Social networks to sell insurance and become banks per Gartner ...

I'd never thought of social networks becoming insurance agents and banks so as to realize additional revenue.

But a recently published report from Gartner shared by Scott Fulton at ReadWrite Enterprise predicts that's where we're headed.

Traditional banks risk being disintermediated by social media websites that are increasingly looking for additional revenue streams beyond advertising. This is a natural extension of the rise already seen in comparison and aggregator sites, especially for more commoditized products such as small loans, general insurance and credit cards. Examples of recent activity include the social payments startup Twitpay, the virtual currency Facebook Credits and the acquisition of the U.K. price comparison site BeatThatQuote by Google.......This disintermediation includes the enablement of online debt management services and peer-to-peer loan pools, all of which happens by way of social networks more than by stand-alone Web sites. To stay competitive, traditional banks have launched services that reach their customers through Facebook, and enable them to conduct transactions through a social network rather than a Web site.

From Gartner analysts:

Juergen Weiss: Offering insurance products to their communities would be a natural extension of social media providers' financial services strategies and would allow them to capitalize on their extensive set of information they constantly collect about their users.

Kimberly Harris-Ferrante: Radical shifts in customer behavioral changes and buying habits... challenging many industries to reinvent their product development and sales and services processes to align with customer expectations and technology use.

Many younger people have never received a paycheck they needed to deposit with the bank. Direct deposit means they've never walked up to the teller window on Friday night to deposit their week's pay and get some cash. They've never thought it necessary to say 'Hi' to bank officers when making the deposit so as to establish a banking relationship for a future a home or business loan.

Heck, most banks aren't even set up to work that way anymore. When I had to go meet my loan officer for LexBlog, I went up to the 21st floor and skimmed through a list of people and phone extension numbers so as to dial him up so he could let me through the glass doors.

Banks, in their effort to save a buck, have lost customer relationships. Most of their employees don't even know what it means to build life long relationships with bank customers. The employees who have been with banks for years who knew what 'banking' was all about have been let go.

Insurance is changing as well. People get insurance quotes for life, auto, and home through websites. Most young people are not hanging out at the local country club or lunch counters with insurance agents.

The combined lack of an appreciation for personal face to face relationships by consumers and financial institutions with society moving to social networks for relationships make Gartner's predictions highly plausible. It was not that long ago that we called travel agents to book flights and business trips.

Two messages for attorneys and law firms here. One, know how to engage your clients and prospective clients online, that's where they network and transact business.

Two, never loose your appreciation for building and nurturing personal face to face relationships. Doing so puts you at risk of being disintermediated -- whether by another lawyer or a computer.

The report is included in Gartner's series of "Top Industry Predicts 2012" reports.

Source: http://kevin.lexblog.com/2012/01/articles/social-networking-1/social-networks-to-sell-insurance-and-become-banks-per-gartner-research/

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