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The Future of Money: On Markets and Marketing

The following is part 2 in a series written by Len, Sasha and me on the future of money. This post will focus on markets and marketing — essentially, how social behaviors and community actions play a crucial role in determining value, and ultimately, transactions. This video from Don Tapscott is a nice backdrop for this discussion, as he explains, through a “macrowikinomic” lens, how the next generation of Internet users is changing how we produce ideas and manifest them into the markets of tomorrow.

http://www.youtube.com/watch?v=ZPpZ9TFgaYs

This conversation between Australian futurist, Ross Dawson, and German futurist, Gerd Leonhard, frames the potential of micropayments and crowdfunding, touching upon the effects they will have on markets and marketing; specifically, as Gerd explains, “Money is content, and money is moving into the cloud.”

http://www.youtube.com/watch?v=Bho9ehbtOQw

The Future of Money: On Markets and Marketing

A new crop of analysts, free thinkers and futurists are debunking the notion that the Big Money problem is just about debt versus capital, or scarcity versus abundance. This really boils down to sustainability, and more acutely, the behavioral triggers that define market movements. A depression-led society, quite literally, means that people are hamstrung in their ability to make money, they’re afraid to spend, and even worse, they typically don’t have the context or the impetus to seek out alternatives or complementary currencies. This is a long-standing, complex problem that we’ve seen over centuries of time, with early examples such as Monti Di Pieta (mid-15th century) proving that certain mercantilist regimes thrive on supporting depressed or leveraged (or over-leveraged) markets. Wall Street and its cavalry of global retail and investment banks were founded on similar principles. Arguably, hedge funds and venture capital groups have compounded the problem by supporting models built almost entirely on scarcity, as opposed to building sustained value in the innovations to which they’ve invested (a bit oxymoronic, it seems).

As for the innovations that are meant to drive the markets of the future, let’s forget about Facebook Credits, the BitCoins, the Billfloats, the Zipmarks, the Openbucks or even the Google Wallets for a moment, and focus on where market movements are actually happening, because modes of transaction are secondary in this equation… At least for now. We need to invest resources in buttressing what could be considered transitional economies — marketplaces that have no choice but to (re)create value from the ground up. If you look at the situations in Greece and Italy (where the black market represents 27% of the country’s GDP), it’s clear that these are areas where skills-building and market growth are tied to old economic precepts found in manufacturing and farming. It also means that technology alone cannot save the day, but it does mean that the combination of technology and people can. The Brooklyn flea markets are a great example of how new micro-economies can emerge by localizing resources and creating jobs where demand can be co-created, or even co-opted.

As for marketing, let’s put the focus

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on the current money-keeping and lending institutions: the retail banks. The most sensible thing for them to do is leverage their local and global infrastructures to support transitional economies, because if they don’t, the BankSimples of the world will literally take over. The point here is that financial institutions, especially retail banks, can no longer market products and services in the same way they have been by pushing ideas into the market that have no sustainable value; one example that led to the collapse of the global banking system was the push on mortgage-backed securities (CDOs or “Collateralized Debt Obligations”), and a more recent example is the push on short-arm mortgages. By continuing to hedge the spread on capital-deficient markets, banks are marketing themselves into a hole of which they will not be able to dig their way out. Marketing the business of money in the 21st century means that banks and other institutions must provide real utilities that help communities build new commerce systems (like educational or farming infrastructures, or information systems tied to applied financial learning) and enable them to scale.

The bottom line is that banks can no longer afford to talk about how great they think they are at “building consumer relationships” or how much “value they provide for your dollar” through fancy billboards, TV commercials and myriad social media applications. Again, to Gerd’s point, if money is content that is moving into the cloud, then the relationships and value have to come by connecting people to each other through information that enables them to make better financial decisions. If advertising and other types of socialized media reflect that then great, but first come the tools — the applications and programs that improve financial literacy, as well as the causes that shape how people live every day. In this sense, CREDO Mobile comes to mind.

To that end, and with regard to how the future of money is marketed in general, I think the onus is on this new crop of utility-providers (such as the organizations mentioned earlier) to educate people on the value of these utilities and how they can be used and leveraged for emerging markets (read: not the kind of emerging markets the investment banks talk about). The most important marketing platforms going forward will involve instilling a new sense of social responsibility around peer-to-peer lending, trade ethics and sound financial management, along with programs that develop strong digital literacy for people of all ages and walks of life. In order to build and sustain markets of the future, we need to empower the people who inhabit them. It’s that simple.

What are your thoughts on transitional economies and emerging markets? On markets and marketing? On the future of money?