As the Web 2.0 age dawns, banks must wake up to the fact that the successful companies of the future will not have customers, they will have participants, and that rather than having a business, they will have a community.By Chris Skinner.
We live in an internet age except that some banks are still trying to work out what that means. Most online banking efforts to date have been merely a reflection of historical transaction-based services: statements, payment orders and information services. A few banks have started offering extended services such as online billing, invoicing and payments, but these are few and far between. Yet there are the odd one or two banks, and a growing community of new entrants, that see much greater potential for servicing online, and not just self-servicing.
A great example is the recent launch of Stagecoach Island by Wells Fargo. Stagecoach Island is a banking version of the virtual reality world, Second Life, which inhabited by more than 1.5 million people globally. It is a world of social networking, where participants create a cartoon version of their life. The beauty and attraction of Second Life is that participants can be anyone they want to be, can dress and look however they want, and can build a business, a life and a world that reflects the person they want to be.
But that is not all. In Second Life, the business people build can make real money. Property, clothes, parties, concerts… all of these cost and are paid for in Linden dollars, Second Life’s currency. There is more than that though: Linden dollars equate to real US dollars and more than a million participants in this community spend about $200m a year at the moment. Expect that number to be almost a billion in about a year from now.
That is why Wells Fargo is getting in on the act. A virtual world needs a virtual bank, and Stagecoach Island is that virtual bank.
Why is this so important to banking? Because everyone is talking about Web 2.0, that is the new generation internet. New generation internet learns from the likes of Amazon and eBay, and looks to see what these businesses have in common with the new social networks, MySpace, YouTube, Wikipedia and company. The main lesson common to all of these web services is that their communities build their businesses.
Without participants, these sites/companies would not exist. They only exist because their customers build their content. And that is what we are learning today from Second Life and other Web 2.0 businesses. You don’t have customers, you have participants. You don’t have a business, you have a community.
This is something most banks are only just getting to grips with, but will have to learn fast if they are to have success online.
Chris Skinner is an independent financial commentator.(www.balatroltd.com)
