DEPLOYING, INNOVATING AND DISRUPTINGDESIGNING DIGITAL

INFRASTRUCTURES FOR ALTERNATIVE FINANCIAL SYSTEMS

LESSONS FROM THE 3DaRoC PROJECT
3rd Party Dematerialisation and Rematerialisation of
Capital: designing and innovating credible digital
intermediaries in the personal financial marketplace

digital intermediary
exchange toolkit

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The Authors, 2015

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Executive!Summary:!Digital!Intermediary!Exchange!Toolkit!..................!5!
1.!Introduction!
!.............................!7!
! Digital!unbanking!
!.............................!7!
! Digital!intermediaries!
!.............................!8!
! Aims!and!Orientation!
!.............................!9!
2.!Intended!Audience!and!Scope!
!...........................!11!
3.!Case!Contexts!
!...........................!13!
! Case!1:!The!Bristol!Pound!
!...........................!13!
! Digital!interactions:!Digital,!Mobile!Money!
!...........................!13!
! Case!2:!Zopa!
!...........................!14!
! Digital!interactions:!peerPtoPpeer!lending!
!...........................!14!
4.!Methods!
!...........................!17!
! Participants!
!...........................!17!
! Research!through!design!
!...........................!17!
6.!Elements!of!Design!
!...........................!18!
! Section!I.!Architectural!Factors:!user%interactions%&%computer%
interfaces%|%service%architectures:%centralised%vs.%distributed%|%
commoditisation%&%financialisation%|%transparency%&%opacity%|%
tangibility%&%the%material%of%transaction%|%legacy%platforms%and%
infrastructures+|+information,+metrics+&+user+feedback+
! Section!II.!Firm,!Users!&!Technology:+social%connectivity%|%membership,%
brand%affinity%and%collective%identity%|%user%trust%|%risk%&%mitigation%|%
regulation%&%financial%ecologies%+
7.!Future!Outlook!
!...........................!33!

Table of Contents

Authors
Mark Perry, John Carter McKnight,
Jennifer Ferreira and Adam Fish

HO

This Report has been produced by the 3DaRoC project partners (Brunel,
Lancaster and Bristol Universities), in collaboration with the Bristol
Pound Community Interest Company and Zopa Ltd.

The remit of the 3DaRoC project is to explore digital connectivity and peerto-peer relationships in financial services. In the light of ongoing challenges
in the UK and world financial sectors, innovations aimed at reducing
systemic risk and rebuilding trust in financial services and their providers are
urgently needed. At the same time, the increasing penetration and take-up of
robust high-speed networks, dependable peer-to-peer architectures and
mobile multimedia technologies enable novel platforms for offering financial
services to current and new users. These 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 key area of transformation in the digital
economy involves retail-level digital banking and payment services.
The impact of the new economic models presented by these digital financial
services is yet to be fully determined, but they have huge potential as
disruptive innovations, with a potentially transformative effect on the way
that services are offered to users. Little is understood about how technical
infrastructures impact on the ways that people make sense of the financial
services that they use, or on how these might be designed more effectively.
3DaRoC is exploring this space by working with our partners and end users
to co-design and evaluate new opportunities for online, mobile, ubiquitous
and tangible technologies, exploring how these services might be extended,
and offering insights for regulators, innovators, designers, and end-users of
disruptive financial technologies.
The 3DaRoC project is funded by the UKs Digital Economy Research in the
Wild theme (grant no. EP/K012304/1).
Find out more about the 3DaRoC project on our website:
http://digitalintermediaries.wordpress.com

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T
HA

W Executive Summary: Digital Intermediary Exchange Toolkit

The UK economy has a huge dependence on financial services, and this is
increasingly based on digital platforms. Innovation in consumer financial
services through the use of digital technologies is seen as increasingly
important for market growth, efficiency, and user empowerment. These new
digital solutions may 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
digitally-mediated peer-to-peer financial services for consumers, rather than
professional financial managers. Firms in this area act as intermediaries
between users looking to trade goods or credit rather than as depositories or
investors. Although their businesses are not always purely computer-based,
these services are made possible through digital technologies that allow
these organisations act as intermediaries between users looking to trade
goods or credit we call these organisations digital intermediaries.
However, building self-sustaining or profitable financial services within this
novel space can be fraught with commercial, regulatory, technical and social
problems.
This document reports on how social, organisational and technical
infrastructures augment and assist users and businesses in making financial
decisions, and how new technologies might change the use, utility and
nature of this activity. To do this, we draw from the detailed analysis of case
studies carried out in two retail digital financial intermediary organisations:
Zopa Limited and the Bristol Pound. Its purpose is to serve as a toolkit for
those interested in the key issues impacting the design and use of innovative
financial products.

For more information, please contact:

Dr Mark Perry
Reader, Department of Computer Science
Brunel University, London, UK
UB8 3PH
mark.perry@brunel.ac.uk
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1. Introduction

Digital unbanking
Financial systems have long relied on digital technology, but since the
financial downturn, we have seen a rush of activity around organisations
operating outside of the traditional banking system utilising digital financial
technologies (fintech). We might call this process digital unbanking, as it is
often driven by organisations and people that seem to draw more from the
software industry or community-based organisations than the financial
services industry. This process of unbanking has largely been built on what
has become known as peer-to-peer systems, which allow users to interact
and transact with one another directly. This revolution has been made
possible by this dematerialization of money into new digital forms and media
allowing it to be handled and processed in entirely new and different ways
through software.
This process of software driven change is underway in many traditional
industries, famously commented on by Netscapes co-founder and Silicon
Valley entrepreneur, Marc Andreessen, in the Wall Street Journal, where he
describes how Software is Eating the World: Software is also eating much of
the value chain of industries that are widely viewed as primarily existing in
the physical world. The financial services industry has been visibly
transformed by software over the last 30 years. Practically every financial
transaction, from someone buying a cup of coffee to someone trading a
trillion dollars of credit default derivatives, is done in software. And many of
the leading innovators in financial services are software companies. This
change in financial service from what was considered as a market with
extremely high barriers to entry now has the potential to be violently
disrupted by new entrants, building on software. Some of these new
financial services will be based on their own, proprietary systems, but in
other cases, these may be provided by the expanding open source software
movement.
This move towards software-driven financial entrants is exacerbated by two
parallel developments: big data and rapid hardware innovations. The ability
to collect and mine big data to generate a better understanding of their users
and customer base (habits, interests, social interactions, and their
behavioural, purchasing and other financial patterns of activity) will provide
unique opportunities to serve or capitalise on this in providing highly
targeted and customised products or services. Rapid hardware changes are
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also crucial to peoples future financial activities. At a consumer level, we

have seen development in high-bandwidth internet connectivity, powerful
smartphones with rapid wireless networking, and a move towards tablet and
app-based interactions in place of the PC, all of which have shifted the ways
that people are choosing to access financial services. In the not so-distantfuture, sensor-based systems, biometric security, powerless, disposable and
new device form factors, all potentially giving rise to a very different set of
context-sensitive service offerings and further fracturing of the existing
financial ecology. Some of these financial services may replace existing
products, others complementing them, and yet others, as we have seen in
other software industries, potentially radically transforming the landscape
and rendering our conventional ideas about financial services as redundant.
All of this is taking place in a regulatory setting that, in part, shapes, and is
shaped by, these technologies; this is not just a problem for organisations
(ie. finance and tech developers) to understand and deal with, but is also one
that governance and regulatory bodies will have to comprehend and grapple
with.

Digital intermediaries
Managing the complexity of these unbanking financial interactions are
digitally-based intermediary organisations that connect users together and
provide the infrastructures for capital flows and exchange. Such digital
intermediaries are peer-to-peer organisations that allow citizens to
exchange e-money in transactions that bypass the banks, and which offer
different business opportunities to their proprietors that open up different
ways that their users can benefit from them. These will be commercial and
non-governmental organisations managing complexities previously handled
by the banks, such as transactional protocols, ledger balancing, and risk.
While it is technology that has created these new opportunities, examining
the technologies by themselves is unlikely to lead to the much-touted
transformed financial systems of the future these disruptive technologies
are enabled by social, organisational, legislative, commercial and financial
infrastructures. Learning about the role and implementation of these
technologies in the wild is necessary if we are to build momentum in
developing these organisations - digital intermediaries - into a new financial
force that will open up new and empowering opportunities for interacting
around and transacting with money. This is an open issue at the moment,
and one that is ripe for development how we go about designing,
implementing, managing, evolving, and regulating these kinds of digital
intermediaries.
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Aims and Orientation

While the area of emerging alternative financial services and technologies is
acknowledged as being increasingly important, little is understood about
how technical infrastructures impact on the ways that users make sense of
the financial services that they use, or on how these might be designed or
regulated more effectively. The aim of our work has been to evaluate the role
of infrastructural designs and its effects on the patterns of use of financial
services provided by digital intermediaries. This document is the culmination
of our work on the socio-digital systems that underlie these new and
emerging digital intermediary services. In it we attempt to explain, in as
simple and succinct a way as possible, how service presentation
comprising of the business model, information content and structure, and
interaction design and data representation to users impacts on the value,
use and interpretation of digital intermediaries. Alongside this, we offer
insights into the design of current and novel infrastructures and technology
for digital intermediaries that are grounded in applied examples of use,
showing the impact that these are likely to have and to whom these issues
should be of concern to.

