3rd Party Dematerialisation and Rematerialisation of Capital

New forms of digital connectivity give rise to opportunities in doing financial transactions in different ways and with radically different business models that offer the possibility of transforming the marketplace. One area in the digital economy that has had such an effect is in the ways that users access and use digital banking and payment services. This move can be seen in the suggestion that highly digitally connected societies might even abandon the use of cash (e.g. Sweden), but has also resulted in the emergence of wholly mobile currencies (e.g. M-Pesa), mixed media currencies (e.g. Bristol and Brixton Pounds), and peer-to-peer moneylending (e.g. Zopa, prosper.com). These financial services dealing with money transfers bypass the traditional banking sector, and new players acting as financial intermediaries have begun to provide financial exchange services without directly acting as banks, i.e. as 'financial holding services'. A variety of different models to achieve this have emerged, often to meet the particularities of different market conditions and sectors. Understandably, these different services-and the different platforms they are built on-may be perceived by their users as offering different kinds of risk and utility to their traditional counterparts. The socio-digital systems that underlie these services form the focus of our enquiry. This research will explore how service presentation (comprising of the business model, information content and structure, and interaction design and data representation to users) impacts on their value, use and interpretation. This will involve data collection and participatory design exercises with two such financial services to understand the issues and difficulties that they and their users face in accessing and using these services. We will also work with these stakeholders to design and evaluate novel approaches and solutions that would be potentially useful to them. We will explore new opportunities to examine how their business models and technological solutions could be used to extend their services outside of their current product range. Finally, we will package our research findings in a form that is available and useful to other players wishing to enter this new and emerging economic environment.

This research will benefit the developers of commercial and not-for-profit financial systems and content by providing an understanding of users' needs, their informational requirements and potential directions for the development of next-generation digital intermediaries. These include software platforms and content developers (e.g. Microsoft, Qoin.org, Socialtrade.org), and the financial intermediaries themselves (e.g. Zopa, Funding Circle, Prosper, Brixton Pound). These organisations will learn about the use of digital intermediary technologies in real world settings, and provoke them to think about novel forms for systems design, media content and delivery. As an output of this, end users will also benefit by its impact on service provision, through gaining better access to content and new forms of service that suit their needs.

Market regulators and governments would also be beneficiaries. These who wish to leverage these systems in supporting the economy will benefit from these in knowing more about user needs and expectations, and in the ways that these organisation manage and present their business and technology models to their users. In the UK, for example, there is little or no regulatory legislation regarding financial intermediaries, as they do not directly hold their customer's money. Whilst this is seen as largely beneficial by the organisations, there is a recognition, not least by the digital intermediaries themselves that this may not provide a stable environment for future service development and to support and guide new entrants into the market. We have also seen that governments (as recently has occurred in the UK) are beginning to see these type of organisations as offering opportunities for sustainable investment and in promoting economic growth in ways that the banks may fail to deliver. By exposing the ways that these organisations operate and how their technological infrastructures impact on patterns of use, we can provide knowledge that allows governmental departments to use this information to invest wisely and have the anticipated policy impact.

'Impact'-related information will be provided through a number of avenues. Most notably, where the impacts are relevant to the partner organisations, we will engage in regular meetings and workshops to discuss ongoing research. The organisations themselves will promote research findings through their trade bodies. For e.g. Zopa is a founder member of the UK's 'Peer 2 Peer Finance Association', an internet-based social lending trade body. Zopa has already costed project publicity into their letter of support, and are keen to do this. The Bristol Pound CIC are also interested in this and have been effective in communicating developments in their work, both as marketing publicity to their user-base and in directly working with their technology providers (Qoin.org and Socialtrade.org). The findings will be published in the academic literature, and whilst this is not perhaps the most effective form of dissemination to these organisations, internet search engines make locating this content increasingly easy for non-academic users; given the necessary technical specialism of the user-base for this material, an academic format should be relatively easy for them to make effective use of use. We will also be publishing (online and in print) and promoting a Digital Intermediary Exchange 'Toolkit. This is intended to be a substantial output of the research, using our case material and analysis to show best practice around how Digital Intermediaries can deploy their technical architectures to meet their business needs. This Toolkit will have sections supporting: i) digital intermediaries (best practice, infrastructure, user interaction, interface design), ii) trade bodies, regulators and legislators, iii) technology developers, iv) emerging technologies (mobile, ubiquitous, tangibles), v) business and financial management (new business models, market dynamics).