The future of ...

Erwin van Lun predict the long term future and blogs about developments today gradually shaping that future. Also in Dutch

Category: Financial

The financial coaching brand helps us manage our money. To make sure that what we do today, we can still do tomorrow. Or to make sure that we can do more than we do now. It helps us investing and saving. It guarantees us income when we all of a sudden lose our job, get sick, or retire.

Kiva for transparent microcredits

Through Kiva you can lend money to an entrepreneur (in a developing country) directly. With your loan you allow people to lift their lives above the poverty line. You choose an entrepreneur, pay a maximum of 25 euros (by credit card or Paypal) and you get your money back without 6 to 12 months. All investments are shown orderly and you get updates via email.

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Future vision by Erwin Van Lun

Kiva is just a new-style bank. Borrowing/Lending money, saving money, entrepreneurship. It’s all about mutual trust. Later on another social layer will be on top of this: you can build a reputation as an entrepreneur. Have you borrowed successfully before? Are you recommended by others who borrowed successfully before (that’s an indication this person might be trustworthy too), do you come from a family which has successfully started a business? Or has the borrower contacts who’ve borrowed from you before? It all adds up. And they’re undoubtedly the next steps which organizations of Kiva are working on.

Triodos shows investments on map

Dutch bank Triodos Bank lets you see exactly which companies are financed by Triodos Bank and where the interest on your savings comes from. You can also see which local entrepreneurs in your area are supported by your money. You can see the map on the site Mijn geld gaat goed.

Future vision by Erwin Van Lun

With banking it’s all about trust. Where trust used to come from stock notation and visibility that’s now going to come from transparency. Later on you’ll be able to decide where you want to invest or not. Or you can think along with an entrepreneur you’ve invested in. Or you get a signal when you walk past a project you’ve contributed to. That’s a very different dynamic from the banks which are now wobbling (and will crash).

Wonga deposits loan in a few minutes

Using Wonga people in the UK can take short mini-loans online. Or, as they call it themselves, 'instant money' or 'cash on demand'. The applicant can determine the figure and span themselves and hear immediately if the loan is agreed to and, when it's accepted, you can expect the money on your account in a few minutes.

The loan vary between 50 and 200 pounds and have a maximum time span of 30 days. Wonga maintains an interest of 1% a day and £5,50 transaction costs per loan. To stimulate quick payback good borrowers get a higher score and as such more flexibility on future loans. This is how Wonga manages to reduce its debit costs. (demo)

Future vision by Erwin Van Lun

Everything will become real time, everything will become instantaneous. Later on, you’ll be able to do this via mobile phone, anywhere in the world. Furthermore your reputation will go up if you friends’ reputation is high. And furthermore you’ll be able to borrow money from your friends directly too. They can, for example, stipulate an amount they want to lend to friends with a good pay-back reputation. This is how Wonga will facilitate in a very fast, worldwide but reliable economy. A foundation you can build on. This is a step in that direction.

American Express regular bank

American Express, a credit card company, is becoming a regular bank. The company has received permission to do this. This allows the company easier access to new funding.

Future vision by Erwin Van Lun

You lend money to people you trust. You trust people you know. You know people when you’ve experienced something together with them. When you’ve been together for a prolonged period. The idea of a credit card, loaning based on no relationship at all, is based on nothing. The new financial system that’ll come will be based completely on trust. People are only allowed to spend money if they have it. People are only allowed to borrow when there’s a guarantee or trust. And a bank might not always know you well, but the bank can have relationships with people who have trust in you. Banks will start to use such relationships. Banks will start to facilitate networks in which mutual trust is shown. And that trust will be the basis for lending someone money.

That spells the end of credit cards and credit card companies. This development is shown here.

Qash gives insight in possible ways to save money

Qash (Dutch) offers you insight in your spending patterns by reading and analyzing the data of your various bank accounts, credit cards and/or savings accounts. Each transaction will automatically be given a label and through this categorization you'll know exactly where your money is going. On top of that Qash can give you ideas on where to save money. Cheaper subscriptions, for example.

GreenNote allows people to pitch for a loan

At GreenNote American students can get financing for their college/university studies through acquaintances. The student creates a profile and adds, alongside the desired monetary amount, a photo, information on finished courses and in 'my story' the reason the money is needed. And of course why they think that lending them money to go to college is a good investment. From there the student can start to approach people.

If people are interested in offering a loan, GreenNote formalizes this through a legally binding contract for both the student and the person offering the loan.