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2. Intended Audience and Scope

This document presents concepts and concerns emerging from the 3DaRoC
projects case material issues that have arisen out of real-world situations,
grounded in empirically-derived evidence. Our intention is to package this in
a digestible way for organisations planning to enter this space as well as
other stakeholders financial technology developers and designers, financial
entrepreneurs,
interaction
designers,
financial
theorists,
social
entrepreneurs, digital currency thinkers, legislators and members of
governance and regulatory bodies, rather than for academic researchers.
Our purpose is to highlight the infrastructural and service design issues that
underlie the digital exchanges between individuals, the devices used in the
transaction, and the interconnections between the human and digital
networks enabling digital exchange. Our intention is that it will be used as a
reference toolkit for people involved in the design, management,
implementation and regulation of such digital intermediary systems,
allowing readers to identify key issues, and to consider how they will impact
on service design, growth, and the future of the technologies through which
money is dematerialised into cyberspace or made material again from its
digital forms.
The toolkit therefore presents a succinct synthesis of the issues that we have
uncovered and the kinds of conditions that these problems and novel
patterns of use may occur under. Our work has resulted in the exploration of
simple examples of digital technology, and we examine how these
exploratory technologies offer potential solutions, or introduce their own
problems. We identify the interdependencies between these concerns to
shed light on the relationships between issues and to alert the reader to
potential impacts from other issues.
The intended audience for this toolkit include those working in the finance
and fintech, particularly those whose roles cross finance and technology
development or deployment. We anticipate that entrepreneurs will also find
this material useful, as it connects across business models, perceptions of
financial products, and settings of use, showing elements that may need to
be considered when innovating new financial products and services around
these interrelated components. Although we have not targeted this toolkit at
them, academic researchers may also find this work relevant, especially
those whose backgrounds are not directly in digital or computer technology.
In short, this toolkit is likely to be of relevance any of those who need to
consider designing, implementing, managing, evolving, or regulating these
kinds of services.
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3. Case Contexts

The toolkit relies on two real cases that allow us to derive empirically
supported design outcomes from. This section summarises the details of
these two cases so as to contextualise and make clearer sense of the
elements of design that follow.

Case 1: The Bristol Pound

The Bristol Pound (B) is a local complementary currency in use in Bristol,
England (Population: 432,500; the 6th largest city in England). It was
launched by the Bristol Pound CIC (Community Interest Company) in
September 2012 and as of March 2015, there were approximately half a
million Bristol Pounds in circulation with over 750 businesses accepting the
currency. 1 sterling is equivalent to B1 and businesses in the city trade in
B on a voluntary basis. The currency is both paper-based and digital.
Transactions occur in printed notes (in denominations of B1, B5, B10
and B20), SMS on any mobile phone, or online via an electronic account
similar to a bank account. Printed notes are accessed from a number of
businesses at various locations in the city (known as cash points).
Digital payments (by SMS and online) require an electronic B account.
Eligibility to open an electronic account is granted by the Bristol Pound CIC,
subject to certain rules based on membership type, which differs for ordinary
members and traders, who sell products or services. Ordinary members
can exchange sterling for B notes free of charge, but once sterling has
been exchanged for B notes, the notes cannot be exchanged back into
sterling; traders can exchange electronic B for sterling, by withdrawing B
from an account as sterling, but this incurs charges and is discouraged.
Administration of the B occurs through the Bristol Pound Community
Interest Company (CIC), a not-for-profit company incorporated on 16 August
2010. The CIC have physical premises in the centre of the city of Bristol from
where a team conducts the day-to-day tasks of running the currency.

Digital interactions: Mobile, Digital Money: Txt2Pay

The platform enabling Bristol Pound members to conduct transactions via
SMS is called Txt2Pay (T2P). It is implemented on the Cyclos platform
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(cyclos.org), which is widely used for mobile and online banking by

commercial banks internationally, as well as social enterprises such as the
Bristol and Brixton pounds. T2P is a type of mobile money transfer in which
business and individual members can exchange electronic B, irrespective
of their mobile network operator. There is one mobile phone number to
which all SMS payments are sent. When a member pays another member by
sending an SMS text message, the payer transfers the amount in electronic
B from their account to the payees B account. SMS texts are charged by
mobile network operators at their standard rates and the payee incurs
charges when receiving electronic B via T2P.

Case 2: Zopa
Zopa, Limited is a London-based peer-to-peer lending firm, established in
2005. As of March 2015, Zopa has enabled lending of over 784 million by
over 59,000 individual lenders to more than 100,000 borrowers. The firm acts
an intermediary between individual potential borrowers and lenders of
money. Unlike banks, Zopa does not hold deposits, and does not act as a
party to loan transactions, which are unsecured contracts between individual
borrowers and lenders and not banking deposits qualifying for the Financial
Services Compensation Scheme (governmental deposit insurance). Zopa
maintains no retail offices: all transactions take place via its website,
zopa.com. Over the course of its lifespan, Zopas underlying lending
business model has remained largely stable, although it has matured in
significant ways that are perhaps most evident in its simplifications around
its interactive tools that match lenders to borrowers and the rates that they
apply. Zopa is regulated by the Financial Conduct Authority.
Digital interactions: peer-to-peer lending
In order to request a loan, potential borrowers submit an online application
and are graded by risk by the credit reference agency Equifax. Manual
underwriting checks are made by Zopa staff in addition to evaluation by a
proprietary risk-assessment algorithm. Loans are currently available only in
two terms: 2 to 3 years and 4 to 5 years. After making its underwriting
checks, Zopas software matches loan requests with lender funds, which
automatically create a basket of segments of loans of varying risk, return,
and term to create a standardized instrument for lenders which reduces the
impact of any potential borrower default on any one lender and enables the
offer of a fixed return on investment to lenders.
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The firms income is largely generated by an annual fee to lenders and a fee
to borrowers built into the pricing of the loan. A portion of the borrowing fee
is paid into the Zopa Safeguard Trust, a self-insurance scheme for
defaults, with current trust assets of over 7.5 million. In case of borrower
default, the lender assigns the loan contract to a separate firm, P2PS Trust,
and may make a claim upon the trust for principal and interest due. If the
Trust denies the claim, it will undertake collections efforts pursuant to the
loan contract, paying a portion of amounts collected back to the initial
lender.
For the purposes of this document, these are highly summarised details, but
a comprehensive set of details can be found in two additional documents.
The first of these documents describes their technical infrastructures and
their role in building business models (covering digital innovations and
financial practices). The second document reports on how these
infrastructures are practically used and understood, pulling from our own
research on how their various users value, use and interpret these digital
intermediary infrastructures.

D1. Putting the digital in Digital Intermediaries: the role of technical

infrastructure in building business models.
D2. Interpreting infrastructure: Defining user value for digital financial
intermediaries.

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4. Methods
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This toolkit is the outcome of a programme of systematic studies run over

approximately a fourteen-month period from October 2013 through January
2015 in which research teams from Lancaster University examined Zopa and
Brunel University focused on the Bristol Pound. Extensive interviews,
document analysis, questionnaires, observation of user interactions, and
other participatory design methods were employed to investigate the ways
that digital technologies were used in making exchanges through digital
intermediaries. Our inquiries focused on the uses, resources, challenges,
values, interpretations, roles and problems of using technology in accessing
the financial services under investigation, which resulted in quantitative and
rich qualitative data for all aspects surrounding the use of these systems.
Participants
Our studies involved extensive engagement with the two partner
organisations involved Zopa and the Bristol Pound CIC and their
representative users through attending meetings, social events and visits to
their premises. This toolkit synthesises data drawn from individuals across a
range of backgrounds, age groups and income groups, and split evenly
across gender. Participants included users, business owners, managers,
technical leads, and administrators.
Research through design
In combination with our empirical data, we worked with the end users in a
number of participatory design workshops to iteratively develop design ideas
and gain further insights into the financial service design space. In these
workshops we explored the use of early-stage technology probes to better
understand our user groups, the settings they are used in, the computational
characteristics and physical form of the technology, and its interaction
design, in concert with the organisations business concerns.
Through these workshops we were able to enrich our understanding of the
issues surrounding the use of digital intermediaries in ways that studying
existing practice could not. This provided rich insights into the challenges
and opportunities for the providers and users of digital financial services. The
full documentation on this set of design workshops, their analysis and
prototype designs can be found in an accompanying document:
D3. Participatory Design of Digital Intermediaries.
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For each of the features identified, we follow a common format, or pattern, in which we define the topic of concerns, cover
the critical issues, identify the conditions that these may occur under, show interdependencies between the toolkit
elements, provide simple examples from our empirical case studies, consider potential design solutions where relevant,
and describe implications in which we identify user impacts for roles that these issues will affect.

The toolkit has been packaged in a format suitable for organisations planning to enter this space, as well as the other
stakeholders working to understand the issues involved. It shows, with examples, how current technology is employed to
augment and assist users and organisations make sense of information in decision-making, and how new technologies
might change the use, value and nature of this activity.

Elements
of Design

Section I. Architectural Factors

Interdependencies: Transparency and opacity;

user trust.

Conditions: User interfaces may support a oneto-one relationship between user and service, or
one-to-many relationships with other
users/peers. For financial service operations that
take place with others, user interfaces may need
to support both public and secure interactions
simultaneously.

