It’s been a big month of financial news with multiple announcements across social media networks about Bitcoin and person-to-person lending. With the recent research by Pew Internet, which found 63% of Americans use their mobile phones to surf the web, it’s no surprise that digital lending and web payments are on the rise.
In public relations we’re always looking at these topics as opportunities to tell stories – but first we have to understand the “so what, who cares” of the issue.
So, how does Bitcoin fall into this digital buying and lending trend? First, Bitcoin isn’t just a new method of payment, it’s a new form of currency altogether. The idea behind Bitcoin is to create a global-digital currency that can be used by anyone, anywhere. I will admit it’s hard to imagine a currency that resides mostly on tablets, smart phones and computers funneled about by fiber-optic cables and wi-fi. I envision masked bandits hacking the network train and making off with my binary coded money. Bitcoin proudly displays its “military grade cryptography” as a security blanket for its transactions, but consumers may still be a bit hesitant to move their wealth from a vault to a virtual cloud given the military’s history of security – remember Wikileaks? And just this month, Belgium had its entire phone system hacked.
So what does this all mean to banks and credit unions and how can they communicate their financial role? From a public relations perspective, it’s important to acknowledge what Bitcoin is and isn’t in order to effectively communicate what impact it could have on financial institutions. While Bitcoin is trying to remove brick and mortar buildings from the transaction process, it has several hurdles to overcome before it can really declare itself a commonplace currency. Bitcoins’ core promotion that it has no boundaries or physical limitations also highlights its lack of accountability. Unlike banks and credit unions; Bitcoins by and large are not FDIC nor NCUA insured up to the same $250,000 coverage for consumers. Yes, governments are just as capable of failing as any other organization, but they have more accountability and infrastructure to mitigate potential financial woes. Bitcoins also rely on empowering the consumer thus making you your own bank. This may feel freeing initially, but with the U.S. outstanding consumer debt at $2.84 trillion and counting, are we really ready to be our own bank?
Smaller steps into digital trading may be what consumers are looking for. The ease and convenience of trading money with friends, family or even businesses through phones is still possible without taking the Bitcoin leap. Again, with 63% of us using our phones to access the web, person-to-person trading is a viable option while keeping the financial institutions in the loop. This is a key area for banks and credit unions to join the discussion and get involved. Several banks and credit unions are stepping up not only to discuss P2P but to promote their own programs to help members. Lending Club, Prosper and PopMoney are just a few P2P lending programs. It’s time to emphasize how consumers do have the power to send money from their account to nearly anyone else through P2P while still relying on the infrastructure and support of an established bank or credit union. Sure we can put on our own band aids or take aspirin for a headache, but we still rely on a doctor for professional help.
The take away in all of this – the “so what” is that we may not be ready to be our own banks, but we are ready to be our own lenders relying on established banks and credit unions to help guide us and provide cover as needed. As for “who cares?” – while Bitcoin works to break down barriers there is something very comforting to consumers about being able to walk down the block to the neighborhood branch of a local bank or credit union and talk to a person. And that is certainly a story worth telling.
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