Heed the Call of Web 2.0

The cover story in this month's Bank Systems & Technology focusing on the nascent Web 2.0 movement among banks was very interesting. It is also interesting to note that in the broader retail financial services arena, one can argue that benks are actually taking the lead in this effort. Indeed, as we posted recently on the Wall Street & Technology blog, aside from a couple of firms dipping their toes in the Web 2.0 pool, we have seen little application of it from major brokerages.According to the article, Gartner estimates that in about five years, 75 percent of banks will use Web 2.0 technologies. That's all well and good, but just because your site makes use of AJAX does not mean it's a Web 2.0 site. The key is adding the social interaction as firms like Wells Fargo (Stagecoach Island) and RBC are doing.

In fact, as we announced in our Bank Monitor Update (subscription required) this week, Bank of America also recently took a step in this direction by adding a Read Reviews to its public site Online Banking page, enabling users to submit comments about the firm's products and services and read other users' comments. The page features a promotional ad at the top, along with a Start Using Bill Pay link. A dropdown menu below contains several sorting options for the reviews, including newest, oldest, highest rating, and lowest rating. A Write a Review link located next to the dropdown leads to the preexisting Login page. A Featured Review section provides a list of reviews supplied by customers.

Each review contains four rating meters - Overall Rating, Ease of Use, Services Available, and Security - along with information about the customer (i.e., screen name, location, and date they became a client), whether or not the customer recommends the product, and a written review. Readers of the review are able to indicate whether they found the review helpful via Yes and No links. In addition, readers are offered a Report Inappropriate Review link. Customers must log in to their online account if they would like to add their own review.

The importance for banks in applying Web 2.0 is not just about marketing to a more technology-driven demographic (e.g. Gen Y). It is about not being disintermediated. The marriage of social networks and technology present a big risk to banks. Firms like Paypal, Prosper, Etelcharge on the payments side are already making waves. For bank technology leaders the time to engage in this change is now.The importance for banks in applying Web 2.0 is not just about marketing to a more technology-driven demographic (e.g. Gen Y). It is about not being disintermediated.