The future of banking

Here’s an interesting idea of mine (and probably others) for a new bank and financial transaction concept, with definite opportunities for new entrepreneurs.

Peer-to-peer/Social Banking

The old “geezer” banks have shown they are losing it, as they are more or less completely self-serving and have long ago forgotten all about their purpose (money-lending, safe-keeping), beyond making their employees super-rich. If they run into trouble, tax dollars will be used to bail them out, so good riddance to them.

For that and other reasons, I expect there will be new slim banks that are completely Internet-based, and that provide low-interest loans either from the banks themselves or in a peer-to-peer fashion, where rich(er) people loan out their money to others and get a user-defined interest via the bank. The bank of course takes a cut from each such transaction.

Such banks already exist, like e.g. Microloans to Africa – Grow business through microfinance – MYC4 and there will be many more. Of course paypal and similar companies provide similar services, but with the difference that e.g. paypal is for unbuffered transactions, not loans proper. Correct me if I’m wrong on that.

There are clear benefits in “spreading the wealth” (literally) by letting individuals loan out to others via a slim bank, instead of traditional banks serving as heavy-weight middle-men, that do much more with the money than you care or dare to know about.

Of course, the bank would provide both the lender and the borrower with a portal covering loan statistics, alerts for repayments etc.

There will be strict needs for anti-fraud, so no one should go into this business area without caution, but considering the little costs such a bank has and the accumulative revenue it could get from millions of transactions, this could be very profitable indeed.

The social component of it would be that you could set up groups of people that would lend money to each other, e.g. family groups, community groups, sports team groups etc etc.