Whoever is the distributor of trust, wins
In a recent interview in the Washington Post, Netscape founder Marc Andreeseen raised a very interesting point regarding bitcoin, the emerging, un-regulated digital currency.
Andreessen stated that bitcoin is much more than a digital currency, it is the conduit of distributed trust. He goes on to qualify his position by pointing out in the move to digitize transactions, a digital currency is more than currency, it is the foundation that allows the transactions to occur. Many applications can built upon this foundation. He cites, “Digital stocks. Digital equities. Digital fundraising for companies. Digital bonds. Digital contracts, digital keys, digital title, who owns what–digital title to your house, to your car.”
While the future for bitcoin has yet to be written, the concept of a distributor of trust is a fascinating one. The recent Home Depot data breech is just another reminder how vulnerable transactions can be. Any financial organization able to increase the level of trust among consumers is bound to have a clear competitive advantage.
The Chicago Booth/Kellogg school performs a financial trust index that measures the confidence Americans have in the institutions which they can invest their money. Credit unions are the winner with a 62% trust index placing them significantly higher than the 28% index of national banks. The question here is how can credit unions can leverage this trust and distribute it.
The answer may lie in the digital space, but it may also lie in traditional delivery channels (branches, ATM, credit cards, etc.) as well. At this point, credit unions should be reviewing how they deliver satisfaction and what opportunities they have to further build trust.
An example of what this could look like is an extra-secure payment system that offers zero liability, such as a PayPal-style account in which transactions are sent via an intermediary with no direct link to the member’s account numbers. It could be funded by a credit card used exclusively for these transactions and give the member control over raising and lowering the limit at their discretion (within reason).
Of course there are many regulatory and operational needs to be addressed, but the point is that credit unions need to look at the tools available to currently distribute trust and see how they can be leveraged. Because if Andreessen is correct, whoever is the distributor of trust will be the winner.
