The Bankwatch

Tracking the consumer evolution of financial services

“Gartner Says Banks Need to Be Ready to Take Advantage of the New Age of Social Banking” | Gartner

Interesting new report noted by Gartner.  I haven’t seen the report (hint hint) but the press release is appealing and fits with the general theme bankers need to get beyond their current problems, and look up for new directions and strategies.

Gartner make the point that fundamental shifts are occurring online, and while not specific to banking, except in pockets, the directions at play are too fundamental to ignore as being permanent.  Sounds like an interesting report.

Gartner Says Banks Need to Be Ready to Take Advantage of the New Age of Social Banking | Gartner

“Currently many traditional bankers tend to reject the concept of social banking as a fad while others refuse to recognize or accept any degree of threat posed by such new phenomena,” said Alistair Newton, research vice president at Gartner. “Although bankers may see current low usage by consumers as a permanent source of safety, this disregard for changing consumer behavior with social networking generally may mean that they miss the possibility of fast, viral uptake of social banking.”

Consumer interest in social networks and social banking does not mean that consumers expect or want their banks to be social networks like Facebook or MySpace. In a January 2009 survey of 3,988 consumers who use online banking (1,970 in the U.S. and 2,018 in the U.K.), the results showed only a small percentage of respondents (7 percent in the U.S. and 8 percent in the U.K.) said that they were interested in using an online social network on their bank’s Web site to talk to other customers. Out of this small percentage, most were interested in using social-network information about how their banks compare with others and to find information to simplify their financial and personal lives. Although these consumers are few currently, they provide clues about the desires for social banking and are likely to be the first adopters and therefore online trailblazers for social banking.

“What has become clear from the growth of social networking as a phenomenon has been both its speed of growth and the viral impact of such communities,” said Ms. Cohen. “Ideas are picked up, established and disseminated within short time scales, much too short to allow late entrants to the market to take advantage of the opportunities that will arise. Banks need to be positioned to take advantage of this shift to a new age of social banking.”

Written by Colin Henderson

May 6, 2009 at 22:32

5 Responses

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  1. I haven’t seen the report either, hint hint, but I am putting together a report for our bank holding company on how we can use social banking to build business and I would be interested to know what Gartner has to say on the topic.

    Dan Voell

    May 7, 2009 at 08:40

  2. @Gartner – anyone like to help us out here – even with some snippets. Here is my email

    bankwatch

    May 7, 2009 at 08:59

  3. Concrete use-cases anyone?

    (I’m not saying there aren’t any, but be nice to hear some.)

    Thomas Barker

    May 7, 2009 at 20:05

  4. @Thomas its a great question and I wish I had some answers that I could offer you, but banks are not there.

    Examples of non banks are Lending Club, Prosper, Virgin Money US.

    Ideas that banks could pursue … just my idea – offer an investment product that allows investors to buy parts of loans. In this scenario, banks would offer loans to borrowers with better interest rates. The investors would buy say up to 10% of each loan. What’s interesting about the model here is that the investors hold the asset – no assets on the banks balance sheet, and they are ‘just the platform’.

    Advantages? The borrowers and the lenders could talk amongst each other, and form their own views on risk and facts required for loan decisions. The banks role is to provide credit scoring, and verifiable data about the borrower.

    Thoughts?

    bankwatch

    May 9, 2009 at 15:22

  5. Unfortunately, Gartner has been over-estimating the size of the social banking market for several years. They had the market for peer-to-peer lending quite wrong, though they would probably argue that the uncertain regulatory framework has impeded growth.

    Jim

    May 18, 2009 at 19:04


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