Social software is the current ‘big thing’ on the web, with many companies developing products and services around the concept of social interaction. There are dedicated social networks such as LinkedIn and Facebook, for both business and pleasure. Applications such as Flickr, LastFM and Dopplr are adding the social aspect to photography, music and travel - bringing people together and encouraging participation and sharing. We have virtual worlds forming in the shape of Second Life, with people coming together for social and economic gain.
Beyond this, many data owners and providers are opening their services, allowing 3rd parties easy and secure access to data stored.Finally, we have data aggregators such as MeeCard, and to some extent applications built on top of many of these social platforms such as Facebook. These pull together data from all of these sources, social or not, and make it available in a single place. Perhaps for slicing and dicing, perhaps for publishing.
But, in the midst of this informational and social revolution, there is still one industry which is actively avoiding any steps in this direction - I do of course speak of financial services.Now, before you think I am suggesting that people begin publishing their financial history on the web, I’d like to clarify that this is not what I am alluding to - privacy and security will always be a major concern whenever we consider personal data, but these requirements do not exclude openness and social attributes if carefully thought out.
Social Finance
Social Finance could be the next revolution in an industry which has traditionally been closed. In the language of Flickr, I see massive potential in Massively Multiplayer Financial Management. People, coming together, making the management of your finances easier and simplifying the classification of your data.
The Game
One of the things I liked most about LinkedIn was the way the system gave you feedback in order to encourage and actively solicit participation. Statements such as “Your Profile is 45% complete, try adding more contacts to increase completeness” really played on my competitive side, encouraging me to update my profile and use various functions of the site. It gave me a challenge, something to play for.
Why not the same with my finances? “67% of people with a similar spending profile to you are saving more each month. Why not start a savings account?”. Here we are incorporating social data, whilst keeping the specifics of that data totally confidential. I’m surprised why no banks have really caught onto this - its fantastically useful as I can rank myself against my demographic, and hopefully better manage my finances. In addition, its a fantastic way to cross-sell relevant products.
Tagging Transactions
Tagging is another aspect of Social Finance which immediately comes to mind; I spend some time each month looking at my statement, yet its hard for me to get a birds eye view of the kind of things I am spending my money on.
Although many merchants on my statement are categorized, these categories are often not as specific as I would like, and also are categories which makes more sense to the financial provider than they do to me! Lets use the power of user’s to tag merchants into categories, that can be fed as tag bundles into visualization utilities - letting me slice and dice my data so that it is more valuable to me.
These are just two possibilities which spring to mind, I am sure there are many more.
Why has this not happened already?
Its not hard to see the value in these ideas - they work well towards the goals of promoting customer loyalty, adding value to products and services; they can help cross-sell complimentary products and implemented well can provide a compelling user experience.From my perspective, working within the financial sector, I would say the primary reason is fear of risk.
Its an interesting situation, where every company wants to be the market leader, but very few financial service providers want to take risks when it comes to technology - they instead wish to be fast followers.
The risks are obvious - if a new technology endeavor goes wrong, then it means a lot of bad press. Especially if it goes wrong in such a way that it compromises the privacy and security of the end consumer. Cost is not so much an issue, with the budget of many a start-up being freely spent on managerial off-sites.
The benefits are also obvious as we have seen. Its about time someone stepped up to the table and embraced the idea of Social (and secure) Finance.I had planned to write a bit more around Open Data in finance, but its getting late - I shall continue this another time. Good night!