Web 2.0 holds promises and threats for online banking

Banks are aware of the need to keep up with the times in serving the Facebook generation and, as such, appreciate the potential of such Web 2.0 technologies as 'mashups', Rich Internet Applications and widgets. While many have dabbled with such functionality, however, independent market analyst Datamonitor in the report Online Banking in the Age of Web 2.0, finds them fearing to tread more firmly, concerned at the loss of control and security implications of opening their online services to third-party content.

“A generation of consumers is coming onto the market that not only thinks of online as the natural way to do its banking, but also expects it to be as customisable and interactive as the Web 2.0 sites on which it spends its surfing hours,” says author of the study, Rik Turner.

“That can mean anything from having your online bank permanently available as a widget, to having third-party information such as stock prices delivered to it as an RSS* feed, to its existence as an island in a virtual world like Second Life.”

Web 2.0 features are coming from banks, but they will need help to deploy them securely

Yet desirable as all the new-fangled capabilities labelled Web 2.0 may be, there are clearly challenges involved in deploying them for organisations whose raison d'être is to take care of other people's money, use it to make more and share the profits with customers and shareholders.

First among these is security, since anything that opens a window for someone other than the customer is inherently dangerous from a bank's perspective. Second are the legal and reputational implications of allowing third-party content onto their websites: enabling customers to pull in data from the stock exchange to inform their investment decisions is one thing, but what if a child pornographer or neo-Nazi decides to populate their online bank with some of their content, even making it available to their associates?

Web 2.0 tech vendors will need to reassure banks that their products will enable control as well as usability

There is thus an opportunity for vendors to capitalise on Web 2.0's appeal for banks, provided they can deliver the control and security they require to embrace fully the technology and roll it out for millions of customers.

Turner concludes:
“We expect to see some Web 2.0 capabilities such as ‘mashups' launched by the more innovative banks over the next year, but large-scale adoption will require work by enterprise software vendors to convince the great majority of them that the technology won't be handing out the keys to the safe nor setting them up for lawsuits.”

Notes

*Really Simple Syndication, a feed format used to publish blog entries, headlines, update notices and general content, including audio and video.

Datamonitor's report Online Banking in the Age of Web 2.0 looks at the market issues and strategic implications of the technologies that have emerged in recent years to enable the internet experience to be a more customisable, less programmatic one, and considers their importance for banks in their online services.