Issues: We have observed how computer

interfaces shape users interactions with the
system and how this impacts at a fundamental
level with the success of alternative financial
services, in their take-up, on-going patterns of
use, and perceptions of value. Trade-offs exist
between interactional flexibility and business
models. The increased uptake of mobiles and
tablets holds challenges for user interface design
in e.g. their limited screen space and
unexpected connectivity issues.

Definition: Customer experiences of online

services are shaped by their digital encounters:
through the computers user interface the
layer connecting the user with the underlying
software. User interfaces shape customer
perception, defining the users role in the
system, as well as allowing them to access
services preferably in a way that is efficient,
effective and satisfying. While the user interface
allows users to manipulate content, this content
presentation, and how it shapes user
interactions, will impact on their perceptions of
the usefulness, value and expectations of the
service.

USER INTERACTIONS &

COMPUTER INTERFACES

Zopas interface design is constantly shifting. Its

current goal is to look less like a high-tech startup, which might appeal to a younger and
technologically sophisticated demographic, to
be reassuring to older customers that may be
less comfortable with online, alternative financial
services. Its interface immediately separates
borrowers and lenders: the user interface for
borrowers focuses on price of funds, the ability
to prepay without penalty, and the credit
evaluation process. By contrast, the user
interface for lenders is designed around a
message of trustworthiness: in the firm, in the
technology, and in the borrowers. This message
is conveyed via design elements including page
layouts and page flow, endorsements from

Case examples:
The user interface to the mobile B transaction is
the standard mobile telephone SMS text
messaging application. This choice allows
piggybacking on an existing service, but limits
flexibility and control. However, user interaction
is not totally determined by the existing SMS
application interface, but also in part by the
format of the payment text entered (in turn
determined by the software that handles the
transaction), and the way that feedback arrives
(an SMS message) for both customer and trader,
delivered over the mobile network. This provides
a degree of control for users in making payments
(at the expense of making errors), and in viewing
the outcomes of actions via SMS feedback (at
the expense of network latency or failure). Issues
arising from the mobile B transaction impacted
on the form of face-to-face interactions, often
relying on social interactions to resolve. The
resulting social interaction was seen positively
by the B as it was helping to build a user
community.

Implications: Interaction designers: for the

alternative financial services discussed in this
toolkit, the form of user interactions will often
wholly shape users experience of the product
and may help determine the users themselves.
Computer interfaces may demand different
levels of technological comfort and literacy, may
be more or less transparent regarding the
workings of the system, and may shape
customer demographics, intentionally or
otherwise, by accommodating or challenging
younger or older users. Different technical
platforms (e.g. web accessed via PC or mobile,
or via a mobile application) can provide a
different set of experiences and/or problems for
users. Good interaction design needs to
consider what kind of service providers would
like users to experience, and how they would like
them to use it. However, for legislators and
regulators, financial disclosure regulations
developed for print media, which may include
detailed requirements as to typeface,
capitalisation, and location may present
challenges for application to digital media,
especially mobile. When possible, direct
negotiation between regulators and firms should
be encouraged, bearing in mind the different
affordances of print
and digital communications.

financial media, and messages from other

lenders, designed to create a sense that the
potential lender is part of a group of savvy and
prudent investors.

Interdependencies: User Interactions &

Computer Interfaces; transparency and opacity;
legacy platforms and
infrastructures; user trust.

Conditions: Occurring where services are

hosted in (or across) multiple locations, nodes or
technologies.

Issues: The mix of technologies and people

delivering services affects the complexity of the
user experience, and may lead to variations in
how up-to-date the services are at any point in
time, levels of robustness, security, and
scalability. Coordinating these many smaller
experiences is a complex exercise where each
point represents an opportunity where the overall
experience can break down.

Definition: Service architecture describes the

organization and the implementation of services;
services may be accessed from a single point
(e.g. a website) or distributed across a variety of
operational (e.g. different functions from different
sites) and physical nodes (e.g. physical
locations, media or devices). Service architecture
designs may trade off availability, cost, speed,
quality, reliability, standards, scalability, and
capacity.

SERVICE ARCHITECTURES:
CENTRALISED VS. DISTRIBUTED

Zopas services are primarily desktop-accessed

through its website for its customer-facing
applications. This means Zopa has a high degree
of control over this aspect of the user
experience, although future change is expected
here. Adapting to mobile, and to creating
seamless transitions between mobile and
desktop has proved complex. Retail customer
usage patterns in accessing financial data are
shaped by their means and locations: personal
records tend to be kept at home, so the desktop
may continue to play an important role. Potential
borrowers may be drawn to the convenience of
mobile, at least for calculating costs and rates, if
not completing a full loan application. However,
mobile access presents challenges in displaying
financial and legal information in a
comprehensible and comfortable manner.
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Case examples:
Participating in the B scheme involves a diverse
set of related activities. The overall experience of
using the B encompasses many partial
experiences, for e.g., users visiting a shop to
exchange sterling for printed B, go to the
Bristol Credit Unions website to check eB
balances or top up credit, visit a street market to
spend B, drop in at B AGMs to direct
decision-making as an active member of the
community, make Txt2Pay payments, or speak
to a member of the B team on the phone to
enquire about procedures. Managing these
operations involves continuous co-ordination on
behalf of the B management team, and requires
its users to be aware of how the parts of the
system are interrelated. Against this, the system
has a great deal of robustness and flexibility
from redundancy and distribution across its
parts.
Implications: All: De-centralisation of financial
services can provide users with more flexibility in
how they can access and engage with services
from multiple devices and settings; the issue
then becomes one of co-ordinating these parts.
Interaction designers need to consider how to
best design and maintain standards and
consistency in user interaction across systems.
For entrepreneurs and service managers,
creating distributed services on one hand
broadens market opportunities and accessibility
but simultaneously creates challenges around
the integration and communication of
heterogeneous system components, delivering,
maintaining and updating content, dealing with
breakdowns and security issues. For regulators,
shifting to de-centralised systems marks the
need to consider who are the new stakeholders
involved in the integration and delivery of such
financial services (e.g. banks, mobile companies
and other middleware players, such as app
markets), and subsequently how to best regulate
to ensure smooth integration and security at an
industry or middleware level. !

Design Solutions: the future looks to be one of

device profusion. Designing services around
expectations of an exclusive, single point access
is unlikely to be successful. Mobile use is
growing, although this changes what users
expect (more, or different, services) in addition to
the different interactional demands of these
devices. Distributed financial service operations
(as with the B) are likely to place additional
demands on supporting technology, but
conversely, may also simplify interactions and
content presentation: at each node, only a
particular part of the total service offering is
required.

Issues: Commoditisation and financialisation

both increase opportunities to extend financial
products from use by small groups of
experienced investors and professional financial
advisors to a larger user base. They work in
parallel: commoditisation creates the
appearance of simplicity while financialisation
requires users increased knowledge of, and
attention to, features and information
surrounding financial products. Simplified
products which many people have a basic
understanding of have more market reach than
complex ones aimed at specialist audiences.
Many advocates of digital currencies and p2p
financial instruments have lauded financialisation
as a means of empowerment, while criticizing
commoditisation for obscuring or removing
users granular control. We have observed that
as alternative financial platforms mature, they are
increasingly commoditised: simplified,
packaged, and made less unique. For Zopa and
B users, we saw less financial literacy, with
specialist knowledge retained in the
organisation, or embodied in the platform, rather
than held by users. This combination of greater
commoditisation and less financialisation is
unexpected, possibly related to the UKs
relatively low degree of consumer financial
expertise, alongside a regulatory regime less

Definition: Commoditisation refers to the

presentation of unique and complex financial
elements as generic (enabling simplified trading),
while financialisation here refers to the process
of transforming products or services into
tradable financial instruments through the
growth of financial expertise and reference data.

COMMODITISATION &
FINANCIALISATION

Design Solutions: Zopa has focused on

The B is deliberately not positioned as a

corporate financial instrument, sitting within an
idiosyncratic and unconventional subculture of
users, and initially these concerns might seem
less relevant. Yet, even here are elements of
increased commoditisation and more
financialisation in play. To enable simple
interactions, the B has worked to simplify its
means of transaction: for e.g., 1 sterling = B1;
unlike bitcoin, its value does not float, instilling a
sense of simplicity (and perceived confidence) in
transactions. In so doing, trading B is
straightforward, but may suffer from losing some
of the uniqueness that it stakes its operational
value in.

Case examples:
Concern with commoditisation and
financialisation is clearest in Zopa, where the
product interactivity and customisability has
been reduced over time. Growth in its user base
seems directly related to the removal of complex
user tools, and the streamlining of the user
experience coupled with removal of technical
information from the main web pages to FAQs
and other back matter. Its user base is
therefore both technically de-financialised
through the reduced detail available on the
operations of p2p lending, and commoditised
through simplified interactional mechanics that
turn a complex alternative p2p financial product
into the appearance of a generic loan.

Interdependencies: Transparency and opacity;

User trust; Risk & mitigation.

focused on expert knowledge than its US and

EU equivalents.

