During the past few months, we've been researching deeply into the financial markets, but not in the way stockbrokers and analysts do. We want to find out how banks are using the web, and paint a picture of what the industry will look like in five, 10, and 20 years.
Our takeaway so far is this: banks that want to succeed in the future will start getting social now, and no, that does not mean creating a Facebook page and encouraging customers to “Like” it. It means sweeping and rapid mobile adoption and, moreso, transformation from a purely transactional model to one of customer engagement. And for an industry that is suffering from a reputation standpoint after a few less-than-stellar years on our wallets, there is no better time.
The problem, however, is that banks are extremely conservative and slow to adapt. They’ll tell you that, too. Most aren’t bothering with Facebook or Twitter, sometimes perhaps for good reason, and sometimes out of fear of regulatory scrutiny. But the banks that are adapting to the new financial model are doing it properly and effectively, from both a mass communications and regulatory perspective.
Which brings us to the concept of social banking – integrating the financial system into the way people interact online. You can see examples if your bank has an iPhone, BlackBerry or Android app. These services will continue to evolve with new features in coming months. Right now they’re mostly a basic, mobilized version of online banking, whereas they’ll soon be a handheld drive-thru teller.
Just this week, the biggest banks in the country – JPMorgan Chase, Bank of America and Wells Fargo/Wachovia – announced a partnership called clearXchange, which will allow their customers members to make transfers from checking accounts via email addresses or mobile numbers, rather than routing and account numbers. So, say you’re out to lunch at a hot dog cart that only takes cash. You only have a card. Your coworker pays for your lunch with cash, then you text the money to his or her account. The Charlotte, NC-based service will roll out nationally, then perhaps move into other financial institutions.
That’s social banking: social and mobile experiences combine to create a financial transaction. Social banking will change how you buy goods and services, how you spend and save, and how you live, work and play.
Another company we’re watching is a hot startup in New York called BankSimple. It’s not a bank, but partners with banks to provide online and social banking services. It’s also just issued its first debit and credit cards for testing in New York, Portland and San Francisco. The company claims “worry free” money management and “unrivaled” customer service. Mashable notes that “BankSimple’s draw will be fee-free ATM withdrawals, predictive money management, Zappos-style customer support and simplified money transfers between you and your social network friends.”
So banks, then, could become cool?
iTunes and the music industry. Amazon and books. Tablets and the publishing industry. Mobility and socialization and banks.
This is the part where I end this post, saying something moderately clever like “we’re banking on technology to change the financial industry.” But I won’t make a lame pun.
- Jeff (@jephkelley)