The Bankwatch

Tracking the consumer evolution of financial services

Social networks, the application web and Banking

The direction of social networks and the application web are of interest to me. Why? I believe the social web could be of extreme value, but only if it is of value to us all. People join social networks and get value from them, but don’t pay for it. There is no business model, and the assumption everyone leaps to is advertising. Yet people are flocking to FaceBook, so there is something compelling there.

With regard to business model, marketers continue to try to gain access to social networks, and when FaceBook opened themselves up as an application platform (F8) this brought together the potential for applications over the web, and in a social context.

Marketers have it all wrong, effectively believing they can somehow trick as many people as possible into their application, therefore garnering eyeballs, and thus adding value to their brand. Wrong. The social context is where this goes wrong.

Social context:

This is an important consideration, because it defines why someone is in a network, and their relevance within it. In face to face networking, its easy, because people walk in or out at will; they tell what they want about themselves, in as much or little detail as they deem appropriate based on their internal sense of whats right.

Online social context is different. It is based on preferences, that must be within the control of the individual; simple control. Yet control is not a simple matter. Control within a set of applications means preferences that exist within multiple social contexts, such as friends, acquaintances, career, or private, such as Banking.

The social context defines why someone is in a social network, and if that reason is undermined, then people will move on.

An example:

This exchange between Robert Scoble, and danah Boyd is illuminating.

danah continues the “precious,” er, Facebook conversation… « Scobleizer

Maryam (wife) doesn’t want Milan (new kid) to become a public object. She doesn’t want to see his photo taken onto some gossip or hater site and turned into a Kathy Sierra-style caricature. She keeps telling me to keep his photo only on sites where we can lock out anyone but our close personal friends and family.

This response which begins to get at danah’s real point:

danah is confused by Facebook’s fans

“But what I don’t understand is why so much of the tech crowd who lament Walled Gardens worship Facebook.” Because there isn’t anything better

… which is the hyprocrisy (her word) of the tech crowd.

SNS visibility norms

He’s totally right. And what he’s really saying is that I should recognize and accept the hypocrisy within the tech crowd. They will happily say one thing loudly, but if the cool new glittery toy that they want has major failings, they’ll bite – hook, line, and sinker. I’m not convinced that FB is “so superior to the alternatives,”

danah goes on to discuss the evolutions of Social Networks. MySpace began as a open network that had to begin introducing privacy options. FaceBook began as closed, and has gradually opened up until now, and danah asks this ideal question “Why did Facebook go from default-to-privacy-protection to default-to-exposure?”

What do we lose if FaceBook fails on social context?

So FaceBook are breaking the rules. They are altering the social context for people, without their permission, and without providing something in return; control. FaceBook have done the right thing by opening themselves as a application platform. The technology crowd leapt on that, and there I differ from danah. They are not hypocritical; just excited about the possibilities.

But FaceBook have to be smart about it. They are opening peoples profile up to search engines, and that is a dramatic shift in peoples social context. The preferences to avoid that search exist, but by leaving the “default to exposure” means that the majority of people will be searchable within the search engines, and its a safe bet that is not what everyone signed up for.

Even more important though, is the implications for the value of the FaceBook platform. With the right social context, FaceBook could be the aggregator of anything that requires an application, and identity management. I wrote about customer centric, and Banks, and how that can only occur within the individuals context, here. FaceBook has (had?) that potential. I won’t write them off yet, but darn, when they have close to 50 million users, why not be careful.

Vendor Relation Management (VRM)

I wrote about VRM in a banking context here, and here. The point is that vendors (merchants, shops, stores) want to sell something, and VRM places individuals in charge of that relationship. In an ideal world nothing would be marketed to me, unless I agreed in advance that I wanted that. The control over such VRM requires automation, and that requires significant detail on who I am and what I want.

Such is the potential for social networks, and the basis of a viable model. No-one is there yet.


The applications on F8 could have far greater value that would extend beyond ‘ask me a question’, or ‘whats your favourite movies’. If FaceBook give too much away for free, and without my permission, they can never be my representative within my personal universe, and my VRM.

The real value within FaceBook F8, for now, will have to be within the applications, and how they can provide the protection to people, that the F8 platform fails at.


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Written by Colin Henderson

September 9, 2007 at 23:03

Posted in Uncategorized

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