Implications: Interaction designers may wish to

minimise mandatory financial disclosures from
core interactions, but available to those seeking
more detail. Simplicity of design and workflow is
key to building new technologies and services.
For entrepreneurs and service managers, trust in
financial firms and products seems related to
clarity and directness in communication, while
financialisation may be resented by ordinary
users who feel burdened with mastering
complex systems in order to save or invest. For
regulators, regulatory regimes for financial
instruments have been based in an approach to
disclosure designed for financial experts and
professionals, based on the notion that trust is
rooted in access to detailed product information.
With consumer products, such disclosure can be
frighteningly confusing, and work to reduce trust.
Regulatory regimes focused at the firm or
industry level may be more appropriate for
consumer-facing financial technologies. !

rebundling its expertise into user-facing and

back-end software, rather than demanding user
expertise. While other digital financial products
(e.g. cryptocurrencies) require a high degree of
financialisation, this combination may only be
appropriate for niche markets of technologically
and financially sophisticated users. It may be a
mistake for financial strategists to expect that
increasing the availability of financial data and
the ability to visualise or explore it may be
relevant to users, or provide a practical basis for
building novel business models, at least for
mature operations seeking to widen their user
base. Fewer and curated generic solutions that
do not require technical or financial acumen and
are comparable across the wider sector (e.g.
utilising XML) may offer advantages to nonexpert users, as well as help build critical mass.

Interdependencies: User
Interactions & computer
interfaces; Tangibility & the
material of transaction;
User trust; Information,
metrics & user feedback.

Conditions: Transparent/opaque interactions

can occur between users digital transactions,
between users and their personal account
details, between users and the digital
intermediary, and between the digital
intermediary and their software or service
providers.

Issues: We have observed a relatively low

degree of transparency in the ways that digital
interactions and transactions have taken place
and that this has been less of a drag on the
uptake and success of the systems than we
would have expected. However, systems that
are more opaque have a potential barrier to
overcome in providing accountability about the
ways that they operate (e.g. ethicality, legality),
comprehension about their service offerings and
methods of interaction, and assurances on the
viability of their financial operations.

Definition: Transparent systems are those that

reveal themselves and the ways that they
operate to their users. It is generally understood
that peer-to-peer financial systems are more
transparently accountable to their users and
more democratically open than the opaque style
of interactions presented by traditional banks,
which typically present a black-box model of
their underlying processes to users.

TRANSPARENCY & OPACITY

Zopa presents a similarly paradoxical case

moving from an early phase in which users were
presented with a rich set of interactive tools to
access and interrogate their lending portfolios,
but these have tools been slowly removed to
only give simple access to general market data.
The rationale for this was that changing user
demographics (young to older), an increasing
focus on financial return (from social lending),
and changing products (less choice, safer
investments) means that demand for analytic
tools is lower, and provides a cleaner, easier-tounderstand user-experience (UX). This lack of
transparency has also meant that experienced
users are not able to game the system and
outcompete novices (who are more numerous,
and more financially valuable as customers to
Zopa) for matched loans.
!

Case examples:
In the B case, it is often not clear what the
status of transactions is (e.g. payments
successfully received, user account balances,
and where or how their money is held and
managed). Counter intuitively, users appear to
consider these issues as largely unproblematic:
the nature of localness and face-to-face
interaction (and possibly the typically small size
of user balances and transactions) appears to
moderate many financial interactions in which
the technical infrastructure might otherwise
engender low levels of trust. This concern is
perhaps also moderated because of the high
levels of transparency in the management and
operation of the B CIC, which holds regular
open meetings and is subject to highly visible
public criticism and scrutiny.

Implications: All: at different stages of service

maturity, user expectations on the visibility of
transactional information may change; at the
same time, this change is likely to impact on
service consistency and consequently on user
satisfaction. This has relevance to interaction
designers in that while transparent interactions
provide a gold standard for UX design and
trustworthy transactions, they may not offer the
most effective solutions in all cases, and users
may be able to work around less transparent
forms of interaction-if they see a value/effort
payoff. For entrepreneurs and service managers,
creating more transparent or opaque systems
may allow them to engage with different user
groups, or to change how the service/business
model operates over time. For regulators, it is
important to understand that changes to the
transparency of interactions may fundamentally
change what the financial service provides to
users, even if the functional financial operations
underpinning the service provider remain the
same.

Design Solutions: While it is preferable and

good practice to provide transparent systems
that are open to inspection and forensic
examination, this is not always necessary or
even desirable. Where other methods or social
protocols can be called into play, more
transparent systems may be dispensed with for
interactional simplicity. The removal of full
transparency is also advised where it may
disadvantage groups of users that do not have
the resources to make full use of these systems,
so that they operate on a level financial playing
field in competitive situations (as with Zopa).

Conditions: Tangible and material transactions

can occur where physical media can be

Issues: Digital forms of value (e.g. money) may

be complemented by physical counterparts (e.g.
printed notes); different forms of material offer
different opportunities for action. It is generally
accepted that increased tangibility offers
simplicity of operation, and flexibility in how
users can appropriate technology for their own
and new purposes. Representing data through
physical objects and of manipulating the data by
physical handling of the objects can aid its
comprehension and control. Linking the physical
to the digital opens up financial schemes to
wider user groups, further increasing their reach
and acceptability. Because p2p and alternative
financial services are not tied to existing systems
and forms of monetary exchange, there are
broad opportunities here for considering how
tangible and material interactions might be
leveraged in building new useful, usable and
credible transactional forms.

Definition: Tangibility refers to the ability to

reach out and touch something; physical and
digital materials offer different tangible
experiences to one another. Money in the form
of cash is a form of material that we can touch
and handle, as opposed to digital money that
exists in electronic form and requires digital
intermediaries to account for and transfer it on
our behalf. In terms of digital media, different
representations offer different levels of what
approximates to tangibilitythis amounts to the
reach of the user in controlling what they can
do with their digital resources.

TANGIBILITY & THE MATERIAL OF

TRANSACTION

Zopas loans and investments are pure

intangibles. Money for both borrowers and
lenders is seen as a largely irrelevant
intermediary stage between the user and
concrete or abstract goals: an extra bedroom
added to ones house, an adult childs mortgage
down payment saved for, a more comfortable
retirement provided for. There are advantages to
this in that part of what Zopa offers is the
disintermediation of material activities:
paperwork, visits to bankers, direct contact

The tangible and aesthetic qualities of the B

physical notes promote interest in the scheme
itself and give visibility to their aims, (e.g.
through local artists work on the notes), as well
as credibility to the scheme as a whole through
their quality (they look expensive to produce),
security features, and referentiality (e.g. notes
can be traced to their source). This gives
substance and credibility to use of the B as a
whole, including its electronic counterpart.
Moreover, unlike Txt2pay, notes do not require a
specific technology and users are already
familiar with their operation. B users also
describe how they have paid in denominations of
B20 notes for small purchases, because the
receiver will now a large amount of B to further
circulate into the local community. Notes can
also leave the local area and reach a wider
audience; they are permanent, curious and
collectable, occasionally being sold on eBay for
prices above their face value, and although
discouraged, potentially bringing financial
benefits to both the seller and the B CIC.

Case examples:

Interdependencies: User interactions & comp.

interfaces; Social connectivity; User trust.

exchanged, typically in synchronous, face-toface transactions.

Implications: For legislators, many regulatory

issues involving digital payment and loan
contracts are country-specific, and beyond the
scope of this document. These may have
profound implications on the design and legality
of digital forms of value. A lack of materiality of
digital financial instruments may (as with lower
Transparency), actually minimize user confusion
and unwarranted assumptions of familiarity
based on flawed analogies to traditional
instruments: e.g., a physical alternative currency
more akin to a banknote than may be
appropriate. Alongside this, regulatory systems
that assume printed documentation (see also
User Interactions and Computer Interfaces) may
need to be re-thought in a context of immaterial
or digitally-native instruments. !

Design Solutions: Digital content can be

enhanced with physical media (and vice versa) to
enhance its tangibility, integrating physical
materials with a digital layer of information. For
e.g., digital resources, such as electronic money
can be made physical (by printing). Similarly,
physical objects (e.g. IOUs or money) can be
sensed or scanned for unique identifiable
features (perhaps via a smartphone), allowing
them to be digitally assessed, or to be enhanced
in some way (such as tracking ownership or use
over time).

between borrowers and lenders. What is lost is

the ability to create a casually tradable
secondary market for loans or debt through
paper or digitally transferrable certificates; for
e.g., promissory notes or physical tokens that
could be exchanged as a form of value or
security. There are clearly solid business reasons
for not doing this, but the form of material and its
properties strongly shape the ways that these
kinds of alternative financial systems may be
used, appropriated and valued.

Issues: Using and maintaining legacy

technologies can mean that the technology is
trusted and reliable. This has to be balanced
against the expertise, time, effort and cost of
keeping those technologies working effectively.
As a well-known example, Microsofts I.E.6 web
browser lies at the heart of many enterprise
application solutions, making it extremely hard to
develop new, more secure and advanced
solutions around because of a need to maintain
compatibility. In terms of financial systems for
alternative and p2p financial services, legacy
issues can have numerous impacts. There is a
need to make sure that consumer users are able
to use the services on their devices without
updating software or hardware, especially when
this is at their own cost for an as-yet tentative
and fragile service that may be secondary to
their normal financial practices. Many alternative
services initially begin life as
side projects, and there is a
need to ensure that as these
mature they are able to
scale to larger
services, that are
reliable and secure, in a
dynamic environment, in
which legislative and

Definition: Legacy technologies are those that

are no longer currently the mainstream or bestin-class, but still in use. This may be because
they reliably carry out specialised functions,
making them risky or expensive to replace, or
because they have a large existing user base,
making it difficult or impractical to migrate them
to another platform.

