Why social networking in banking won't take-off easily?

10.08.08 10:11 PM By S.Swaminathan

Suzanne has written a post about a new social networking site in banking called Mybanktracker.com. This site is a marketplace which allows customers to do comparative shopping for banking services that is the best for the them while it also helps them leverage the knowledge and experience of the millions of existing banking customers

I am not very sure if this is an entirely new idea and to me it does not seem compelling enough. There are several similar services available on the web but the real questions to me are a little more fundamental and is as follows:

  • Customers are keen to search online for financial services products and compare them for best offers or interest rates. Are they comfortable as yet to leave a "trail" of their financial services relationships in such sites? I seriously question the readiness for the same amongst customers.
  • Most social networking sites often work under masked identities except a few of them like "linked-in" where there is a  serious opportunity for "professional networking" value attached. But, when there are financial implications, are customers ready to give -away their identities, am not quite sure about it.
  • Also, financial needs are a lot more "personal" than "social". By its very nature of needs, can such a need become "social" and "shareable". I have my own doubts. I believe customers would always want to know, explore, examine choices etc. and therefore have a freedom to choose their financial services partner but "personal identities" regarding where does one have their bank accounts and the problems that they face with some transactions will still have to remain in the private domain. The ones that can reach "social" domains are customer service issues which are neither here nor there as there will always be some problem one time or the other during a long relationship.
  • Financial services decisions are a lot more relationship based. Hence, I believe a "hybrid" model is the one that will be successful. Knowing and comparing can be online but any issues related to the account has to be  one-to-one. Generic customer service and  product delivery issues  can be brought into a " collaborative  platform" to help new prospects feel a lot more reassured but specific account-led complaints have be tackled offline.
  • Also there's differential risk-based pricing on interest and premia paid, this can hinder social networking in banking as many of customers would like to believe they have got the best rates! At least, that's how banks make customers believe they have got the best deal. Undoing this is like opening a pandora's box. Would banks ever be ready to do it even within their own web site. I am quite sure as it will be very difficult and seems a long way off.

What do you think? I am quite keen to hear feedback and comments on this topic.

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