Is it a perfect storm for Social Media and Credit Unions?

 

The definitive answer unless you have been hiding yourself in the 1990’s is a resounding YES! 

I will admit right now that sometimes I feel like the “Social Media Noah” at my corporation, telling everyone that will listen that they better start pitch in and help to build that “Web 2.0 Ark,” lest they all start practicing the “flotsam backstroke.” 

Truth be told, not everyone is “on deck,” most of the traditionalists are in reactionary mode with the Fed, the stock market, and the law of diminishing funds. 

Maybe it is the entrepreneurial spirit that I have been “weather-proofing” within myself that sees the latest turn in the economy as an opportunity as opposed to a negative consequence. 

I have been fascinated by the P2P services (Zopa, Prosper, Lending Club, etc), the integration of social finance applications integrated within Facebook and the online discussions occurring about ideas for the future of credit unions and finance with a few of my colleagues in virtual space. 

I am looking forward to participating in my first BarCamp (3/29 in S.F.) where I hope to interact with some of the bright minds of the industry. 

Because I prefer to “try and build things” – all I need is the tattered robes on my back and a handsaw (OK, maybe my laptop and assorted electronic gizmos – I’m more of a modern day Noah).

 P.S. As I finished writing this I read that a Facebook API will let you display a Facebook application on a website, here is the link.  OK – give me two programmers, two computers, two…well you get the idea.

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Social Blogism

I was thinking about Charles Darwin and his theory of evolution on my way home tonight – OK, yes is the answer to your next question – it was just as I finished my customary quad espresso.

 I was thinking that it might not be too far fetched of an idea to theorize that “the survival of the fittest” concept could be applied directly to the “evolution” of some of the current social media trends. 

If you are thinking early fossils that are deeply embedded into the conscious of most of our minds when it comes to originating the decentralized P2P file sharing concept, then you HAVE to be thinking Napster. 

Napster thrived as an early primitive specie and proliferated the idea of file sharing over networks, garnering millions of music file sharing users. 

Natural Selection however (and the Recording Industry Association of America) stomped it out with a stud-laced Metallica boot. 

It’s funny to think about it now because it was ultimately the unauthorized release of the demo song “I Disappear” by the hair band that fueled the early extinction for Napster. 

The great thing was that while Napster slept with the fishes, a couple more lung-breathing fishes made their way to shore and transformed the concept in bold new ways. 

There would be no iTunes without Napster and certainly no BitTorrent type file sharing services without that “disruptive” and “trendy” concept. 

I look at some of today’s concepts of P2P in particular P2P lending and read those same type of comments about a ”disruptive” and “trendy” model for lending money. 

Right now there are several models for P2P lending “evolving” and not all of them will “survive,” but you have to think that one will, and it just might completely transform the lending business. 

Some of the other type of forward thinking businesses that were called “disruptive” and “trendy” were companies like eBay and more recently, YouTube. 

I predict that other Social Media technology will evolve the concepts of Facebook, Twitter and LinkedIn – maybe even combine them. 

I imagine that I will someday have a widget on my desktop that feeds me lending rates in P2P format where I can see the institutions (or personal lenders) information on a network and in several click gain access to statistics on their financial stability (sort of like BitTorrent feeds where you can see the “health” of a feed).  

I also predict that I will be constantly managing my money daily – searching for the best return on investment – and probably being even more hunched over my computer than I already am.

 

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How Credit Unions Partner with Zopa.

To follow up my last discussion regarding Zopa.com (Zone of Possible Agreement), I wanted to talk about how credit unions actually partner with this unique person-to person social lending service.

As mentioned in my first post, Zopa is currently partnered with just six credit unions (I have learned that they are currently working on an in-depth partner program which tentatively is scheduled for rollout in February 2008).

The following is a simplified version of the current partner program (please reference Zopa.com for more detail):

Zopa handles all aspects of hosting and managing the main Zopa website, along with handling the servicing and statement processes for all transactions. Primarily this is electronically processed only and includes membership and registration, identity verification, payment processing, and account verification. They also handle call center support as well.

Members who wish to transact on Zopa must already be a member of one of the six credit unions listed on their site or join one of them, based on geographic eligibility via their integrated online new member application process.

The partnered credit union maintains ultimate control of approving new members, Zopa CDs and Zopa loans using Zopa proprietary technology, which requires no technical integration by the individual credit union.

For early-partnered credit unions, it is a way to supposedly test the waters with the targeted demographic of 18-34 year olds.

It also appears that Zopa may be looking to targeting partnerships with credit unions with a pre-existing large membership (they mentioned being appealing to CU’s with memberships in the millions) but also makes a small pitch to the smaller credit unions in their current program marketing information.

I will be watching and reporting closely on the social lending and credit union trend in 2008 and will also be reviewing some of the other related services. I am also hoping to get a hold of Jim Bruene’s (Netbanker.com) “Person-to-Person Lending 2.0” report.

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Person-to-Person Lending

I really like the idea behind person-to-person lending sites starting to proliferate the web lately. Sites like Zopa are using the power of social networks and “mashing” them together with the concept of “social lending” in a way that is certain to appeal to the Gen Y demographic. 

Zopa (Zone of Possible Agreement) provides borrowers with the opportunity to apply for a five year loan with rates ranging from 8.75% to 16.99%, depending on their credit scores, which are graded by the company with a scale of A*, A, B, and C. 

Along with their online application, the borrower also creates a personal profile that describes their reasoning for the loan and they get the chance to promote their profiles to potential lenders directly on ZOPA’s website and other social networking sites. Lenders buy into a one-year Zopa CD that is currently set at a maximum 5.1% interest rate (this helps to lower the borrowers loan payments) and they are given the option of spreading out the interest earned from their investment to help further lower the rate of a borrower of their choosing.

 Borrowers must have a minimum FICO score of 640 and must be affiliated with one of only six credit unions currently partnered with Zopa. The maximum loan amount available is $25,000 and with the affiliation of a credit union, deposits are insured by the NCUA (National Credit Union Administration) for as much as $100,000.

 I think the idea is promising for the future and you can almost bet that 2008 will see additional credit union participation.

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The Tao of Credit Union Blogging, Tip #2.

Tip #2 Do not try to come off Gen Y in your messaging, especially if you had to use Wikipedia.Org to look up the definition of “fo’ shizzle.”

Do NOTand I repeat it again, DO NOT attempt to use Gen Y slang in your blog communications. The moment you drop your first slang word (even if you’ve used it in the correct context) you run the risk of losing credibility for everything your write thereafter.

As part of your overall blog strategy, make sure that you have a review committee setup (usually two people in your marketing department will suffice) to provide feedback/suggestions before you hit the “publish now” button.

Try to “think outside of the box” with your posts and collaborate with others on how you can pique the interest of your potential readership.

Although it is recommended not to try and speak Gen Y in your writing this doesn’t mean that your company can not experiment with creating company presences on Social Networking sites like YouTube, Facebook, and Linked In. If your company has television commercials that have run their shelve lives over traditional broadcast medium (and we know how expensive that is!) , why not create a company YouTube Channel (hello –it’s free!) and upload them there? 

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