Influx

Colin Henderson runs the The Bankwatch blog. Influx got the chance to interview Colin and discuss how companies in the world of consumer finance are embracing the Web 2.0 revolution.

1.Briefly describe your background?

Banking – retail and commercial, including work in online banking, and ATM’s. Recently I became independent, and focus on financial services consulting and joined the advisory board of CommunityLend.

2. Why do you believe Web 2.0 matters for the worlds of banking and consumer finance?

Online banking’s evolution to date is very transaction based. It’s the virtual equivalent of a teller. Banks and their relationships with customers have been based on interaction, and conversation that engenders trust, and loyalty. Web 2.0 brings the potential to provide for that interactive component which is missing from online banking today.

3. Why are they so resistant to change?

It’s new and brings new sets of risks and different control mechanisms than banks are set up for. Banks have historically been all about controlled messages, controlled advertising, and scripted answers. The high velocity, interactive nature of Web 2.0 where even customers might interact with other customers is a new paradigm for banks.

4. Do you think this is out of step with what consumers are seeking from their financial relationships?

This is the key question. It’s definitely not out of step as it relates to Gen X & Gen Y. They have grown up knowing only internet, and it is their norm. Other generations have different responses, and aren’t so uniform. Having said that, generally 50 – 60% of people start any financial service purchase with online research. That’s a highly significant statistic that suggests online has a lot more potential to satisfy everyone’s needs.

5. Any examples of outsiders that you like who are looking to change the industry and why you like them?

Wesabe, who to my mind are leading the charge in Web 2.0 financial services. It provides a forum for online advice shared amongst others in the forum. They allow you to anonymously share your financial data, and start to share tags on merchant usage. It’s in its infancy in terms of where it might go. Lastly let’s not forget the leaders in person-to-person lending – Zopa, and Prosper.

6. What about incumbents who are striking out and changing?

I like what US credit unions are doing. Whether it’s the board of UFirst talking to their customers via a blog, or Verity CU informing their customers of the latest storm impact on branch closures last December via their blog. This is significant stuff.

In terms of banks, Wells Fargo are the most progressive with several blogs, and step-by-step they are learning of the impact of those blogs. I like that approach, iterative, small improvements that help to educate the bank.