Future vision by Erwin Van Lun

This is how new financial brands are created in the network economy. The new model will be borrowing from the acquaintance of an acquaintance. We trust the people we know, our trusted relations, and the trust that they have in the outside world. This is how micro credit becomes useable around the globe, this is how new brands such as GreenNote grab a chance that traditional banks aren’t yet embracing well enough.

ABN AMRO facilitates borrowing between people

Private loans (Dutch) are a new service of the Dutch ABN Amro branch. It's a service for people who want to lend money privately. It often involves a loan between friends, acquaintances or family members.

It's pretty simple. You agree with someone from your area how much you'll borrow and make arrangements about the height of the interest rate and the repayment plan. Lenders and borrowers can orient themselves on the website of ABN AMRO. When they've reached an agreement on the payment conditions, ABN AMRO offers them sample contracts for making the agreement. The site also offers fiscal and judicial tips and a calculator.

The bank doesn't charge a commission for this service, but aims at binding customers to itself and offers additional paid services. The Judicial Service Plan offers direct connection with professionals, specialized in judicial aid.

Future vision by Erwin Van Lun

This way the bank transforms itself into a financial coaching brand: a brand that facilitates financial transactions between private people. In a closed model this was only possible by accepting and then lending large amounts of money. In an open model, small transactions can take place. Soon we’ll find these transactions between our savings accounts (or our loans). Even if we lend money to people elsewhere in the world (call it microcredit). This is how the network economy is formed and existing brands transform into open network brands.

Hengelo helps citizens with selection of subsidies

The district council in Hengelo, the Netherlands, helps its citizens to claim the correct subsidies by providing a 'money searcher'. Via the computer they enter a wide range of details about pay, benefits, tax credits, rent, savings and insurance policies. Within 10 minutes they receive personalized advice.

Future vision by Erwin Van Lun

The world is gradually changing. Instead of consumers, members or citizens being expected to trawl through all sorts of loose pieces of information, rules and procedures from various organizations the focus is now on the individual. Even then it is still too complicated. Personal finance brands will soon be able to automatically read all the customers’ details, interpret them and arrange all the appropriate subsidies (the consumer will only need to give permission). This sort of brand can immediately give good personal advice: do you want this, or that? And arrange what is required straight away. Only identification is needed, but by the time all this is possible identification will be able to be given in the blink of an eye.

SmartyPig helps you save through others

SmartyPig offers an online savings account for which you can invite friends, family or colleagues to contribute money towards a goal you have chosen yourself. SmartyPig has developed a widget for social networks MySpace and Facebook, so you can make your savings goal accessible for more people (fe, Dutch). Saving, lending, investing: it is all about trust. And the people directly around you trust you most. Brands are more and more building on this trust: they get better at tribal thinking since they have less chance to reach the consumer with messages, while at the same time they have more chance to facilitate the consumer. This development fits in that trend.

Wesabe controls your bank transactions

Via Wesabe consumers can manage their money. They can upload their bank transactions, set goals, and control their financial path (dc, Dutch). Thus financial coaching brands evolve. They control the consumer’s household expenses, and advise you in choosing investments, savings, pensions, loans, and mortgages. A good advice however starts at total financial insights, and this is what Wesabe starts at.

PayPal takes care of bank payments

Online Payment Provider PayPal now also offers the possibility to make payments through banks. With a PayPal account customers now have the choice between payments through credit card or through a bank account, for local as well as international payments (cc, Dutch). This way a brand taking care of all our payments slowly comes into being. Whether it is through a credit card or directly through a bank account (debit), PayPal takes care of it. Starting from this total package, PayPal has the possibility to grow into a financial coaching brand. It can introduce a home brand account. It can start offering additional services like instant loans. This way PayPal gets more and more meaning in our lives. This is a small step in that direction.

Zopa, banking 1.1 or 2.0?

Financial auction site Zopa brings together money lenders and borrowers. A borrower states the conditions for a loan, and if these compare to offers of lenders, the deal can be made. The risk is spread by dividing the total amount of money into smaller amounts, provided by several lenders. The credit scores of people who are borrowing money are thoroughly checked (dc, Dutch). Here banking 1.1 comes into being. It is he existing principle of a bank, as Zopa has to make money too. Using IT to make a new start, processes can be reinvented, or even be deleted if necessary. This way situation can arise that is comparable to what Easyjet has done in air transport. Zopa can grow into a transaction brand, with a price fighter position in the savings and loan markets. In the end financial coaching brands will advice us on what we should do with whom (what transaction brand), under what conditions. And they will take care of that for us. That will be the added value of the financial coaching brand, and that is where their margins will be. That is banking 2.0. The development of this kind of transaction brands contributes to that.

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