As with any concept that gets a lot of buzz and attention, Web 2.0 is a catchphrase that marketers, luminaries, and business strategists seem compelled to drop into almost any discussion. Wikis. Blogs. Podcasts. Social networking sites. File sharing. Customer-generated content. These are just some of the hallmarks of the much-talked-about (but little understood) “Web 2.0.” Though Web 2.0 is unlikely to supplant or fundamentally change CRM’s role for financial services companies, CRM and financial services companies alike have a lot they can learn from Web 2.0.

1. Web 2.0 and the
Return of the Relationship
A R T I C L E
Look past the hype, and Web 2.0 is all about fundamentals that
have always been important to financial services: interaction
and relationships.
Wikis. Blogs. Podcasts. Social networking sites. File sharing. Customer-generated content. These
are just some of the hallmarks of the much-talked-about (but little understood) “Web 2.0.”
As with any concept that gets a lot of buzz and attention, Web 2.0 is a catchphrase that marketers,
luminaries, and business strategists seem compelled to drop into almost any discussion. The
conventional wisdom is that if your business hasn’t fully embraced Web 2.0 (whatever that entails),
then it is falling woefully behind and missing out on lucrative opportunities. In response, many
companies, including firms from across the spectrum of the financial services industry, have raced
to set up corporate blogs, invite customer-generated content, set up profiles on MySpace, open
storefronts in “virtual world” Second Life, and take other steps to connect with their markets using
Web 2.0 tools.
If a few relative “luddites” are watching this melee from the sidelines and scratching their heads,
it’s understandable. Sure, Web 2.0 sites and applications are fun and engaging, but are they really
going to bring in business? Aside from being a new channel for advertising and brand-building, is
a CEO blog or Second Life storefront really going to increase profits? Is it worth the trouble, or is it
just another expense and distraction from tried-and-true business strategies?
There are a lot of different facets to Web 2.0, and thus many potential answers to these questions.
While a dose of skepticism is prudent, there is much to recommend the strategic use of various
elements of the Web 2.0 craze. Some Web 2.0 technologies are invaluable for corporate
knowledge-sharing and collaboration, for example. And one need only consider the massive
popularity of social networking sites to recognize that they are having a significant impact on the
ways people interact and spend their time. Once you push past the hype and look at the ideas
and tools that underlie the fads, there are some aspects of Web 2.0 that have strong potential for
profitable use in financial services.
In fact, even for those who staunchly prefer “proven business fundamentals” to “new paradigms,”
there are compelling ways to use and understand the importance of Web 2.0. One of the most
valuable and accessible ways to look at Web 2.0 is to think of it in the context of an age-old
business fundamental: relationship-building.
Web 2.0 as the Relationship Medium
Social networking sites are among the most important—and popular—innovations of Web 2.0. On
sites such as Facebook and MySpace, users set up profiles and “add” friends to their networks,
sharing news, thoughts, photos, music, jokes, and just about anything else. On many social
networking sites, users can see who each other’s friends are, who they know in common, and
details on how they know each other. Users can join virtual clubs and interest groups, form sub-
groups of friends within their larger group of friends, and connect through networks based on
geography, educational facility, place of work, and more.
Not surprisingly, these new modes of interaction have been wholeheartedly adopted by the tech-
savvy younger generations. But if you think social networking sites are just for teenagers and
college kids, think again. Stats from 2007 show that persons aged 35 and up accounted for 39%
of Facebook’s visitors—if you include those 25 and up, the number goes up to almost 51%.1
And online networking is not restricted to the “social”; professional networks are rapidly gaining
ground. Between October 2006 and October 2007, membership growth for LinkedIn, the most
popular professional networking site, significantly outstripped that of Facebook,2 suggesting
1 Gonzalez, Nick. “Facebook Users Up 89% Over Last Year; Demographic Shift.” July 6, 2007.
URL: http://www.techcrunch.com/2007/07/06/facebook-users-up-89-over-last-year-demographic-shift
2 Nielsen Online, November 2007.
This Pivotal CRM–authored article was originally published by Financial Services Technology (FST).
