Social banking won't change the consumer banking model immediately, although retail banks that understand social media, financial social networks and microfinance have a better chance of adapting their services.

According to recent research by Gartner, those that don't face the prospect of being sidelined in the emergence of the social-banking services model.
Gartner defines social banking as an emerging approach to retail banking that makes depositing, lending and the connections between depositors, borrowers and financial institutions transparent. It has its roots in social/consumer trends, including social responsibility and social-network participation, and financial and banking trends, such as financial social networks, microfinance and personal finance management.
"Social banking should not be mistaken for charitable giving," says Stessa Cohen, research director at Gartner. "Rather, it addresses social needs while meeting the consumer's need to access and use financial products and services.
"The result is an emerging model for social-banking services that removes the banks from the centre of the customer relationship. Instead the bank takes its place among a series of loosely connected financial and social relationships mediated by online social-networking media and tools."
This model provides opportunities for consumers to meet their day-to-day financial needs while balancing their desires to be good global citizens. Without planning for the emergence of this new financial services environment, retail banks will not only be disintermediated, but also miss a significant opportunity to transform their operations and customer focus.
Gartner expects these challenges to impact the delivery of all retail-focused products and services delivered by banks. Strategic enterprise architects in retail banking and senior business vice presidents responsible for retail delivery strategies should start planning for this approach.
"Currently many traditional bankers tend to reject the concept of social banking as a fad while others refuse to recognise or accept any degree of threat posed by such new phenomena," says Alistair Newton, research vice-president at Gartner. "Although bankers may see current low usage by consumers as a permanent source of safety, this disregard for changing consumer behaviour with social networking generally may mean that they miss the possibility of fast, viral uptake of social banking."
Consumer interest in social networks and social banking does not mean that consumers expect or want their banks to be social networks like Facebook or MySpace.
In a January 2009 survey of 3 988 consumers who use online banking (1 970 in the US and 2 018 in the UK), the results showed only a small percentage of respondents (7% in the US and 8% in the UK) say they were interested in using an online social network on their bank's web site to talk to other customers.
Out of this small percentage, most were interested in using social-network information about how their banks compare with others and to find information to simplify their financial and personal lives.
Although these consumers are few currently, they provide clues about the desires for social banking and are likely to be the first adopters and therefore online trailblazers for social banking.
"What has become clear from the growth of social networking as a phenomenon has been both its speed of growth and the viral impact of such communities," says Cohen. "Ideas are picked up, established and disseminated within short time scales, much too short to allow late entrants to the market to take advantage of the opportunities that will arise. Banks need to be positioned to take advantage of this shift to a new age of social banking."
Cohen says banks should first create a social-media strategy and ensure that they have the technology required to implement a social-banking model. They should evaluate opportunities to create partnerships between retail banks and social-banking providers, rather than trying to build their own social networks.
Banks are also advised to plan for greater transparency on pricing and service in the organisation and use this transparency to compare pricing with that of competitors and to expose pricing strategies that reward loyalty from customers and encourage multiple account holdings.