http://webank.org.uk/ I went to this event on wednesday evening at NESTA, part of a series called weBank to explore whether people can replace institutions.
Some interesting learning about micro credit unions called ROSCA's - an historic form of micro finance from India (still in practice I understand) "Rotating Savings and Credit Association or ROSCA is a group of individuals who agree to meet for a defined period of time in order to save and borrow together. "ROSCAs are the poor man's bank, where money is not idle for long but changes hands rapidly, satisfying both consumption and production needs." [source:wikipedia]
Three P2P finance models were presented : Kubera Money, Zopa and Midpoint & Transfer. Each, in their own ways, are predicated on cutting out the middleman (ie the banks - also termed as Disintermediation) and enabling direct lending and borrowing by harnessing the internet. None of these models call themselves banks, instead using terms such as "social lending platform" and "social finance models". The interesting thing about these models is that other than cutting out the "unreasonable", "unnecessary", "opaque" fees incurred by banks is the elements of fiscal responsibility of the individual (ie what you choose to do with your money and what you area able to do with it) as well as the opportunities for community building. Models such as Zopa, Grameen Bank and Kiva (http://www.kiva.org/app.php) show that these models work - though each have a particular context.
There is a challenge to be overcome in how these models might be applied as part of the "institutional revolution" - an idea raised by a member of the panel, Umair Haque (Havas Media Lab). The models from India and Kenya rely heavily on trust networks and social rules which have a significant value in those cultures where the participants are not economically or socially mobile. Those models have unlocked the 95% unbanked individuals into the money market. The Zopa model is reliant on a different community "There is not a great deal of engagement within Zopa on a community or social level, as the primary aim is to save lenders and borrowers money by ‘cutting out the middleman’, not to create a community of lenders and borrowers."
Another model that was mentioned was Caja Navarra which is not about P2P lending, but customer rights and is being called Civic Banking. When it first started, the bank had an agenda to invest responsibly, so customers knew their money was being invested into social projects. The next step was customers being able to vote on the amount of investment, then the amount as a ratio to the profit which was being earned by the bank to be invested in social projects. The current evolution includes customer rights on dictating the specific areas to which the money is directed (You Choose You Decide Programme).
What is the potential in creating/strengthening/seeding community using contextual versions of these models? In a country where a majority of the population is "banked" but where community is lacking, is it an inverted model of Kiva/Kubera where the use of an alternative form of lending can be used to enable community building?