The banking industry looked pretty ugly in the hearing on Capitol Hill yesterday as Senate leaders on the left and the right slammed Goldman Sachs for allegedly defrauding investors.
But the kernel that the industry has to take away from the screaming matches in the news today is that trust is all but gone between consumers and the traditional banking system. So how can the finance industry move ahead? Perhaps the answer rests with consumers taking more responsibility for their own financial future. This was one of the themes of a conference I attended this week called The Future of Money and Technology. I moderated a panel at the San Francisco event, where I met leaders in the financial and tech worlds who are working on creative, innovative ways to improve and expand on how consumers and companies manage their money.
Former Union Bank executive and entrepreneur Arno Hesse spoke about Bernal Bucks a new project in a San Francisco neighborhood that encourages people to spend money in their community and reinvest in businesses they know and frequent.
A fellow at the social entrepreneur organization Ashoka Bruce Cahan is creating GoodBank, which aims to put a mirror on investors and show them where their money is really going. Do you actually support the causes you say you do? GoodBank plans to serve as a moral compass for your money:
Rob Garcia, who won the Twitter “Shorty Award” in finance, discussed his company Lending Club, a site that allows people to borrow money from people they trust, resulting in lower interest rates and a community of smart investors.
While gaming might be seen by some as frivolous, especially when it comes to money, John Bates talked about Entropia Universe, the only cash –based virtual game, which allows players to invest in a virtual world and see actual monetary results. Bates reminded the panel that the future of banking doesn’t have to be so serious; it can have a fun element to it as well.
Some of the biggest issues that came up with each of these diverse projects were around defining community, creating sustainability for these new projects, and determining what the needs in the market will be to gain investors’ trust in these new ideas.
Are you more likely to invest in organizations that you have a direct connection with, like the coffee shop on the corner, or is your community more broadly defined by people who care about similar philanthropic causes? What kinds of parameters need to be put in place to regain trust and share financial information online?