LEGACY PLATFORMS AND

INFRASTRUCTURES

Case examples:
The B CICs decisions around the technologies
underpinning its services is shaped by the CICs
limited financial resources and as a result the
limited skills, expertise and time that grants them
access to. They also maintain a duty to the B
members of upholding the values of the B, in
ensuring sustainability and inclusivity: there is a
deliberate attempt to ensure that users who are
unwilling to replace their mobile feature phones
(i.e. non-smart mobile phones) are not excluded;
for e.g., they may not wish to replace costly or
environmentally damaging devices. The back
office technologies in use reflect the
relationships between the CIC and other bodies
that share its financial ecology, e.g. the Bristol
Credit Union, on which the CIC depends for
administering the B accounts, and the suppliers
of the software (commercial and open-source)
that they rely on, not all of which are current and
interoperable. Some of these services require
manual activation and others exist that the CIC
are aware of, but have insufficient technical
expertise to operate.

Interdependencies: Transparency and opacity;

Information, metrics & user feedback; Regulation
& financial ecologies.

Conditions: Where old and new collide.

regulatory issues emerge, new security threats

arise, and auxiliary software and network
services may change. Moreover, as alternative
and p2p financial services mature over time, they
may wish to change their service offering and
business models to adapt to market conditions,
and their better understandings of business and
operational needs.

Implications: All: Legacy systems are often

necessary parts of the ecologies of financial
systems, especially where there are many
external interdependencies, and they will need to
be considered. For entrepreneurs and systems
developers, designing for anticipated ideal or
best-of-class environments may limit the user
base; it will also mean that exporting systems to
new settings is unfeasible. For financial
strategists and managers: evolved business
models commonly emerge as products mature,
and extensible back-office system architectures
and their software interdependencies have a
critical role from an early stage in systems
development. For regulators, there needs to be
an awareness that smaller and emerging
organisations in the alternative finance arena
may have difficulties in adapting their systems
around infrastructures that either they are not in
direct control of, or have more limited resources
than the major banks to address.

Zopas technology has remained largely

constant since the firms founding in 2006, aside
from standard hardware and software upgrading.
Currently, this presents little potential problem
for their existing business operations; however,
this is not a taken-for-granted assumption. In the
context of having to accommodate mobile
devices now being adopted by users, this
challenge may require significant effort. Zopa
has already undergone changes in reducing its
information and complexity, but the addition of
new services, or variations on its financial
offerings may require considerable architectural
change to its technology infrastructure. !
!
Design Solutions: Legacy platforms provide
advantages as well as disadvantages; solutions
will be context and problem dependent.

Issues: We have observed how financial service

providers access different types of information
and also how they share it with their users. It
would be expected that alternative financial
services (especially successful ones) that have
differentiated access to user and business data
will use this to improve their operations, as well
as making this available to users to help support
their decisions around transactions (where it is
not commercially sensitive). Our observations on
this are mixed. Information about usage or a
financial product may be central to an
organisations business model or operational
success, so this content may be fully, partially or
not visible outside its source. Users themselves
may, or may not, wish information about their
activities to be tracked or made available, either
at a granular, or abstract level, and if they do,
they may expect this to be at their own
discretion or under their own control. As more
and more information becomes collectable both

Definition: Quantitative and qualitative data can

be used to steer decision-making, both by users,
and by organisations. Information that reflects
usage patterns can guide an organisations
decisions that benefit from an understanding of
which products users are using, how they are
using the products, and where improvements
can be made. Information that reflects users
own usage patterns, the activities of the financial
services they use, or activities of co-users can
help users in making decisions around their own
future use of the services. To achieve, this
standard measures (metrics) need to be created
for quantitative data for the purposes of
comparison.

INFORMATION, METRICS & USER

FEEDBACK

Zopa actively presents itself internally and

externally as a data analysis and marketing firm
with a financial product, rather than envisioning
itself as a purely financial services firm.
Qualitative and quantitative data collection lie at
the core of its business, continuously reshaping

The B CIC has limited quantitative data about

B usage: the BCU administers the B accounts,
leading to privacy issues around the release of
banking information. By interacting with their
members face to face or over the phone, they
collect considerable qualitative feedback and
can build up an understanding about currency
use, problems users face, or areas that will build
operational value. The relatively small size of B
operations makes this possible, but as
operations scale, this will be increasingly
unmanageable. The CIC recognise that their user
base are likely (and able, due to its democratic
mandate) to resist high levels of access into their
financially-related activities. The CIC are also
reluctant to give users access to extensive
aggregate information or allow user sharing
about patterns of spend, even for shaping ethical
behaviour as they feel that this will focus user
attention on spending, rather than build
community interaction.

Case examples:

Interdependencies: Mainstream and legacy

systems; Transparency and opacity;
Commoditisation & financialisation.

Conditions: Concerns arise when user or

business data is accessible for secondary reuse.

from device sensors as well as from financial

service interactions, and this can be effectively
processed as big data, this information can be
both useful and problematic.

Implications: All: users value service data, but

this can also provide significant problems. For
regulators: regulatory issues, regarding access
to and use of personal data, financial and
otherwise, are country- or region-specific,
causing potential effects on information
collection and usage. Few if any of these issues
are unique or novel, but on-going efforts to mine
and apply social media data may challenge
users privacy expectations, even when the law
supports firms exploitation of this data.

Design Solutions: Developing financial services

may be able to determine the information that
they collect without the legacy issues of
traditional banking services and outside of the
regulatory regime that will be of benefit to the
organisation or to its users; on the other hand,
this information may not be strategically useful to
analyse or represent even if deemed valuable.

its product and presentation. This operates as a

separate process from the presentation of data
to users, which has been streamlined and
gradually transformed into tools and systems
more readily comprehensible by a customer
base with less desire to go under the hood and
less familiarity with complex software and
financial tools. However, it does permit users to
examine some of the financial material it
generates, although this is heavily curated in
ways that Zopa feels is appropriate to shape the
users cognitive models of its business
operations. Zopas operation is presented to
lenders and borrowers as standardised interest,
allowing this metric to be presented to users as
being (as near as possible) comparative to bank
interest. Other commercial financial information
on Zopa is available externally, so this is not a
commercially sensitive issue, but a
presentational choice. !

Section II. Firm, Users &

Technology

Case examples:
For the B, T2P and
paper notes can open up
social interactions with a
rich sense of connectivity.

Interdependencies: Membership, brand affinity

and collective identity; User
Interactions & Computer
Interfaces; User trust.

Conditions: Sociability and community grow

around the financial interactions between users,
and between users and the digital intermediary.
Sociability and community relationships may
also build more effective financial interactions,
for e.g. strengthening trust between transactors.
Sustaining a social network requires maintaining
existing connections as well as expanding to
new connections.

Issues: Peer-to-peer financial systems facilitate

connections between transacting users.
Depending on the goals of the digital
intermediary, building rich connections can
range from acting as a primary function (e.g.
financial transactions delivering a social good),
or as a secondary, instrumental function in
connecting peers to populate an interactive
platform to conduct financial operations over.

Definition: digital peer-to-peer structures imply

computer-mediated connections between users,
or between the users and a digital intermediary.
However, they do not determine the extent or
shape of these connections. What form those
connections take depends upon a wide range of
social and technological factors.

SOCIAL CONNECTIVITY

Over time, Zopas notions of how, and how

much, to connect transacting peers has shifted,
moving from the digital to the metaphoric and
physical. In its early days, lenders were able to
access information about borrowers (personal,
borrowing needs, etc.), and to make lending
decisions around this. This is no longer
supported, as lenders contribute to a loan
basket rather than to individuals. More recently,
Zopa has attempted to connect users and
borrowers rhetorically in its advertising as both
being financially sensible, thus attempting to
build connections between the two different
groups. Zopa stages an annual party near its
offices in London, attended almost exclusively
by lenders, some of whom have expressed a
desire to assert membership in a status circle
of like-minded persons of similar age, class, and
financial sophistication. This limited physical
interaction allows Zopa to control the frequency
and form of social connectivity more than in the
open digital discussion forums that Zopa have
pushing further and less accessibly into the back
matter of their website.

T2P require users to talk to one another more

than sterling or cards, and the B connection to
common interests between users opens
opportunities to build and reinforce a sense of
social connectivity. Receipt of payment provides
the name of the spender, allowing a personal
touch to interactions: Thanks, Tom. See you
later. Users described this as acceptable
because it was a local, community interaction,
and more trusted than impersonal payments to
national/multinational organisations. Notes are
often circulated and discussed between friends
as curiosities, or given as gifts, further building
social bonds. At another level, the B CIC
organises social events for B members to meet
and regular B2B and B2C networking events.

User Impacts. All: Social connectivity allows for

the exchange of information and coordination
among networked peers. The level of
connectedness may impact on levels of
engagement, ranging from awareness of being
part of a larger group, to active participation in
group outcomes. Different user roles may require
different levels of engagement. Interaction
designers may need to take into account the
appropriate level of engagement required and
design accordingly. For entrepreneurs and
service managers, understanding the features of
the social dynamics inherent in the network
could lead to insights into how social
connectivity can be expanded and sustained,
and how collective action can be enabled. For
regulators, the manipulation of social interaction
will affect user understandings of the financial
product, and consequently how it is used. !

