Not All Banks Reaping Web 2.0’s Potential
Q: What is Web 2.0, and in which types of applications can Web 2.0 tools deliver competitive advantage for banks?
Secil Watson, Wells Fargo:The wiki-based community is an intellectual asset for innovation. Our wikis provide research and insight from our biggest assets — our team members. Members may contribute and edit an idea or comment regarding products and services, and these ideas are subsequently passed on to product managers and/or management for consideration. The benefit of a wiki is that it is unrestricted and democratic — team members can create, add, edit or delete content without approval or supervision.
Blogs are a wonderful tool in that they allow team members to share ideas and opinions in a more casual way. Our internal blogs have allowed team members to really get inside the heads of their managers through a more intimate platform than, say, formal memos or meetings.
Matt Nelson, TowerGroup:Web 2.0 is the use of lightweight, intuitive, Web-based services that rely on user participation and user-contributed data, and generally involve some level of social interaction and networking. For financial services firms, this isn't going to mean MySpace (a social networking site) or del.icio.us (a social bookmarking site), but it might mean taking some of the philosophies that have made those sites so popular in the consumer realm and applying them to business software, client portals or the firm's Intranet.
The most obvious opportunity for Web 2.0 in financial services firms is in client-portal design. Most financial services firms still have fairly basic HTML-style client portals. Technologies like AJAX, Adobe (San Jose, Calif.) Flash and Microsoft (Redmond, Wash.) Windows Presentation Foundation (WPF) allow developers to build much better sites that engage the client more effectively. The slightly less obvious application is in business software where Web 2.0 concepts might allow firms to better collaborate internally and externally [with business partners] on knowledge management and problem resolution. Also, there are some interesting possibilities for augmenting the traditional support channels (e.g., call centers) with self-service tools like wikis.
Nicole Kealey, Adobe Systems: Web 2.0 is an opportunity to deliver information to customers, partners and employees in a manner that is more responsive, compelling and effective than ever before. Web 2.0 has the potential to impact all facets of financial services — from customer self-service to process management dashboards. In a customer-facing scenario, the key advantage is to differentiate your brand and deliver engaging customer experiences online with the ultimate goal of increasing adoption of online services. In other scenarios, the primary benefit is to accelerate and improve decision-making by delivering information that is both intuitive and visually rich.
Q: Are banks currently implementing Web 2.0 technologies?
Watson, Wells Fargo:Wells Fargo's Internet services group has an internal wiki where engineers, marketing people, product managers and operations teams all submit ideas and comment on each others' ideas on how we can innovate our products and services to benefit our customers. This creates an open, inclusive environment where diverse points of view are shared, evaluated and further developed across our group.
These wiki and blog initiatives have resulted in the development of next generations of online financial management products and tools, such as Wells Fargo's My Spending Report. They have also created active communities within Internet services. We are also using RSS feeds to deliver news feeds that team members can customize to see the business news that matters most to them.
Robin Bloor, Hurwitz & Associates: I've seen no pioneering of Web 2.0 from banks at all. Banks have used collaborative technologies — such as those from IBM (Armonk, N.Y.), Lotus (an IBM subsidiary) and Microsoft — for quite a while, and they can be deployed in a Web 2.0 manner. But I've seen no evidence of it. I haven't seen any activity in the area of customer relations, where the potential rewards should be the greatest.
Kealey, Adobe: Financial institutions are working to improve how they engage customers online during the product research and selection phase. There are numerous examples of Web applications that provide retirement calculators, product selectors and guided advice that are helping institutions differentiate themselves online. We're also seeing a number of firms using rich Internet applications as the front end to automating key customer-centric processes, such as account opening and loan origination. These front ends are available to be used by employees as well as by customers, and help to guide the users through the process in a step-by-step manner, helping to eliminate confusion and reduce errors.
Q: Why aren't banks embracing Web 2.0 technologies more?
Nelson, TowerGroup:The general problem is that this is new technology, which people currently equate to the consumer realm. When you think of Web 2.0 business opportunity, you probably think of ad and search revenues, not better user-interface design, improved site usability, collaboration, etc. But these are the more relevant business impacts.
The biggest downside is that it's new, and some people fear change. IT departments are eager to use these tools and develop and deploy new software, but business isn't yet driving the projects. With regards to internal Web 2.0 tools (e.g., blogs and wikis) there are major adoption challenges. A good portion of the intellectual property of a firm resides in the older, more senior staff that is often hesitant to pick up and use new technology.
Bloor, Hurwitz & Associates: The reticence is cultural with banks. Nevertheless, if you want to sell to the younger age ranges you have to meet them in their chosen contexts, which can include places like Facebook, MySpace and Second Life. Banks have a particular interest in attracting such customers.
However, it may simply be a matter of where to invest. A Web 2.0 project is very difficult to define in terms of specific business objectives. You are, in effect, opening a communications channel and it may or may not pay big dividends There are no obvious corporate successes to imitate and no easy way to calculate payback. So any foray into a Web 2.0 project is going to be speculative. If you are the first to open a bank in Second Life, though, you'll get a bundle of free publicity. That on its own could pay for the cost of the project, even if it doesn't generate a heap of business.
Kealey, Adobe: Generally speaking, the main obstacle seems to be that institutions are hesitant to improve one section of their Web site too drastically for fear of making the other sites look even more out of date. Given the siloed nature of banks and financial institutions, many companies find it simply impossible to manage their Web presence as a cohesive whole.
Q: What are the security, privacy and legal issues, if any, of Web 2.0?
Nelson, TowerGroup:The fact that Web 2.0 relies on users contributing all of the data certainly does raise some issues. ... If any firm, in any industry, decides to let its employees blog publicly, they need to first consider the risks and create careful policies. Blogging has become common in the technology industry, and every major technology firm that communicates this way (e.g., Microsoft, IBM, Sun Microsystems) does have well-crafted blogging policies in place.
Bloor, Hurwitz & Associates: I don't see the legal or security issues as any worse than those associated with any other Web activity — by and large, they are the same. Where a company sets up a wiki, it is best practice to declare a usage policy of all postings to the wiki, otherwise you are open to copyright disputes. But that has always been best practice for accepting postings. There is a particular issue, though, for the banking industry. Security and trust are pillars of the banking industry, and there must be no indication that either is compromised by any Web 2.0 capability.
Peggy Bresnick Kendler has been a writer for 30 years. She has worked as an editor, publicist and school district technology coordinator. During the past decade, Bresnick Kendler has worked for UBM TechWeb on special financialservices technology-centered ... View Full Bio