Designing for Trust and Community

 

Economics and Finance might not be the first terms one comes up with when considering the path to a sustainable future. But access to financial systems is an integral part of social sustainability, and must be considered along side resource use, pollution, and other concepts more directly associated with the conservation movement. After all, social sustainability is key to our continued coexistence on earth, and ubiquitous access to market economies and financial resources is necessarily going to be a part of that. As the Harvard Business Review notes,

No one these days seriously denies the need for sustainable business practices. Even those concerned about only business and not the fate of the planet recognize that the viability of business itself depends on the resources of healthy ecosystems—fresh water, clean air, robust biodiversity, productive land—and on the stability of just societies… And yet collectively we have not been making progress on reducing the damage business does to the world.

Abstract financial concerns are not traditionally associated with the formal design world; many of the quintessential cliches of the industry, like besuited executives and endless spreadsheets, can seem totally divorced from the less rigid ethic of our studies. This is somewhat deceiving. As a matter of fact, in recent years, the world of finance has undergone tremendous change in a highly deliberate and designed way.

One example of these changes can be witnessed in personal banking. In the past, local bankers decided who to lend to based on a potential borrower’s history and reputation in their community. Today the process is standardized as much as possible. Most functions of a bank, often including mortgage borrowing, can be done online.

This is a process that could only be facilitated by designers; once banks were striped of their physicality and community ties, designers had to find new ways for customers to identify with their banks. TD Bank, for example, is famous for distributing free pens and dog treats. Many of their locations have children Penny Arcades to help bond with customers. Increasingly, banks turn to massive advertising campaigns for this purpose. While well intentioned, these are obviously poor substitutes for the community fabric banks once provided.

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(Courtesy, New York Times)

Another negative impact of depersonalized banking is the abdication of responsibility for debts through the financial system. In the old days, a banker’s personal reputation and career rested on his judgment about borrowers. A lot of people had a lot to lose if money were lent to a delinquent borrower. Today, a computer decides who is creditworthy, often with macabre outcomes. After the 2008 financial crisis, it was found that many borrowers did not have to disclose their income or assets to obtain a loan. Where once the relationship between borrower and lender was practically tactile, it is now almost completely abstract.

One place where designers are working to create more tangible relationships in business and finance is in the world of micro-lending. In these organizations, borrowers create public profiles where they document their background and how they intend to use a prospective loan. While the jury is still out on the viability of micro lending as a antidote to poverty in the developing world, the concept surely sheds light on possible solutions to what is an international problem.

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(Courtesy, Kiva.org)

Today, websites like KickStarter are also working to resurrect the personal aspects of banking and finance using digital tools on the internet. On one hand, this can be seen as a feckless upstart trampling on the territory of responsible investing professionals. On the other hand, the quality of the lending experience provided by banks, and its increasingly apparent deleterious effect on our society make new lending solutions with community and trust ‘designed’ in their fabric a much needed breath of fresh air. Many technology pundits are optimistic that programs like these may one day lead to a world with a much more inclusive financial system. As AOL founder Steve Case put it in his recent book “The Third Wave”,

The real threat to banks is not from Washington or Brussels but from start-ups all over the country creating interesting fintech start-ups that are chipping away at key parts of their franchise.

Steve Case argues that the internet is going to have a fundamental transformational effect on all institutions, mirroring the effect it has already had on media. Government, corporations, factories, and yes, the financial industry are all prime candidates for ground up change. Case argues that industries that sustain themselves through tough barriers to entry may see their defenses diminished. Financial companies are among the most despised from a consumer’s point of view. It seems as though the waters are rising and the levy’s might break.

As we move into the future, we may begin to see an investing and financial world that is much more thoughtfully designed around the people it is meant to serve. Today, this is mostly taking the form of software innovation; services that help customers keep track of and manage money in a simple and intuitive way, without middlemen to take a cut. The exciting aspect of this particular slice of the start-up world is that its solutions to the present unsustainable state of finance are coming from all directions. According to the New York Times DealBook:

The fintech phrase itself is actually not new — it dates to the late 1980s and early 1990s — though it has taken on a heightened sense of importance and urgency now that it has been embraced by Silicon Valley as the new new thing. An estimated $19 billion of investment poured into the fintech bucket last year, according to Citigroup, up from just $1.8 billion five years earlier.

As noted here, Micro lending emerged from an institutional desire to alleviate international poverty. Kickstarted was made for artists and makers in relatively affluent urban communities. The open source moment is coming forward with solutions like crypto-currency, and marginal functions once relegated to the boiler rooms of finance, like wire transfers and trades, are also being approached with similar rigor.

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