Implications: For technology, the role of digital

and digital mediation is important: digital
intermediaries connect potential transactors; this
is a social as much as a financial relationship.
For strategy and management, social
connectivity is seen as a means of building
membership and identity, and in perpetuating
and accelerating the take-up of financial
services. As services evolve, the role and form of
social connectivity may require change, with
user roles changing from interacting individuals
to networked peers.

Design Solutions: Real personal connections

are valued, and the form of digital media used in
transactions and other interactions (face to face,
social media, delimited interaction) builds user
connectivity and moulds how it takes place. !

Issues: The sense of collective identity around

innovative financial products is primarily shaped
through users digital experiences. The form of
collective identity experienced can appeal to
several different values, from novelty to
trustworthiness, the political to familial; how
these are designed will deeply affect product
engagement. Particular financial instruments and
particular sorts of technologies may suggest
some values more than others, but digital
intermediaries have wide latitude in defining the
values to associate with themselves and their
users. The choice of computer interaction
methods available according to user
membership type, and the brand communicated
(in large part, through the digital design) will

Definition: Formal membership acts as an

access model for end users, allowing providers
to control who has access to which services.
Services may be differentiated, with different
forms of access available to different types of
user membership: this shapes the social
structure of the community and the ensuing
costs/benefits of the service to the associated
individuals or organisations involved. Branding is
different but related to membership as it relies (in
part) upon invoking an identity association
between user and product, by creating brand
attributes that the user feels they gain by
association. This process is considered to be
more emotive than rational, and can draw from a
wide range of values for its appeal. Both
membership and brand can contribute to a
sense of collective identity with the financial
product, the digital intermediary and to their cousers.

MEMBERSHIP, BRAND AFFINITY

AND COLLECTIVE IDENTITY

Zopas brand identity is formed around the key

word sensible, which is used to distinguish its
borrowers and lenders, as well as the firm itself,
from the excesses of global banking on the one
hand and the imagined spendthrift patterns of
short-term or payday borrowers and the firms
with predatory lending practices on the other.
This identity elides age, geography, and income
distributions between borrowers and lenders,
but critically positions Zopa as a legitimate

Case examples:
The role of place and B member identity are
highly interdependent. Place is institutionalized
in B membership criteria (members have to live
and/or conduct business in the local area),
reinforced through CIC marketing: Love Bristol.
Go Local. Trader membership requires
demonstrating a fit with the B values (ethical,
green), and this impacts on interactions with
ordinary members in making spending decisions
and on social interactions with traders. T2P also
requires users to live or work in Bristol, further
building a sense of community. The printed B
has no restrictions on its access and use,
allowing non-B member users to associate with
its values to feel a sense of belonging to the B
community without having officially signed up.

Interdependencies: Financial ecologies; Social

connectivity; User interactions & computer
interfaces.

Conditions: Inclusion/exclusion criteria

determine who can access and benefit from the
financial service. Associating with a set of values
can differentiate between similar services.

therefore shape what users understand about

the service, what they will try to do (individually
and collectively), and how they value it.

Implications: All: Membership criteria and brand

affinity shape the norms and practices around
how people in the group collaborate and access
information and construct in the process a
collective identity. Interaction designers could
draw inspiration from the user group itself with
participatory design techniques. For technology
developers and financial strategists, the form of
collective identity built around financial
relationships is both limited by membership
inclusion criteria and influences user intents.
Debt appears to be considered less of a driver
for building collective identity. For entrepreneurs
and service managers, it may be useful to
consider whether not adhering to the inclusion
criteria implies that those individuals are partially
or fully shut out of the services. Those who are
excluded may be able to contribute in
significant, albeit different, ways.

Design Solutions: Mechanisms that help build

collective identity support stronger engagement
between peers using financial services. Digitally
supported and online community-building offers
advantages in user buy-in and commitment.

alternative to traditional high street

banks. Collective identity is much more of a
factor for lenders than borrowers. Lenders are
more likely to seek tokens of identification with a
peer group, and have been shown to prefer
photos of other lenders in testimonials, in order
to read signs of similarity. They are also more
likely to become involved in offline and online
community interactions. Borrowers appear more
transactional and interested in obtaining lowcost loans rather than establishing an identity
around their financial products, perhaps inhibited
by the social stigma surrounding debt.

Conditions: If users do not trust the operations

of digital intermediaries, they will withdraw their
custom. Trust may operate at a number of levels,
from the financial regulations in place, down to

Issues: Peer-to-peer and other non-bank

financial systems operate either outside of the
traditional regulatory environment, and hence
cannot rely on regulation to drive trust, or they
have to find new ways of operating within the
established regulatory system. Where these
services are not a part of the financial
mainstream, users also cannot rely on existing
networks of trust in their brand. Peer-to-peer
organisations may also have to overcome
adverse misconceptions and misattributions
associated with their use (e.g. illegal filesharing,
bitcoin criminality); non-standard methods of
financial operation will similarly have to
overcome user doubt over their operational
legitimacy, digital and financial security, and
organisational longevity, all within an
environment in which users feel they may have a
potential for substantial financial loss.

Definition: To initially adopt and keep using

peer-to-peer financial instruments, users need to
overcome inherent uncertainties to build up a
degree of trust in the transactions, the devices,
the organisations involved, the individuals
involved, and the various networked
components that make up the peer-to-peer
financial system. In the interests of the stability
of the financial system and consumer protection,
regulatory bodies establish rules and perform
monitoring of financial institutions, which
ensures that if they perform in an untrustworthy
way, there are legal implications.

USER TRUST

Design Solutions: Consistent, well-designed

user interactions and media are considered to be
indicators of integrity. Feedback on users status

With Zopa, user trust is formed from a complex

interplay of factors including familiarity of the
technology; rates and terms of the financial
instruments themselves; governmental
regulation; endorsement (particularly by financial
TV commentators); adoption by their peer group;
and the firm being seen as having accessible,
domestic, identifiably British offices, and
employees who can be contacted by telephone.

Case examples: Users confidence in the digital

B payments system was inextricably linked with
the interpersonal connections between them:
payments are face-to-face, embedded in
proximal social relations, and this enables
reciprocation of common concerns. These are
not fast-paced, anonymous transactions that
take place in the absence of rich social cues.
This allows delicate judgements to be made in
an interactive process that takes place over time.
Users also trusted the SMS system underlying
digital payments: users were familiar with this,
and had expectations around its transmission
speed and likelihood of failure moreover, they
attributed this trust in SMS to aspects of the
financial transaction further on down the process
that they understood less. The notes were also
trusted: these have a high quality, expensive
look and feel, with security features on them.
With regards to the transactional value,
purchases were usually low value, so that users
and traders would not take a large financial hit
if difficulties emerged.

Interdependencies: Social connectivity;

Transparency and opaqueness.

the form of social connections involved in in

resolving transactional problems.

Implications: All: trust in financial services is

hard won and easily lost. Financial systems
outside the banking system contend with serious
issues around user trust, particularly if the
system is opaque and users find it difficult to
explain behaviours or situations. Interaction
designers should be attentive to the differences
in users expectations and actual behaviours of
the system. For financial strategists and systems
developers, there is no simple formula for the
ideal balance among trust-related factors, or a
ranking of relative importance. Factors may be
dynamically interdependent, meaning that
financial intermediaries must bear each factor in
mind with every change to the business, and
must be capable of responding on all fronts to
changes in its environment. For entrepreneurs
and service managers, it is useful to consider the
ways in which users build trust in the system and
how it allows them to recover when things go
wrong. For regulators, users often see regulation
as legitimising the service as a whole, with users
unable to differentiate between the parts
concerned.!We frequently heard from
respondents that required disclosures
(legalese) undermined their trust in, and
willingness to use digital financial products.
Consideration of interplay in user experience
design and disclosure requirements to find an
effective balance between disclosure-based
regulatory systems and confidence-based ones,
as they may apply to digital financial
technologies is recommended.

on-going financial interaction supports

trustworthiness in the process, as does the
ability to connect with other people (as peers or
the organisation) to assess reputation and make
value judgements around transactional progress.
Use of well-understood digital media and
platforms creates a basis for building trust.

Conditions: Some sources

of risk include the digital
technologies used in
delivering the financial
service, the changing

Issues: Over time and as a financial service

grows, risks change and providers will have to
adapt to the changing circumstances, for e.g.,
attitudes to regulation may change. Thus, while
local currencies are small movements in
comparison to the national UK economy, this
could change, and the future application of
regulations may have an unexpected impact on
the course of their development over time. Users
also face risk in their interactions with emerging
financial services, and how institutions provide
resources to them through the digital and nondigital infrastructures that they act through will
affect user attitudes to this risk
and their subsequent financial
interactions.

Definition: Risk here involves the potential for

financial loss, to the user of or to the digital
intermediary, and arises out of action (or
inaction) under conditions of uncertainty.
Providers of innovative financial instruments
need to consider the risks inherent in the
industry. Risks need to be identified, assessed
for severity and mitigated. Operating outside the
traditional banking sector exposes alternative
financial service providers to several additional
risks that range in impact, for the worst case in
the service collapsing, to less dramatic but
damaging issues such as loss of trust, weakened
brand identity, or enabling competitor
advantage.

