Banks are aware of the need to keep up with the times in serving the Facebook generation and, as such, appreciate the potential of such Web 2.0 technologies as mashups, Rich Internet Applications and widgets. While many have dabbled with such functionality, however, a new report finds them fearing to tread more firmly, concerned at the loss of control and security implications of opening their online services to third-party content.

A generation of consumers is coming onto the market that not only thinks of online as the natural way to do its banking, but also expects it to be as customisable and interactive as the Web 2.0 sites on which it spends its surfing hours. That can mean anything from having your online bank permanently available as a widget, to having third-party information such as stock prices delivered to it as an RSS feed, to its existence as an island in a virtual world like Second Life.

Yet desirable as all the new-fangled capabilities labeled Web 2.0 may be, there are clearly challenges involved in deploying them for organisations whose raison d’être is to take care of other people’s money, use it to make more and share the profits with customers and shareholders.

We expect to see some Web 2.0 capabilities such as mashups launched by the more innovative banks over the next year, but large-scale adoption will require work by enterprise software vendors to convince the great majority of them that the technology won’t be handing out the keys to the safe nor setting them up for lawsuits.

Related Research: Online Banking in the Age of Web 2.0