Locavesting – Back to the Future

The future of banking is as much philosophical as it is technological.

I expect it to be return to the past as much as it will be a march into the future.

Banking originated as local. Simple. Familiar. Familial. Helpful. Compassionate. In the service of the individual and the institution.

In recent years it became complex. Remote. Inaccessible. Unfathomable. Focused on the needs of the institution rather than the customer. Unable to meet basic customer needs.

But now banking is changing in some interesting ways. Is some cases quietly. But with some profound implications and opportunities.

My favorite in recent months is the concept of Locavestors. People who invest only in local businesses within a designated radius. Much like Locavores who eat only foods that have been produced within a 100-mile radius. Locavestors invest in local businesses and earn profits while supporting their communities. And in some places regional stock exchanges are emerging to facilitate this new flow of capital.

I find this concept compelling on several levels. First, community focus. Second, the convergence of things we associated with big business (lending, investors, stock, exchanges) in the service of the everyday person. [It’s interestingly aligned with how technology makes its way from the rarified to the everyday courtesy in part to Moore’s Law]. Finally, the inherent opportunity for banks.

Banks have a natural advantage here. Knowledge and expertise. World class technology platforms. Ability to execute and sustain. Recognized brand. Local presence. Existing banking relationships and community investments. And associates who are also neighborhood residents.

So how great would it be for Bank of America to jump start locavesting in a few targeted communities across the country? Perhaps tapping into the renewed spirit of rebuilding America that is sweeping the nation in light of the recent transfer of governance, powered by the new generation. Banking from the ground up. The inside out. Turn banking on its head so to speak. From what it’s become to what it needs to be. To what it once was.

Additional reading.

http://dealbook.blogs.nytimes.com/2008/12/15/exchanges-look-to-encourage-locavestors/

Herve Jean-Baptiste