Retail banks scared of embracing Web 2.0 - Datamonitor
11 September 2008 | 13187 views | 0
Retail banks are failing to embrace Web 2.0 technologies like mashups, Rich Internet Applications and widgets due to security fears and concerns about losing control of their content, according to analyst house Datamonitor.
Datamonitor says a generation of customers now considers the Internet as the natural medium for banking and they expect more customisation and interactivity.
"That can mean anything from having your online bank permanently available as a widget, to having third-party information such as stock prices delivered to it as an RSS feed, to its existence as an island in a virtual world like Second Life," says Rik Turner, retail banking technology analyst, Datamonitor.
But banks are concerned at the loss of control and the security implications of opening their online services to third-party content.
Security is a major challenge for banks looking to introduce Web 2.0 features because anything that opens a window for someone other than the customer is inherently dangerous from a bank's perspective, says Datamonitor.
There are also reputational and legal risks in allowing third-party content on a bank's Web site, opening up the possibility of illegal or offensive material appearing online.
But despite these concerns, Datamonitor says financial firms want to introduce Web 2.0 but in order to capitalise on this vendors must do more to reassure banking clients that their Web 2.0 technology is secure.
Says Turner: "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 them that the technology won't be handing out the keys to the safe nor setting them up for lawsuits."
Datamonitor's conclusions echo the results of research conducted by IT specialist Conchango last year that found fears over brand damage are preventing the UK's major retail banks and building societies from implementing Web 2.0 applications. 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.