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

Research output: Book/Report/ProceedingsCommissioned report

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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.