Web 2.0 a Blessing and a Curse for Online Banking

09/11/2008

Banks are looking at implementing Web 2.0 technology to shore up their online offerings, but they approach it cautiously. Some of the immediate benefits Web 2.0 technology offers the online banking sector are increased customer customization and more interactivity. The biggest concern, however, is Internet security, i.e., keeping customer information safe online.

With social networking sites all the rage, banks are extremely aware of what they need to do to keep up with online, interactive technology. However, the very thing that attracts banks to this technology is the way it is used – interactivity and opening their services up to use by/for third parties. This interactivity, they fear, will lead to a loss of control and possible security breaches.

In spite of this, online banks realize that there is a whole generation of consumers they have to reach who have grown up being wired. They are accustomed to conducting their whole lives online – from the social to the professional.

They are also accustomed to such advanced features as having information instantly delivered via RSS Feeds, and interacting with others via the simple click of a widget.

Online Banking Challenges in a Web 2.0 World

Security: The trick for banks is to capture these consumers where they work and play online, while still keeping customer information safe.

Legal: The legal ramifications of permitting third-party content onto bank sites is also unchartered territory.

Image/Reputation Issues: The potential for third-party content to be shared and/or misused among bank clients and their associates also presents problems.

For online banking to fully embrace Web 2.0 technology, they will have to find a way to address these issues.
Datamonitor, expects it to happen, predicting Web 2.0 technology like mashups to be launched by more forward-thinking banks over the next year or so.

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