The Bankwatch

Tracking the consumer evolution of financial services

How should Banks react to web based application providers?

Duncan at Techcrunch, posts a thought provoking view of FaceBook’s potential. The key that he has zeroed in on, is ‘open vs closed’, and whether FaceBook risks becoming obsolete as Microsoft has.

Could Facebook Become The Next Microsoft?


It’s difficult to be against Facebook at this time. The platform strategy and now the move into Web Operating Systems are fairly lauded as being smart business moves, and of course the Facebook product itself is constantly improving. From a users perspective, a centralized one-stop shop of applications has great appeal, particularly in a marketplace where choice can actually be overwhelming.

Yet Facebook is a closed shop; there’s no open source in Facebook and every app built for it will not work with other sites. Facebook could easily become the Microsoft Windows of tomorrow. Microsoft will tell you how better the world is for having their product, and little doubt that Facebook will spin a similar line; yet it’s not unreasonable to question whether uniformity and centralized control ultimately delivers better outcomes for everyone. Of course Facebook isn’t at Microsoft’s level yet, but we are better asking these question today and tomorrow rather than 2-5 years time when by that stage it may well be too late.

A while back I posted the thought that FaceBook looks like the old AOL. The catalyst for that thought at the time, was that F8 requires its own markup language. Now its probably not the end of the world, and a subset of xml, but thats the point. Duncan notes that F8 applications are not transferrable to other platforms.

Google and Yahoo are apparently preparing to produce their own web social aggregation, and web based application layers, with Google being furthest ahead. We can only speculate, but lets have some fun and do that. This is important for disaggregated financial services, because they will need to run on one or more platforms. Its my bet that Banks won’t bet on one being a winner. Betting on more than one, makes anything remotely proprietary, a high risk from an investment perspective.

However, as open as open standards are, the devil is always in the details, and as each participant develops their Web operating system standards, a degree of proprietary-ness is likely to creep in.

Socialstream is work being done with Carnegie Mellon

Socialstream is the result of a Google-sponsored capstone project in the Master’s program at Carnegie Mellon University’s Human-Computer Interaction Institute. This project was guided by three goals that built upon each other:

Initial Task: Rethink and reinvent online social networking

Refined Focus: Discover the user needs related to social networking and explore how a unified social network service can enhance their experience.

Prototype Goal: Create a system for users to seamlessly share, view, and respond to many types of social content across multiple networks.

Yahoo is a bit of a mystery, but something is coming there. TechCrunch post this from a Yahoo job description.

Project overview and job responsibilities:
– Develop go-to-market tactics for new social communication service
for young adults

I think they don’t know yet, but they will do something.

I will go back to Duncans post, and use his educated speculation.

Imagine that in 2-5 years time Facebook has become the No. 1
destination on the web. Facebook as a Web OS is the leader in online
storage, online applications, email, blogging and of course social
networking. How people interact with Facebook has changed; Facebook OS
has absorbed Facebook F8, all previous Facebook applications work under
Facebook OS, but they work more like Windows does today; Facebook has
become your desktop and not just an internet site.The Facebook Paint
application substitutes Photoshop, Facebook Email is a superior
offering to Outlook, Facebook Office (Facebook having acquired either
Thinkfree or Zoho) provides the market leading word processing and
spreadsheet platform.

FaceBook have taken the strategy lead over the last few weeks, but the overall direction towards web based applications, and social networks was already happening. What is now clearer is that the future will hold providers, who offer capabilities to users to manage their web lifestyle, from word processing, to blogging, to financial services, to communication (not necessarily email, or IM).

Relevance to Bankwatch:
Whether financial services are offerred by Banks, or P2P providers, or ???, its a reasonable bet that consumers will want their online financial services to come to them, within their aggregator. Consumers will be able to log in once and access their life online in one place, or at least thats the promise. Lots of things have to be solved before we get there, specifically identity management in particular, but thats the promise.

Those services will need to be offerred in a way thats flexible enough to work in their standalone site, but also be shareable (replicable) within all of the main aggegators. They will also need to be able to interact with other services on a defined basis.

This has implications for how services are built … openness, and accessible API’s (or next big thing after API) will be key considerations.

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Written by Colin Henderson

July 20, 2007 at 22:52

2 Responses

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  1. […] Which banks understand the web lifestyle? ← How should Banks react to web based application providers? […]

  2. They will adopt the strategy and go beyond traditional Internet banking and , for example, offer secure web desktops(Web OS) to their custumers. Why? Because traditional banks have strong brands loaded with credibility and trust from years and years of personal contact through their branches. No pure “cyber actor” can match that. We will first see that “tactical move” from banks with strong and futuristic visions. In the long run they will use the ongoing social networking to boost MetaWeb banking.

    Peter Tuscher

    July 23, 2007 at 08:37

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