Banking goes social

Social networking software is an emerging technology that is topping the agenda for CIOs in the financial services industry.

This is according to Gartner analyst David Furlonger, who says this sector is looking at methods such as crowd sourcing and collective intelligence. “The use of social software to reinvigorate knowledge management (KM) initiatives has languished in the trough of disillusionment for many years.”

He says the advance of Web 2.0 and the concepts of peer-to-peer, collective intelligence, and crowd sourcing have changed the way companies approach KM. “Technologies from instant messaging to wikis to Microsoft SharePoint have made it quicker and easier to share knowledge.”

Combined with the right focus, he says newer collaboration technologies of all kinds can ease the task and increase the reach of KM capture and access.

Furlonger points out the focus is on improving scale and reach, and offering targeted communications initiatives to select customer groups for product development as well as service enhancement.

He says banks are making a strategic decision to deploy a presence across key new media platforms. “Their online communications strategy allows them to monitor groups and community chatter as well as their subsidiaries.”

According to Furlonger, the other trend getting attention is cloud computing. Gartner defines this as "a style of computing in which scalable and elastic IT-enabled capabilities are provided 'as a service' to external customers using Internet technologies".

It heralds an evolution of business - no less influential than the era of e-business - in positive and negative ways, he says. “It has become a 'hot' industry term that has been used in many contradictory ways.”

Overall, there are very real trends toward cloud platforms and also toward massively scalable processing. With cloud computing, he notes that virtualisation, service orientation and the Internet have converged to sponsor a phenomenon that enables individuals and businesses to choose how they will acquire or deliver IT services, with reduced emphasis on the constraints of traditional software and hardware licensing models.

According to him, services delivered through the 'cloud' will foster an economy based on delivery and consumption of everything from storage to computation to video to finance deduction management.

Furlonger says telephone and Internet banking have caused banks to view their branch networks as a cumbersome and costly expense, where costs needed to be carefully managed. In this way, banks discourage customers from in-branch banking to further reduce costs.

He points out that banks then discovered they had spent too long “pushing" customers away - all they had succeeded in doing was alienating those customers, losing contact with them in the process, and leaving them open to offers and enticements from their competitors.

“In addition, customers were becoming more knowledgeable,” he notes. With increasing levels of data, and the capability of sharing and distributing this data, banks needed to become a part of the conversations their customers were having - among themselves and with competitors.

He says banks offer a view of where branch banking may be headed, with information on products and services easily accessible and transparent.

“Linked with process and document management applications, these branches will draw customers in to obtain and share information. When and if they decide to make a purchase, the bank processes will be focused and streamlined to ensure the customer is brought onboard quickly and efficiently, and without the customer having to leap through any significant hoops or hurdles,” he says

Banks have started to relearn these lessons, according to Furlonger. He notes that branch automation (full-service ATMs, cheque and cash deposit ATMs, enquiry terminals, and solid multichannel integration) have helped link all the bank's distribution channels together.

This ensures persistence of data across channels and ready access for all staff, no matter what channel they operate through, allowing banks to engage with customers for transactions that add value to the relationship, he concludes.