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Banks Need to Keep Relevancy, Openness in Mind for Web 2.0

Relevance and openness are keys to making a bank's Web 2.0 initiatives work.

Though many banks are just beginning to wrap their heads around the idea of Web 2.0, the concept will play an increasing role in determining the future competitive landscape. The key to success, according to executives from large banks that have been dabbling in the area, is that banks must have a clear idea of what Web 2.0 will do for the institution and its customers.

During the opening session at this year's BS&T Executive Summit in October, Anita Sands, managing director and head of transformation management with New York-based Citi ($2.1 trillion in assets), told attendees that Web 2.0 has less to do with technology and tools than it has to do with creating content and creating connections that are meaningful to users. (For more on the BS&T Executive Summit, see page 34.) "Trust levels are changing. What does it mean to a bank when its customers turn to other customers for advice?" Sands asked, referring to the numerous blogs and wikis that consumers often tap to share financial advice.

Margaret Weichert, e-commerce/ATM business development and planning executive with Charlotte, N.C.-based Bank of America ($2.7 trillion in assets), added, "Who people trusted used to be an institution with big pillars. Now it's their friends and families." During these difficult economic times, she continued, how banks touch their customers will become more vital than ever.

And those customers, especially the new generation of digital natives, have vastly different expectations than previous generations of customers, both speakers emphasized. "Users expect a different experience now," said Weichert. "[Gen Y] is used to being heard."

To meet those demands, according to Weichert, banks need to leverage Web 2.0 technologies to create open, more-democratic and interconnected contribution models, where customers can customize their banking experiences. Further, she advised, banks shouldn't limit customer access to resources. For example, if consumers want to aggregate information from all of their accounts at multiple financial institutions, the primary bank should facilitate this, Weichert said, noting that BofA already offers this capability among its portfolio management tools.

Sands also pointed out that Web 2.0 isn't just a customer-facing concept but something that can be used internally as well. While she was with Toronto-based Royal Bank of Canada (US$600 billion in assets), for instance, the bank used Web 2.0 in its recruiting efforts, Sands related.

"Knowledge work is increasing," Sands added. As a result, she explained, when implementing Web 2.0 banks should look to answer two questions: Who knows whom, and who knows what? "What do people know, and how can we harness that intelligence?" Sands posed to attendees.

sidebar:

Financial Services Get Social

The financial industry increasingly is embracing social media. A recent study of 70 financial services firms by Corporate Insight (New York) revealed the following highlights among banks and credit card companies:

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