1. One of the core concepts is 'Everyone is a bank'. The system has built in loan pooling complete with a marketplace. http://catallax.info/everyone-is-a-bank/ Instead of being paid interest, you receive a dividend over time based on how well the person who placed your loan does.

2. A trusted public ledger is necessary. A bunch of tech exists to build it on the blockchain right now, but you are right, it isn't a long term solution. As long as the ledger is public and verifiable you'd be ok.