ANAHEIM, California — Both banks and credit unions riskbecoming irrelevant as more consumers begin to turn to otherapproaches to payments and lending, according to banking consultantBrett King.

King, author of BANK 2.0, spoke Wednesday to attendees atCO-OP Financial Services THINK 2011 conference and credited therise of the Internet for the explosion in different forms of mobilepayments, peer-to-peer lending via social networking.

King noted that the largest payments organization in Kenya withfar more customers than the four major banks is actually not a bankat all. It's a telecommunications company that facilitatesthe transfer of money over mobile phone networks with textmessaging.

Similar things are taking place in Hong Kong and London, Kingsaid, and there has been a corresponding boom in P2P lending,which, coincidentally, has loan loss rates that are a fraction ofthat of mainline financial institutions like banks and CUs, Kingsaid.

This has powerful implications for both banks and credit unions,King said, because it means consumers feel entirely empoweredto take financial services on their own terms and then tell theirfriends and family about how they have found your service.

“It will not matter how much money you spend on advertising,”King told the attendees, “if my friends tell me your credit unionsucks I am not going to use your products or services, because Itrust my friends.”

The conference continued through Wednesday in the GrandCalifornian Hotel at Disneyland.