Retail banks can see the benefits that a more customisable and interactive internet experience based on Web 2.0 could bring, but many are still concerned about security implications, according to a report by Datamonitor.
Banks are clearly aware of the need to keep up with the times in serving the so-called 'Facebook Generation', and appreciate the potential of Web 2.0 technologies such as mashups, rich internet applications, and widgets. But while many banks have dabbled with such functionality, however, Datamonitor also observed them fearing to tread more firmly, concerned at the loss of control and the security implications of opening their online services to third-party content.
New online generation
The report, entitled 'Online Banking in the Age of Web 2.0', noted that a whole new generation of consumers is coming onto the market that not only thinks of the internet as the natural way to do its banking, but also expects it to be as customisable and interactive as the Web 2.0 sites on which these people spend their time.
According to Rik Turner, retail banking technology analyst for Datamonitor, and author of the study, "This can mean anything from having your online bank permanently available as a widget to having third-party information such as stock prices delivered as an RSS feed, to the bank's existence as an island in a virtual world such as Second Life."
Web 2.0 challenges
Web 2.0 features are now beginning to emerge from retail banks, but the banks will certainly need help to deploy them securely, the report warns. However, desirable as the capabilities of Web 2.0 may be, there are several challenges involved in deploying them.
First among these is security, since anything that opens a window for someone other than the customer is inherently dangerous from a bank's perspective. Almost as important are the legal and reputational implications of allowing third-party content onto the bank's web site without vetting by professional editors and legal teams. As a result, there is an opportunity for vendors to capitalise on Web 2.0's appeal for banks, provided that they can deliver the control and security required to safely embrace the technology and roll it out for millions of customers.
Turner concluded: "We expect to see some Web 2.0 capabilities such as mashups launched by the more innovative banks over the next year, but large-scale adoption will require work by enterprise software vendors to convince the great majority of banks that the technology won't be handing out the keys to the safe, or indeed setting them up for lawsuits."