Word from the Executive Summit: Web 2.0 is Inevitable

Anybody who has read any of my material before may recall that I've been a bit skeptical about the use of Web 2.0 technologies in banking. To me, that's something relegated to "cool" retailers intent on courting the Millennial crowd (I still kind of roll my eyes when I hear about yet another YouTube contest offered by a merchant of some sort). But the more I listen to bankers in the know about Web 2.0, the more I'm beginning to understand what it is that this can do for financial institutions.For instance, the opening session at this year's BS&T Executive Summit was on the topic of Web 2.0. Both presenters were from large financial institutions that have been dabbling in this area: Anita Sands, managing director and head of transformation management with Citi and Margaret Weichert, e-commerce/ATM business development and planning executive with Bank of America. What I took away from the presentation is that banks just can't do this for the sake of wanting to be perceived as "with it." Rather, they must have a clear idea of what it is Web 2.0 will do for the institution and its customers.

"Trust levels are changing," said Sands. "What does it mean to a bank when its customers turn to other customers for advice?" (Think of the wikis and blogs out there offering financial advice)

Weichert similarly stated, "Who people trusted used to be an institution with big pillars. Now it's their friends and families."

As tough a time it is to be a banker, how banks touch their customers will become even more vital, said Weichert. She noted that customers have been contacting Bank of America at three-to-four times the normal level over the past couple of weeks. They are also doing so via multiple channels.

Customers want it all now, especially the up and coming generation of digital natives. Both speakers emphasized what a different animal these people will be from any other customer demographic and that banks will need to understand how to reach them. "Users expect a different experience now," said Weichert. "[Gen Y] is used to being heard."

But Citi's Sands emphasized that Web 2.0 has less to do with technology and tools as it does with content. It's about creating content and creating connections that are meaningful to the users.

How a bank will accomplish this is still up for debate, but Weichert offered a good starting point. First, banks need to approach 2.0 as something that is open. She spoke about creating open, more democratic and interconnected contribution models, where the customers can customize their own banking experiences. Don't limit their access to resources either. If they want to aggregate information from all their accounts at any financial institution, the primary bank shouldn't balk at this, she noted. This is something BofA already offers in its portfolio management tools, she added.

Sands also pointed out that Web 2.0 isn't just a customer-facing concept but something that can be used internally as well. While she was at Royal Bank of Canada, Sands said the bank used Web 2.0 in some of its recruiting efforts. "The nature of work is changing," she said. "Knowledge work is increasing and the rest of it will be outsourced."

So with Web 2.0, the bank should look to answer two questions, explained Sands: who knows who and who knows what? "What do people know and how can we harness that intelligence? Where do the skills reside in the organization?" she posed to the Summit attendees.

Whether internally or externally, Sands said banks should look to create communities. However, these communities can't just be built and left to their own devices. They must be cultivated, she stated. "It's not a free-for-all. There are hierarchies but they are based on who has the most knowledge. It's meritocratic. People will participate in communities to the degree to which it benefits them."

Whether banks like it or not, in the end, BofA's Weichert said this is going to become a reality for the industry. "This just going to happen one way or the other," she noted. "We don't need to be cute. It's not about cuteness or flash. Web 2.0 means being connected to customers at all times."