Web 2.0 And Why Banks Should Care

1. Colin Henderson thebankwatch.com NetFinance 2007 19th April, 2007 Scottsdale Arizona “Reputation economy” Web 2.0 And Why Banks Should Care

2. Colin Henderson | thebankwatch.com Internet is killing business models Retailing Research Newspapers Marketing Yet Banks have survived ....

3. Colin Henderson | thebankwatch.com Motivation for online banking is largely cost driven Generally .. Pure cost play Elimination of Branch activities Online bill payments – 39% Checks – 34% Harris – Jan 2007 Source: Pew Internet & American Life Project, Online Banking 2006 Source: Aite Group, September 6, 2006

4. Colin Henderson | thebankwatch.com Meantime – new Internet models along comes, Zopa, Prosper, Wesabe, CircleLending, Kiva, FYGO .... Common theme - simple forum for participants to listen, interact, learn ..... Middleman eliminated In the lending examples,typically borrower and lender get same rate

5. Colin Henderson | thebankwatch.com Message 1 Banks are vulnerable because of their built in cost structure, arising from technology and branches

6. Colin Henderson | thebankwatch.com Online banking causes other sets of problems Financial services consumers have changed They're mistrustful, insecure, and hands-on. The result is that customer satisfaction has plummeted. What satisfies consumers are firms that are customer advocates Firms that demonstrate the four aspects of customer advocacy simplicity, benevolence, transparency, and trustworthiness .... enjoy higher customer satisfaction rates and greater cross-sell success Forrester Research: Firms That Demonstrate Customer Advocacy Overcome Mistrust

7. Colin Henderson | thebankwatch.com Online is an essential part of shopping experience

8. Colin Henderson | thebankwatch.com Internet has highlighted the purchase process

9. Colin Henderson | thebankwatch.com Amazon has made a science of user engagement. Amazon sells the same products as competitors such as Barnesandnoble.com, and they receive the same product descriptions, cover images, and editorial content from their vendors. ... orders of magnitude more user reviews, invitations to participate in varied ways on virtually every page .... even more importantly, they use user activity to produce better search results. Amazon always leads with "most popular", a real-time computation based not only on sales but other factors that Amazon insiders call the "flow" around products Barnesandnoble.com search is likely to lead with the company's own products, or sponsored results,

10. Colin Henderson | thebankwatch.com What has changed here?

11. Colin Henderson | thebankwatch.com People want to interact – the web facilitates this Harnessing Collective Intelligence Hyperlinking is the foundation of the web eBay's product is the collective activity of all its users Amazon has made a science of user engagement .... greatest internet success stories don't advertise their products. Their adoption is driven by "viral marketing"--that is, recommendations propagating directly from one user to another The power of the permalink .. easy to gesture directly at a highly specific post on someone else's site and talk about it. Discussion emerged. Chat emerged. If an essential part of Web 2.0 is harnessing collective intelligence, turning the web into a kind of global brain, the blogosphere is the equivalent of constant mental chatter in the forebrain, the voice we hear in all of our heads. http://www.oreillynet.com/lpt/a/6228

12. Colin Henderson | thebankwatch.com Within 5 years, net generation will outnumber the rest of the working population College internet ... or younger

13. Colin Henderson | thebankwatch.com Commenting on interactive sites is growing

14. Colin Henderson | thebankwatch.com Message 2 – transaction based online banking is not adequate to keep customers interested Generational change Different expectations about how internet should be interactive, and participative

15. Colin Henderson | thebankwatch.com How can this be accomplished? Can social networks really replace Bank staff? Social plays a role in new models – what's the role for Banks? Is there a better way to provide Banking that levers social activity to provide guidance, assistance, and advice

16. Colin Henderson | thebankwatch.com McKinsey say Banks lag all firms in anticipated use of Web 2.0

17. Colin Henderson | thebankwatch.com Web 2.0 hints at very a different business model Wesabe

18. Colin Henderson | thebankwatch.com Small, incremental, steps are being taken ... within the industry Vancity Wells Fargo Ufirst Verity Credit Union

19. Colin Henderson | thebankwatch.com Big leaps are being made ... from outside Wesabe Zopa Prosper Boober

20. Colin Henderson | thebankwatch.com Wesabe Setting up a will Use only cash

21. Colin Henderson | thebankwatch.com Who are “V” Blog link from their site

22. Colin Henderson | thebankwatch.com Change Everything – Vancity CU

23. Colin Henderson | thebankwatch.com Student LoanDown – Wells Fargo

24. Colin Henderson | thebankwatch.com Ufirst, Plattsburg, NY State Internet language Flickr Comments

25. Colin Henderson | thebankwatch.com Thank you! Questions, thoughts colin@thebkw.com thebankwatch.com