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IBM Banking: Using Web 2.0 Social Networking to Rebuild Trust | Social Networking Service | Web 2.0

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Learn how the social networking offered on Web 2.0 sites like Facebook, MySpace, and LinkedIn can be used to cost-effectively and efficiently reach an increasingly fragmented and dispersed customer base.
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  Banking IBM Institute for Business Value  IBM Global Business Services Undressingin public Harnessing the power ofWeb 2.0 to rebuild trustin banking  IBM Institute for Business Value IBM Global Business Services, through the IBM Institute for Business Value,develops fact-based strategic insights for senior executives around critical publicand private sector issues. This executive brief is based on an in-depth study bythe Institute’s research team. It is part of an ongoing commitment by IBM GlobalBusiness Services to provide analysis and viewpoints that help companies realizebusiness value. You may contact the authors or send an e-mail to iibv@us.ibm.comfor more information.  1 Banks have historically been trusted, valued members of the community, but globalization and new-age communications have combined to put distance between institution and customer.Rebuilding trust requires listening to customers and complete transparency. In a time of global financial turmoil, banks intent upon reconnecting with an increasingly diverse, fragmented and suspicious customer base should ”bare all” and use the varied and powerful tools of Web 2.0 at their disposal. By Wendy Feller and Cormac Petit  Undressing in public In years past, the bank was a central focus inthe community. Bank managers held positionsof privilege and authority based on trust, andthe strength of banks was founded upon therelationships they built with customers.Today, however, globalization, and the speed ofinformation are rapidly transforming traditionalbanking. The world is becoming smaller. But,in a period where margins have been steadilydecreasing – or vanishing – strong customerrelationships and trust have become moreimportant than ever. 1 The transparent, opendialogue available through Web 2.0, visible toall customers, is a method we believe bankscan use to help rebuild these relationships andengender trust.Many people today are beginning to use Web2.0 tools – social networking, blogging, wikis,mashups and the like – to build relationshipsand help them with decisions about virtuallyevery facet of their daily lives, from whom todate, to what to buy, to, even, where to bank.As a result, banks today are likely to findmany of their customers online. And they’renot content with just checking their accountbalances and paying their monthly accounts.They are soaking up information – researching,comparing and finding the best products, ratesand deals. They are collaborating, connecting,and sharing opinions and experiences aboutbanks and other suppliers – and, as theyevaluate the advice they receive, about each Undressing in public  Harnessing the power of Web 2.0 to rebuild trust in banking  2 IBM Global Business Services   other – with numerous others throughoutthe world. They are blogging about theirexperiences with banks, brokers and otherfinancial institutions. Social networking siteFacebook, for example, attracted nearly 124million unique users in May of 2008, comparedto MySpace’s 114.6 million, and users spent anaverage of more than two hours per monthinteracting. 2 In fact, about 60 percent of theworld’s online population visit some form ofsocial network or blogging site. 3 If you area banker, do you know what these onlineconsumers are saying about you and yourinstitution? Are you even on their radar?Web 2.0 allows customers to interact the waythey want to – by leveraging the social aspectof the Internet to make connections and 2IBM Global Business Services decisions. To complete in this environment,banks should become a part of theircustomers’ online social networks andunderstand how to harness their power tocreate value.Based on discussions with more than 100bankers with responsibility for Internet bankingchannels, as well as observations and studyof Internet banking sites and their function-ality, we believe social computing can have apositive effect on the top line, driving increasedaccess to new customers, improved customerservice and greater levels of product andservice innovation. We believe, as well, that useof an increasingly cost-effective and intercon-nected Web 2.0 infrastructure can also result inbottom-line improvement (see Figure 1). Source: Serious business, Web 2.0 goes corporate, Economist Intelligence Unit survey, January 2007. N=406. FIGURE 1. Web 2.0 can help banks reduce costs and increase revenues. Increasing revenue impact of Web 2.0Reducing cost impact of Web 2.0 Acquiring new customersCustomer service/supportProduct/service innovationMarketing/advertising/public relationsCustomer retentionAccount managementOnline salesService deliveryLogistics and distributionIn-person sales0 10 20 30 40 Percent of respondents  40 30 20 10 0 Percent of respondents 
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