ for those interested in the key issues impacting the design and use of innovative financial products.