FreshNetworks Blog

When working with the big banks and insurance companies, as they embrace the potential of social media, their adoption of change can be fairly slow. The highly regulated (and risk averse) financial services industry often lacks the appetite to engage in online social conversations and (they could argue) “why do we need to?”. The answer is that, if you don’t, then you get left behind. There are competitors and some new entrants already building a successful social media presence.

As an example of a new entrant, in the banking sector, I’ve been following Zopa for some time. It started in the United Kingdom, and promotes itself as the first marketplace for social lending. This means that members of the Zopa community lend and borrow money with each other, sidestepping traditional banks. The premise is that both lenders and borrowers get better rates, because Social Lending is more efficient than traditional banks, which, with large overheads, must take bigger margins on the money that passes through them.

With over 400,000 members, Zopa appears to have hit upon a successful formula, and one that is now being copied in other countries, such as Prosper in the US, Smava in Germany and Boober in the Netherlands

And because it has empowered their online community, it becomes natural for it to add the social media features that further enhance its proposition, such as frequent blogs and online conversations between its members.

Time will tell whether this business model will be successful and sustainable. But it demonstrates that a new entrant into the marketplace such as Zopa can shake-up an otherwise cautious banking industry, and maybe move them faster towards embracing social media. It’s going to happen – it’s simply a question of when.

Read all our posts about social media for financial services