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Putting the ‘digital’ in Digital Intermediaries: the role of technical infrastructure in building business models

Research output: Book/Report/ProceedingsCommissioned report

Publication date2014
Publisher3rd Party Dematerialisation and Rematerialisation of Capital
Number of pages21
<mark>Original language</mark>English


The UK economy has a huge dependence on financial services, and this is
increasingly based on digital platforms. Innovating new economic models around
consumer financial services through the use of digital technologies is seen as
increasingly important in developed economies. There are a number of drivers for
this, ranging from national economic factors to the prosaic nature of enabling
cheap, speedy and timely interactions for users. The potential for these new digital
solutions is that they will 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 peer-to-peer financial services
for non-professional consumers. These organisations act as intermediaries
between users looking to trade goods or credit. However, building self-sustaining
or profitable financial services within this novel space is itself fraught with
commercial, regulatory, technical and social problems.
This report addresses the mutual shaping of business models and innovations in
digital technical infrastructure – both client-facing and administrative back-end –
in two retail financial products currently in use in the United Kingdom: peer-to-peer
consumer lending and a local digital/paper hybrid currency system. The two
products and their issuing firms, Zopa Limited (Zopa) and The Bristol Pound
Community Interest Company (the Bristol Pound), respectively, are established
leaders in their respective product areas: Zopa was established in 2005 and the
Bristol Pound in 2010. Each of these firms seeks to disrupt an established financial
market through the application of digital technologies and processes: consumer
lending for Zopa and retail payment for the Bristol Pound.
Our research has involved teams from Lancaster University examining Zopa and
Brunel University focusing on the Bristol Pound over approximately a one-year
period from October 2013 to October 2014. Extensive interviews, document
analysis, observation of user interactions, and other methods have been employed
to develop the process analyses of the firms presented here.
This report is comprised of three primary sections: descriptions of the business and
technological processes of each of Zopa and the Bristol Pound, and a final
analytical section drawing preliminary conclusions from the research presented.