RISK & MITIGATION

Risk management is perhaps the core and

differentiating service that Zopa offers its
customers: uninsured borrower default is a
concern to lenders. Zopas business model is
based upon maintaining a lower default rate on
its loans than that tolerated by high street banks,
let alone short-term or payday lending
services. Currently it relies upon traditional
metrics and third-party services, augmented by
a proprietary algorithm, for determining
borrowers creditworthiness, backed by manual
underwriting of each loan. This system may not

Case examples:
The B CIC faces several risks unique to
establishing and sustaining a working currency
alongside a strong national, sovereign currency
sterling. Features built in to the money itself, as
well as the work the CIC carry out in the local
community serve to prevent against the currency
going out of circulation: the currency has an
expiry date on the notes to guard against
hoarding, transaction costs associated with
converting B back into sterling, and initiatives
that link up primary producers with local outlets,
and local outlets with customers. Other features
protect against fraud, such as password
protecting digital transactions, and special ink on
the printed money. The risk of failure of a
payment to go through is mitigated through the
social and local relationships held between
participants in the transaction.

Interdependencies: Regulation and financial

ecologies; Social connectivity; User interactions
& computer interfaces; User trust.

environment in which the service operates,

organizational structure and governance
processes of the firms offering the service.

Implications: The ISO series provides existing

frameworks for managing risks with respect to
technology resources. Interaction designers can
alleviate risk by evaluating new technologies with
users, or conducting small pilot studies before
releasing the technology to a wider audience.
For regulators, we have seen little to suggest
that evaluation of investment risk or firm-level
risk differs materially in the context of retail-level
digital financial instruments. Current systems
appear to date to be adequate in preventing
fraud, and have been affirmatively sought by
several firms, to build user and investor trust.

Design Solutions: For a financial service, the

potential for financial loss, and the perception of
this, underpins user trust and the likely success
of a service, digital or otherwise. As consumer
users may find it difficult to assess actual risk,
digital services may be able to utilise social
connectivity to their advantage. Previous Zopa
solutions on allowing lenders to see information
provided by borrowers supported building of
trust judgements, and these kinds of social
connections can allow consumer users to bring
their (non-specialist) skills into play to make
more informed judgements.

continue to scale, and the firm has experimented

with novel risk measurements such as metrics
drawn from social media data, but has yet to find
any which it regards as superior to traditional
means of credit analysis. As Zopa is not a
deposit-taking institution, its loan instruments
are not eligible for governmental deposit
insurance, a major source of user confidence
and trust. In response, Zopa has developed a
self-insurance system called Safeguard to
provide a similar service that it promotes to
mitigate risk to its lenders.

Before launching the currency, the B CIC

conducted a feasibility study to identify
stakeholders, obtain buy-in from businesses and
create incentives for joining. The CIC works in
close partnership with the BCU to provide digital

Case examples:

Interdependencies: User trust; Mainstream and

legacy technologies; Risk & mitigation.

Conditions: The financial ecology is

characterised by the diversity in its constitutive
elements, which include technical, geographical
and institutional components.

Issues: For digital services to remain sustainable

and robust, providers need to understand the
human and digital infrastructures, and the links
between them that make up their financial
ecosystems. These elements set the conditions
for how the financial service may grow, link with
other services, innovate new services and
disrupt the status quo. Poor connections
between these elements can lead to issues
ranging from service abandonment at its
extreme, to reduced levels of engagement and
problems in making on-demand financial
transactions.

Definition: Financial service providers operate

within a larger financial system in which different
digital technologies, regulating bodies, and the
financial services themselves are connected to
one another in a variety of ways that create an
ecology of interacting and interconnected
systems.

REGULATION & FINANCIAL

ECOLOGIES

Unlike the B, Zopa has a great deal of control

over its proprietary software systems, although it
still faces challenges in its digital interconnections with the financial and banking
sectors (e.g. user payments into their system;
third-party credit assessment services).
However, it faces a particular challenge around
issues of financial regulation due to its
technology platform and digital architecture.
Zopas business model is designed around, and
unique to, the British financial regulatory system.
American p2p lending has become dominated
by institutional, rather than individual, retail
investors, as a result of the p2p contract being
regulated as a security in the US. Zopa actively
sought out regulation for the p2p finance
industry in the UK, working with the Financial
Services Board to design a regulatory structure
for p2p lending (the P2P Finance Association), in
the belief that FSB regulation would lead to
greater consumer trust and acceptance. This
regulation has resulted in changes to the website
terminology and content, and continues to pose

B accounts to its members. The CIC relies on

existing mobile phone technology (SMS) and
open-source software (Qoin) to enable digital
transactions. The CIC manages the B as a
complementary currency alongside the sterling
issued by the Bank of England, by ensuring that
the printed B functions as a voucher with an
expiry date. The Bristol City Council supports the
efforts of the CIC by accepting council tax
payments in B. The CIC works to establish and
increase the links in the vertical market to
facilitate B use. These interdependencies are
both what makes the B function and
successful, as well as providing the potential
problems as any of these components changes,
or fails to provide a suitable level of supporting
service.
Implications: All: Solutions to digital
intermediary design that rely on external services
carry inherently greater complexity and risk. For
financial strategists and system designers,
reliance on external services is particularly
problematic as financial activities scale up, and
where an external service may be unable to
cope. This may be exacerbated as new forms of
service provoke exponential additional demands
on existing platforms unable to cope with this
traffic (e.g. users carrying out multiple
background checks in parallel to optimise
financial performance). Both entrepreneurs and
service managers will require an understanding
of the constitutive elements of the financial
ecology digital, financial, and regulatory - in
which their service will operate and the
regulation of those entities. Working to create
new regulatory environments may offer some
solutions, but the effects
that this offers also need
to be considered over the
long-term, as their
external providers and
digital systems evolve
and change, which
may disadvantage
their agility.

Design Solutions: Retaining, or developing inhouse financial services is one approach to

reducing dependencies on external providers
where these are likely to provide breakdowns or
bottlenecks.

challenges of balancing trust via disclosure, the

model underlying financial regulatory systems,
and trust via simplicity, Zopas user experience
design model.

7. Future Outlook

Given the rapidly changing technological landscape and the accompanying

new forms of digital connectivity, we need a better understanding of how to
innovate for consumer-level financial transactions and methods of financial
exchange. Examining the social, organisational and technical infrastructures
underlying interactions around novel digital financial products, this toolkit
offers practical insights into the design of digital financial services to make
them easier to understand and use, more trustworthy, accessible, and
socially useful. Novel technologies will continue to transform the relationship
between users and digital financial intermediaries, opening up new services
and new ways for users to benefit from them. Our own research identifies a
number of forces that future innovators are likely to need to be prepared to
harness for competitive advantage, which include the following areas:
New form factor devices available to consumers, such as wearable
devices, personal or environmental sensors, or deformable interactive
displays.
The proliferation of internet-enabled, always connected objects that
make up the Internet of things. It is likely that these will allow users to
access and interact with aspects of our financial lives, create new
forms of value that we can transact with, but also to make visible parts
of our financial activity that were previously considered private.
Changing expectations of users around the performance,
responsiveness and breadth of services. Better services do not
always create more satisfaction, but may instead create more demand.
The continuing integration of social connectivity and sharing into our
digital lives via social media. These are likely to impact at a range of
levels and across a wide set of financially-relevant factors. Users may
be able to see what their peers are doing to help shape their own
behaviours, but they are also potentially opening up their financial
activities to inspection and exploitation by others.
The there are a huge range of analytical opportunities offered by the
big data generated by our devices, allowing users to benefit from
tailored financial services, organisations to optimise their products and
services, but also for this valuable, highly personal, financial
information to be misused or used in ways that disadvantage their
users.
Managing these issues so that they are addressed appropriately is critical to
ensure that the financial services offered by alternative, digital intermediary
providers is an important challenge if these services are to remain credible.
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33

Of course, this toolkit is not a complete picture of the landscape of existing

and future digital intermediaries, but we hope that it will offer an interesting
and useful set of issues to consider and directions to take in your own work.
It also cannot cover all of the material that we have uncovered in our
research in the wild at the two partner organisations that we have worked
with, and interested readers are encouraged to explore the other materials
that we have documented in the accompanying reports and project
deliverables.
To the users of this toolbox, the elements of design that have been covered
are deliberately intended to be relatively simple and brief; for areas that need
more detailed thought, there are resources to make more complete sense of
this. However, these elements should be considered as a simple, structured
resource that can be used to draw people together from different disciplines
and with different expertise and experience into a discussion so that they
can use a common language and draw from easily understood examples in
making decisions.
If you have used it, please let us know, and what you found useful! Wed be
delighted to know how it has been used so that we can develop these areas
more in the future. You can contact us via the project website, or directly
our details are listed overleaf. Were interested in following up this work in
the future, so if you would like to be involved, please let us know.
Finally, we would like to thank our partner organisations and the people in
them who have been so helpful to us the Bristol Pound and Zopa. We wish
them the best of luck in navigating the tricky and changing waters that come
of being a digital intermediary. Professor Sriram Subramanian, a coinvestigator on this project at Bristol University, who deserves particular
commendation for conceiving the initial idea of the project, without which
this work would never have happened. We would also like to thank the
participants who patiently took part in our interviews, questionnaires,
workshops and observations. Thank you all.

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34

8. Report Contributors

Dr Mark Perry is a Reader at Brunel University, looking at the design of

ubiquitous and mobile computing from a user-centred and ethnographicallyinformed perspective. He has a background in psychology (BA), cognitive
science (MSc), and human-computer interaction (PhD). Mark is Principal
Investigator on the 3DaRoC project, exploring new media formats for
alternative and peer-to-peer financial services outside the banking sector.

