As we look to kickstart the UK's post-pandemic economic revival, any successful strategy requires community-first thinking.

The government's Build Back Better agenda stresses not only the need for sustainable development to instill resilience into local economies but also the role of digitalisation and innovation as principal drivers of recovery. The aim is to 'support and incentivise the development of the creative ideas and technologies that will shape the UK's future high-growth, sustainable and secure economy.?

One way this can be achieved is by adopting a digital currency in local economies - geographically limited "Stablecoins? designed to serve specific areas or regions. I will call them LocalCoin. These blockchain based cryptocurrencies will function primarily as a medium of exchange and store of value, mirroring the pound sterling. They will facilitate contactless payments and help local communities adapt to lower cash usage - already a declining trend, the transactional use of cash was further impacted by the pandemic.

An apt experimental platform in the UK for these digital monetary instruments could be regional building societies, which risk becoming irrelevant to the post-millennial generation of customers with their paper-heavy, savings bank and mortgages focused business model. This approach is ripe for change, as many building societies are still operating with legacy systems, thus presenting an ideal incubator to trial a fresh idea.

Immediate value creation via a ?local coin?

LocalCoin will focus on payment transactions in the local economy. Not tradable on any exchanges, it would also offset any volatility associated with traditional cryptocurrencies. Being promoted by a local bank, it will be accepted in the local business ecosystem, with its use promoted by discounts and loyalty programmes. The ultimate objective is to encourage widespread adoption of the token over time through in-built rewards mechanisms for both individuals and merchants signing up to the programme.

Such rewards, cashbacks and discounts will act as a strong incentive to spend with local businesses, thereby creating a long-lasting, local area ecosystem that aids the regeneration of the high street and helps building societies embed themselves as key players in local monetary transactions - something they are not currently designed for.

Powering building societies into the digital future

The upside for traditional building societies is considerable. As the pandemic has accelerated the speed of digitalisation, these smaller entities risk lagging behind the innovation curve and losing competitive edge. Most building societies are primarily focused on the financially mature customer with a savings or mortgage relationship, so one way for them to attract Gen Z and Gen - customers is by introducing a digitally enabled, transaction-focused product.

For these entities to facilitate this type of product would entail building a separate, Cloud-based platform that can communicate seamlessly with the bank's core systems. This would allow them to handle a much larger volume of transactions without compromising on requirements of availability, speed and security.

Community banking business needs transformation. As the average home-buying age increases and spending preferences change, so should the local bank. The LocalCoin initiative offers a way to funnel investment now, not only to future-proof building societies but to help the communities around them bounce back quicker.

To share your thoughts or find out more, write to mph.communications@mphasis.com