Web 2.0 And Why Banks Should Care Colin Henderson thebankwatch.com NetFinance 2007 19 th April, 2007 Scottsdale Arizona “Reputation economy”
Jan 26, 2016
Web 2.0 And Why Banks Should Care
Colin Henderson
thebankwatch.com
NetFinance 2007
19th April, 2007
Scottsdale Arizona
“Reputation economy”
Colin Henderson | thebankwatch.com 2
Internet is killing business models
RetailingResearchNewspapersMarketing
Yet Banks have survived ....
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Motivation for online banking is largely cost driven
Generally .. Pure cost playElimination of Branch activities
6%
9%
13%
4%
2%3%
0%
2%
4%
6%
8%
10%
12%
14%
2005 2006 2007 2008 2009 2010
Source: Aite Group, September 6, 2006
Source: Pew Internet & American Life Project, Online Banking 2006
Online bill payments – 39%
Checks – 34%Harris – Jan 2007
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Meantime – new Internet models
along comes, Zopa, Prosper, Wesabe, CircleLending, Kiva, FYGO ....
Common theme - simple forum for participants to listen, interact, learn .....Middleman eliminatedIn the lending examples,typically borrower and lender get same rate
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Message 1
Banks are vulnerable because of their built in cost structure, arising from technology and branches
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Online banking causes other sets of problems
Financial services consumers have changedThey're mistrustful, insecure, and hands-on.The result is that customer satisfaction has plummeted. What satisfies consumers are firms that are customer advocates
Firms that demonstrate the four aspects of customer advocacy
simplicity, benevolence, transparency, and trustworthiness
.... enjoy higher customer satisfaction rates and greater cross-sell success
Forrester Research: Firms That Demonstrate Customer Advocacy Overcome Mistrust
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Online is an essential part of shopping experience
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Internet has highlighted the purchase process
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Amazon has made a science of user engagement.
Amazon sells the same products as competitors such as Barnesandnoble.com, and they receive the same product descriptions, cover images, and editorial content from their vendors.
... orders of magnitude more user reviews, invitations to participate in varied ways on virtually every page.... even more importantly, they use user activity to produce better search results. Amazon always leads with "most popular", a real-time computation based not only on sales but other factors that Amazon insiders call the "flow" around products
Barnesandnoble.com search is likely to lead with the company's own products, or sponsored results,
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What has changed here?
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People want to interact – the web facilitates this
Harnessing Collective IntelligenceHyperlinking is the foundation of the webeBay's product is the collective activity of all its usersAmazon has made a science of user engagement.... greatest internet success stories don't advertise their products. Their adoption is driven by "viral marketing"--that is, recommendations propagating directly from one user to another
The power of the permalink.. easy to gesture directly at a highly specific post on someone else's site and talk about it. Discussion emerged. Chat emerged.
If an essential part of Web 2.0 is harnessing collective intelligence, turning the web into a kind of global brain, the blogosphere is the equivalent of constant mental chatter in the forebrain, the voice we hear in all of our heads.
http://www.oreillynet.com/lpt/a/6228
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Within 5 years, net generation will outnumber the rest of the working population
College internet ... or younger
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Commenting on interactive sites is growing
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Message 2 – transaction based online banking is not adequate to keep customers interested
Generational changeDifferent expectations about how internet should be interactive, and participative
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How can this be accomplished?
Can social networks really replace Bank staff?Social plays a role in new models – what's the role for Banks?
Is there a better way to provide Banking that levers social activity to provide guidance, assistance, and advice
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McKinsey say Banks lag all firms in anticipated use of Web 2.0
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Web 2.0 hints at very a different business model
Wesabe
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Small, incremental, steps are being taken ... within the industry
Vancity
Ufirst
Wells Fargo
Verity Credit Union
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Big leaps are being made ... from outside
Wesabe
Prosper
Zopa
Boober
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Setting up a will
Use only cash
Wesabe
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Who are “V”
Blog link from their site
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Change Everything – Vancity CU
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Student LoanDown – Wells Fargo
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Ufirst, Plattsburg, NY State
Flickr
Comments
Internet language
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Thank you!
Questions, thoughts
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