Dr John Carter McKnight is a postdoctoral researcher on the 3DaRoC

project. His research focuses on the role of transmedia platform and user
experience design in creating affective communities around financial,
national-cultural, and gender identities. He has a background in political
science (BA), law (J.D.), international affairs (M.I.A), and media and
communications (PhD). From 1988 through 2000 he was a corporate finance
attorney specializing in initial public offerings of high-technology firms.

Dr Jennifer Ferreira is a post-doctoral researcher on the 3DaRoC project,

exploring the ways digital connectivity shapes the relationships of users of
local currency and peer-to-peer lending through design research. She has
degrees in Econometrics and Economics (BCA), Computer Science (BSc),
and software engineering (PhD). By taking a user-centric perspective on
what is usually considered the asocial flow of economic value, she studies
the intermediary role of digital technologies in financial transactions as
opportunities for rich social interactions.

Dr Adam Fish is a Lecturer at Lancaster University, a social anthropologist

of digital culture, business, and politics. He is Co-Investigator on the
3DaRoC project. He investigates the interface of economic and political
power, cultural discourses and practices, and networked communication
technologies.

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9. 3DaRoC Publications and Presentations

The work that underpins the 3DaRoC project has been documented in the
academic literature or presented at conferences and symposia. For further
information about the work of the project and this academic research, these
are listed below for readers to follow up.

Peer Reviewed Papers

Ferreira, J., Perry, M. and Subramanian, S. (2015) Spending Time with
Money: from shared values to social connectivity. In Proc. ACM
CSCW15, March 14-18, Vancouver, British Columbia, Canada.
McKnight, J.C., Ferreira, J., Fish, A. and Perry, M. (2015) Digital financial
innovation: design rhetorics, spatiality, and the challenge of creating
community. Workshop on Collaboration and Social Computing in
Emerging Financial Services, ACM CHI 2015, Vancouver, BC, Canada.
Ferreira, J. and Perry, M. (2015) Building an Alternative Social Currency:
Dematerialising and rematerialising digital money across media. Proc.
HCI Korea15, Dec 10-12, Seoul, South Korea. Lee (Ed.), Hanbit Media,
Inc., 122-131.
Kaye, J., Vertesi, J., Ferreira, J., Brown, B. and Perry, M. (2014) #CHImoney:
financial interactions, digital cash, capital exchange and mobile money.
In Extended Abstracts on Human Factors in Computing Systems. ACM,
New York, NY, USA, 111-114.
Pantidi N. and Ferreira J. (2014) What can HCI do for local currencies?
Workshop paper presented at #CHImoney: financial interactions, digital
cash, capital exchange and mobile money, as part of CHI 14.
McKnight, J.C. and Fish, A. A Sensible Lamb Portfolio: Constructing Peers in
Peer to Peer Lending. In review at Ephemera: Theory & Politics in
Organization.
McKnight, J.C. and Fish, A. Becoming Sensible: Peer-to-Peer Lending and
the Limits of Financialization. In review at Science, Technology and
Human Values.

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Presentations
Perry, M. Invited Keynote: Ordinary interaction around local, digital and
mixed media currency exchange: managing fungible, social and material
transactions. The Future of Money Symposium. MobileLife, Stockholm
University.
McKnight, J.C. Invited talk: Peer-to-Peer Finance: Design Rhetorics and the
Limits of Financialization, Department of Computer Science, University
of Bristol, Bristol, UK.
McKnight, J.C. P2P Invited Talk: Finance: Technological Play to Sensible
Saving, Department of Sociology Seminar, Lancaster University,
Lancaster, UK.
McKnight, J.C. Peer reviewed conference presentation: Sensible
Borrowers: Class Narratives and the Manipulation of Affect in the
Marketing of Alternative Finance. Presented by Adam Fish, Lancaster
University. Association of Social Anthropologists of the UK and
Commonwealth Annual Conference, Exeter, UK (upcoming)
McKnight, J.C. Peer reviewed conference presentation: Sensible
Borrowers: Class Narratives and the Manipulation of Affect in the
Marketing of Alternative Finance. Social Media & Affect Research
Seminar. University of East London, London, UK. (upcoming)
McKnight, J.C. and Fish, A. Peer reviewed conference presentation:
Financialization: Process Innovation in the New Financial Workplace.
The Dynamics of Virtual Work: The Transformation of Labour in a Digital
Global Economy. University of Hertfordshire, UK.
McKnight, J.C. Peer reviewed conference presentation: A Sensible Lamb
Portfolio: Constructing Peers in Peer to Peer Lending Affective
Capitalism Symposium. University of Turku, Finland.
McKnight, J.C. Peer reviewed conference presentation: Reconfiguring Peerto-Peer Finance: From Technological Play to Sensible Saving. Fourth
Annual Cultural Political Economy Workshop, Lancaster University,
Lancaster, UK.
McKnight, J.C. and Ferreira, J. Public lecture: A Sensible Lamb Portfolio:
Talking About Alternatives to the Banks. Caf Scientifique, The Robert
Gillow, Lancaster, UK.
McKnight, J.C. Sensible Borrowers: Class Narratives and the Manipulation
of Affect in the Marketing of Alternative Finance. Social Media & Affect
Research Seminar. University of East London, London, UK.

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10. Suggested Further Reading

If readers are interested in the topics covered in this report, you might be
interested in the extensive materials listed below:
Ahmed, S. (2004). Affective economies. Social text, 22(2), 117-139.
Andrejevic, M. (2011). The work that affective economics does. Cultural
Studies, 25(4-5), 604-620.
Antonopulous, A. (2014) Bitcoin security model: Trust by computation.
OReilly
Radar,
14
February
2014.
Online:
http://radar.oreilly.com/2014/02/bitcoin-security-model-trust-bycomputation.html
Benkler, Y. (2006). The wealth of networks: How social production transforms
markets and freedom. Yale University Press.
alkan, K., & Callon, M. (2009). Economization, part 1: shifting attention
from the economy towards processes of economization. Economy and
Society, 38 (3), 369-398.
Clark, G., Thrift, N., & Tickell, A. (2004). Performing finance: the industry, the
media and its image, Review of International Political Economy, 11(2),
289-310.
Cortese, A. (2014) Loans that avoid banks? Maybe not. The New York
Times, May 3, 2014.
Crotty, J. (2009) Structural causes of the global financial crisis: a critical
assessment of the new financial architecture. Cambridge Journal of
Economics, 33(4), 563-580.
Davies, M. (2012). The Aesthetics of the financial crisis: Work, culture, and
politics, Alternatives: Global, Local, Political, 37(4), 317-330.
Deville, J. (2013) Leaky data: How Wonga makes lending decisions.
Charisma: Consumer Market Studies. Online: http://www.charismanetwork.net/finance/leaky-data-how-wonga-makes-lending-decisions
Deville, J., & van der Velden, L. (2015) Seeing the invisible algorithm: The
practical politics of tracking the credit trackers. In Louise Amoore and
Volha Piotukh (eds.), Algorithmic Life: Calculation in the Age of Big
Data, London: Routledge. (in press)
Epstein, G. (2002) Financialization, rentier interests, and central bank policy.
Manuscript, Department of Economics and Political Economy,
Amherst, MA.
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Erturk, I., et al. (2007) The democratization of finance? Promises, outcomes

and conditions. Review of International Political Economy 14:4, 553575.
Financial Conduct Authority (2014) FCA proposes price cap for payday
lenders. Online: http://www.fca.org.uk/news/fca-proposes-price-capfor-payday-lenders
Fisher,
M.
(2004).
Corporate
Ethnography
Economy. Anthropology News, 45(4), 15-15.

in

the

New

Gola, C. (2009). The UK banking system and its regulatory and supervisory
framework. Palgrave Macmillan Ltd.
Graeber, D. (2011). Debt: The first 5,000 years. London: Melville House.
Granovetter, M. (1985). Economic action and social structure: the problem of
embeddedness. American journal of sociology, 481-510.
Hulme, M.K. and Wright, C. (2006) Internet based social lending: Past,
present, future. Manuscript, Social Futures Observatory.
Martin, R. (2002). Financialization of daily life. Temple University Press.
Martin, R., Rafferty, M., and Bryan, D. (2008) Financialization, risk and
labour. Competition & Change 12(2), 120-132.
Montgomerie, J. (2009). The pursuit of (past) happiness? Middle-class
indebtedness
and
American
financialisation. New
Political
Economy, 14(1), 1-24.
Moran, M. (1984). The politics of banking. New York: Macmillan.
Nesta. (2014). Understanding alternative finance: The UK alternative finance
industry report 2014.
Online: http://www.nesta.org.uk/sites/default/files/understandingalternative-finance-2014.pdf
OReilly, T. (2005). What is Web 2.0: Design patterns and business models
for the next generation of software, 30 September 2005.
[http://oreilly.com/web2/archive/what-is-web-20.html]
Peer2Peer Finance Association (2013) Online:
http://www.p2pfinanceassociation.org.uk/
Polillo, S. (2013) Conservatives versus wildcats: A sociology of financial
conflict. Stanford University Press.

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Online

A digital version of this report can be downloaded from: !

https://digitalintermediaries.files.wordpress.com/2015/03/d5.pdf

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