Pivotal CRM | Article

2. that professionals—in droves—are beginning to see the 2.0 tool or combination thereof has the potential to satisfy the
relevance and value of these kinds of interactions to their deep, broad business needs served by CRM systems—nor
business lives. are they meant to. What seems more likely is that CRM
vendors will absorb some of the best ideas from the Web
So what’s at the root of all this interest in online networking? 2.0 world into their systems. Working in the CRM space, we
The answer’s easy: relationships. see a lot of intriguing opportunities to integrate tools such as
wikis and RSS feeds into the CRM framework to help facilitate
Networking has always been an important part of business
collaboration and communication both internally and with
life, an opportunity to cement and extend the relationships
customers and prospects.
you already have and to establish new ones. Online
networking transposes this experience into the wired Relationship Lessons from Web 2.0
business world we now operate in, where interacting and
Though Web 2.0 is unlikely to supplant or fundamentally
collaborating with those one may never have met in person is
change CRM’s role for financial services companies, CRM
a common phenomenon.
and financial services companies alike have a lot they can
Understanding who knows whom and finding ways learn from Web 2.0.
to capitalize on this knowledge has always been a First, the high flexibility and configurability of many Web
2.0 tools points to the need to integrate this kind of
key business goal for CRM implementations. personalization into both CRM systems and the customer
experiences they help firms provide. The ability to adjust
What online networking lacks in traditional face-to-face
interfaces, configure personal portals, and create custom
contact, it makes up for in immediacy and insight. Most of us
views and reports is paramount to CRM users, and it will
have had the experience of meeting someone at a live event
become even more so as they continue to use more and
and failing to glean the person’s role, relevance, or shared
more Web 2.0 tools that give them this level of control. The
connections on the spot, thereby missing out on a valuable
ability to aggregate different kinds of information of one’s
opportunity. With online networking, much of this information
choice from internal and external sources—ticker information,
is available up front, instantly revealing shared associations
market data, and news feeds, in addition to top contacts,
and interests. LinkedIn, for example, allows users to see three
tasks, appointments, and more—will be a key feature for
degrees of separation, revealing the kinds of connections
CRM systems moving forward. At the same time, customer
that can take months or years to become apparent under
expectations for highly personalized and flexible interactions
other circumstances.
are on the rise—financial services firms need the level of
From a business perspective, this information is golden. customer knowledge to provide this degree of personalized
Companies can use this knowledge to find their way into experience, as well as the tools to offer customers diverse
deals using existing relationships, understand prospect options for interacting with the firm.
and customer allegiances and influences, recruit individuals
Furthermore, the CRM and financial services industries can
strategically, and find common ground with new and existing
both learn from the wild popularity of social networking sites,
contacts, just to name a few potential applications. In a
blogs, and wikis—and the staggering amount of personal and
business such as financial services, where trust is paramount
professional data individuals share through these venues—
and relationship structures can be complex and hard to
that under the right circumstances, today’s customers are
decipher, such information can prove invaluable.
remarkably willing to share data that can be of great value to
CRM: Precursor … and Successor? businesses. Rather than thinking of data collection as a painful
or cunning process of extraction, firms should look at what
A desire to learn more about contacts and their
characterizes the conditions under which people are willing to
interrelationships is nothing new to the business world, and
openly share such information. What they are likely to find is
while Web 2.0 tools are finding new and exciting ways to
that individuals’ willingness to share personal data is related
collect and chart this information and enable individuals
to three things: their perception of the value they receive in
to interact, they are simply the latest in a long line of
exchange, their degree of trust in the venue or platform, and
technologies and tools for doing so.
their ability to control the situation. As such, financial services
In the enterprise technology context, the systems that most firms need to give more thought to how they can provide
closely match the kind of business value and function clear reciprocal value to their customers in exchange for their
described in online networking tools above are customer openness, build stronger relationships and more trustworthy
relationship management (CRM) solutions. The “customer” reputations with them, and shift more control and choice
relationship moniker is in some ways misleading, since CRM into the customer’s hands, truly becoming more “customer
systems have always been equally geared toward gathering centric.” All of these are objectives in which the company’s
information not only about a firm’s customers, with whom they CRM system—with or without the addition of some strategic
already have relationships, but also about prospects, targets, Web 2.0 tools—can be of great value and assistance.
partners, and other parties with whom the firm is looking to
At the end of the day, the high popularity and strong
initiate or expand relationships. Understanding who knows
relationship focus of many Web 2.0 technologies affirms
whom and finding ways to capitalize on this knowledge has
the continuing importance of interaction and relationships in
always been a key business goal for CRM implementations.
today’s social and business environments. The time-honored
So are Web 2.0 tools the successors to CRM? Despite the adage that “it’s who you know, not what you know” is as
buzz around them, it seems unlikely. Although some of their true today as ever, and Web 2.0 offers new ways for financial
profiling and relationship-mapping functions overlap with CRM services firms to establish, build, maintain, and leverage
features, at this stage it does not appear as though any Web relationships that can help further their business goals.
CDC Software is a leading provider of enterprise software, including the industry-specific Pivotal CRM for Financial Services suite of
customer relationship management solutions. To learn more, visit www.pivotal.com/financialservices or call us at +1 877-PIVOTAL.
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