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Next Generation Banking With Web 2.0

Posted in Finance Articles, Total Reads: 3473 , Published on December 17, 2011

What is Web 2.0?

It   is a group of technologies (like AJAX,SOAP,XML and JavaScript)  which can be associated with terms: wikis,  blogs, RSS feeds, social networking, tagging, multimedia sharing etc, which facilitate actual user interaction with the web.

Next Generation Banking

What is the need in Banking?

The world today, has whole heartedly welcomed this concept of web 2.0. We can already see the rise in number of Facebook users to 550 million in just a few years time. In these rapidly changing times bank customers are also becoming more and more demanding. They demand from banks a more user friendly, interactive, trustworthy and transparent banking experience. Web2.0 is the technology that will assist the banks in providing such an experience.

Web2.0 BankingWe are the bank”

This is what web 2.0  Banking is all about, to make the  customers  realize that – “We are the bank” .They are the ones who will come up with new products, select or reject a product and advice others on different products.   Banks  will  only act as a facilitator to assist interaction between customers. They will help the customers to talk, exchange, know, share and transact. In order to do so they should:-

1. Exploit the full potential of web2.0 :- Banks today are not making full use of web2.0 applications. Most bank websites   only provide general services such as branch locators, general transactions facility   or balance check facility. Web 2.0 provides a lot of new avenues for banks to provide better customer experience. Some of these are:-

  • Blogs: - A  blog will provide  a platform to customers, employees and  management of the bank to connect, collaborate and share their views on banking and non-banking subjects.
  • Financial Forums: -These forums will act as a platform for customers to discuss complex banking products among themselves or with the bank personnel.
  • Video tutorials and Video calling: - Video tutorials explaining  complex banking products can be put up on bank website and video calling facility for customers to directly contact the banking personnel in case of a query.
  • Community Banking: - Increase   presence on social networking sites such as Facebook, LinkedIn etc to increase  bank visibility.

2. Properly integrate web 2.0 into their strategy:- While some banks have started providing web2.0 services to their customers, few have succeeded  in successfully implementing them . This is because most of the banks implemented these services as an add-on over their existing internet or mobile banking services. To provide a complete web 2.0 experience requires a bank to develop a fully integrated model along with supportive IT and operational capabilities, which provides  a consistent customer experience across all channels.  A strong customer analytics system must also be developed to measure the implementation success.

Wells Fargo, Spain’s BBVA bank and Fidor Bank, a German startup community bank are some  examples of Web2.0 banking that really stand out.

Benefits of web 2.0 Banking

  • Cost of sales:-web2.0 lets banks sell its complex products easily on low cost online channels, reduces the need for consultants and eliminates the need for back office.
  • Customer Experience and Loyalty: - Web 2.0 improves customer communication and provides greater customer convenience by reducing the difficulty faced by the customers and even by the banking personnel.This eventually increases the loyalty of customers towards the bank.
  • Customer Interaction: - Web 2.0 creates a good interaction among bank customers and allows them to know each other. This increases sales of bank products as customers trust more on advice of other customers.
  • Bank Accountability: - With increased customer connectivity,  a single dissatisfied customer can create a great harm to bank’s reputation. So banks have to be more cautious in their dealings with the customer.

Web 2.0 Banking in India

Indian banks such as SBI, ICICI  have shown presence on  social networking sites but with very less activity and customer presence. Moreover none of the Indian banks have shown involvement in maintaining blogs or incorporating any other feature of a web2.0 bank. So Indian banks  still have  a long way to go to become  web 2.0 banks .They need to explore all avenues provided by web 2.0 and need to  increase customer awareness and participation.

This article has been written by Harsh Dingwani of NMIMS, Mumbai

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