Social Financial Services… can they work?

Over the past few months I have watched with keen interest, the story of UBank, a bank lead by innovators with the aim of creating tomorrow banking model for the Gen-Y market. The bank shed’s the formalities of a big bank and opts for a more connected, casual and innovative business model. Printed statements are a rarity and twitter is the preferred method of customer service.

In his blog post, Great Strategy, a Gen Y blogger wrote, we like Ubank because they:

• Offer 24 hour support for customers
• Allow customers to contact them via Skype
• Tweet regularly not just to broadcast updates but also personally replying to queries 
• Sends SMS and email to customers immediately when a transaction takes place on their account. 
• Signs off on all their correspondences with "Speak soon", implying customer loyalty

Essentially they are doing everything that fits with the nature and behaviour of the tech savvy Gen-Y and in a recent move, they will allow customer to check their account balance through social media platforms such as Facebook. Cause let’s face it, Gen-Y tend to check their Facebook every day, creating an ideal spot for customer’s to get other network updates such as their financial balance. Some time ago ANZ experimented with the Smarty Pig platform. Which creates a public visualisation of savings goals, so friends and family can not only see your progress, but also contribute. Although little has been heard on it progress.

Which leads us to the question, can Social Financial Services work? First we have to qualify, what is Social Networking, other than buzz words like Facebook, Twitter, MySpace and foursquare. Social Network creates a web of ‘relevance’ in a hyper connected world. As more and more connections are able to us, we have to have a way to manage what connections are relevant to me? Or as some of the more innovative marketers will say “The Segment of One.” To summarize Social Networks, I have found three common themes that all the offerings being:

• Connection: An established link to those around us in a virtual world
• Contact: manages the back-system contact details that make service linkages difficult. More and more we are seeing the Integrated Contact management approach to Social Networks
• Communication: Two ways channels for broadcast and listening to messages in your network

Imagine a world that your mobile handset not only makes calls, sends emails, connects you to facebook, but also enables a host of services through your world, your network. Groups can coordinate virtually to share not only information, but also money.

How does this apply to financial services? Today’s world of payments and banking shares the same three core concepts, but implement them in very different ways. Here is how I would see Social Financial Services working:

• Relativeness: You social network manages your social network just as it does today, but through the use of technologies that identifying the physical location of you, it can create relevant services. Such as using GSM location information to know you are near your friend John to give him $20. Or know that you’re in a certain retail store so you can ‘check-out’ easily.
• Connection Framework: One of the challenges of the current financial networks is it’s up to the payer and payee needs to know the address/routing details to get money from one point to another. For example, giving your friend your bank code, branch code and account number to send you the $20. Given that you’re already connected on something like Facebook, why can you just use that to pay to John and Facebook works out the routing?
• Behavioral Dynamics: I am impressed with the dynamics theory’s of Seth at SCVNGR, a social network gaming company. The theory talks about the use of seven game dynamics that exercise degrees of persuasion of the network to perform tasks at preferred times, or grow the network. Many of which have existed for decades in the physical world, like Happy Hour persuades people to drink more during a certain time. At SCVNGR they call this the appointment dynamics. Check out Seth’s TED Talk at (http://www.ted.com/talks/seth_priebatsch_the_game_layer_on_top_of_the_world.html)

Over the past decades we have seen the emergence of several technologies and converged technologies that prime the market for a hyper connected world, something that easily extends to Financial Services. Social Networks such as Facebook have built the framework. Mobile Money has built the services. Let’s work together to overlay them and release the awesome power of these new world tools.