The survey of 60 senior executives in the financial sector found that brand damage is the top concern with Web 2.0 technology, over and above security and cost.

Mike Altendorf, CEO of Conchango says it is concerning that high street banks and building societies see Web 2.0 as a threat to their brand.

"It proves that there is work to be done much to dispel the confusion about how new technologies and functions can be applied," says Altendorf. "Web 2.0 does not mean relinquishing control of your brand and handing it over to the consumer, but rather adopting a more collaborative approach."

However all the companies taking part in the research are planning to implement one or more Web 2.0 functions in the next twelve months, says Conchango. The most popular planned addition to Web sites is a blog followed by rich content such as videos.

Research group Gartner said last year that banks should monitor emerging Internet social networks for their potential for partnerships to offer services within the network or to create non-traditional distribution channels by dealing with customers one-to-one.

Financial services firms should also use Web 2.0 applications - such as wikis, podcasts and blogs - to deliver personalised information to customers and for cross-enterprise collaboration, said Gartner.

Last year Dutch banking group ING launched a viral video marketing campaign that promotes its new 'orange mortgage' to renters and potential first time home buyers.

The backbone of the campaign was a new Web site which features content, video clips and games. ING said the campaign was designed to reach first time home buyers through creative, interactive activities and links with other Internet destinations most familiar to the majority of the audience.