Social networking will impose huge transparency on financial services firms - from which they can't hide - exposing price comparisons and service experiences, says Gartner analyst Alistair Newton.
Speaking yesterday during the Gartner ITxpo/Symposium Africa 2009 conference, in Cape Town, Newton said financial services firms have lost the fundamentals to understand their customers.
“In fact, one could actually say the current financial meltdown was a result of banks not being able to fundamentally understand what their customers wanted,” he said.
Newton's presentation provided an overview of how IT is fairing within the financial services sector during the world economic crisis.
He noted that innovation is being stifled due to risk mitigation, and banks are seeing increased intervention from regulators over a much shorter time period than before.
Returning to the point of social networking, Newton said the 'consumerisation' of technology will continue to move to the next level, as customers become exposed to ever-increasing levels of technology and information within their everyday lives.
“However, banks will generally choose not to move at that pace - strategy around this area will continue to lag as banks adapt and deploy product and channel specific strategies.”
Newton said social media will expose retail experiences and hidden value propositions, and customers will bring these experiences and that knowledge to the financial services table.
“Traditional service providers will likely lack the capability and credibility to keep up with the changing social fabric. Transparency of pricing and service propositions will require much tighter integration across channels, lines of business and applications,” he said.
Web 2.0's rise will be checked to a degree and likely experience a crisis of strategy, relevance and value, and banks will need to validate the role of these strategies to their customers and their organisations.
Newton asserted that mobile banking will fail to reach the profitable mainstream in many developed countries, as early-adopting banks recoil from loss-making forays into the market, to be replaced by targeted mobile financial strategies.
And the banks' woes will not necessarily end here. With the growing focus on risk management and fraud prevention, customer service will be ignored in favour of saving the bank money and protecting assets, he noted.
“However, this is not a sustainable situation, as banks struggle to rebuild trust with customers and maintain ongoing business lines.”
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